Page 70 - AA 2018_11

Battle lines

effectiveness of the price and quality consequences of monopoly airport The AAA’s membership “The process for Virgin Blue to gain
of service monitoring” to promote power, as they are in other sectors,” includes about 280 airports and access to airside services at Sydney
the economically efficient operation A4ANZ said. aerodromes. melbourne airport Airport took almost five years from the
of, and timely investment in, airports “The current regime is clearly application for declaration in October
and related industries; minimise not fit for purpose, neither through 2002, to resolution of the terms of
unnecessary compliance costs; and its coverage of airports nor through access to the airside services in May
facilitate commercially negotiated practical access to remedies when a 2007.”
outcomes in airport operations.” breakdown in negotiations occurs.”
Further, the scope of the inquiry A4ANZ has proposed a model
also includes an examination of where airports and airlines that do not
aeronautical services and facilities reach agreement on a pricing regime
provided by airport operators; during negotiation are able to have a
passenger-related aeronautical decision arbitrated on their behalf.
services and facilities provided Its submission said this was most
by major airline tenants; and the likely to result in genuine commercial
provision and quality of land transport negotiations between airlines and
facilities providing access to the airports to effect fair outcomes for
airports. airport users.
It is the Productivity Commission’s “A pathway to negotiate-arbitrate
first look at airport regulation since would create a credible regulatory
2011. threat and, coupled with information
The AAA, whose membership disclosure and consultation
includes about 280 airports and requirements, would encourage good-
aerodromes and some 120 aviation faith negotiations. It would not, as
stakeholders and organisations, said has been suggested by airports, create
in its submission to the inquiry the instability in the sector.”
current regulatory framework had led A4ANZ said Australia’s current
to better quality of service outcomes, light-handed approach to the
cheaper airfares for passengers and economic regulation of airports
increased discounts to airlines on was based, in part, on the implicit
international charges. assumption that the majority of
It also offered a full-throated Australia’s airports did not have
defence of airport privatisation and significant market power.
the light-handed regulation that has “This can no longer be accepted as
been in place since 2002, when it the case,” it said.
replaced a system of price controls. Under current national
“Despite the recent campaign competition rules, airlines can seek
of disparagement by sections of to have an airport “declared” under
the airline industry, the Australian Part IIIA of the Trade Practices Act,
airports industry is regarded as which provides a right of access to
one of the most customer-focused monopoly services. It also provides
transport and economic and social the Australian Competition and
infrastructure sectors in Australia,” the Consumer Commission (ACCC) with
AAA said. the power to arbitrate in disputes over
access, price and other terms of access
Monopoly power? for airport users.
Air New Zealand, Jetstar, Qantas, In 2002, the then Virgin Blue
Tigerair Australia and Virgin sought to have Sydney Airport
Australia, usually fierce competitors “declared”. The application was later
for supremacy in the skies, formed withdrawn.
their own lobby group Airlines for Virgin Australia, as the airline is
Australia and New Zealand (A4ANZ) now known, said in its submission the
in 2017. current regime had the potential for
A4ANZ has former ACCC chairman significant delays in the resolution of
Graeme Samuel as its inaugural disputes, citing its experience from
chairman and Dr Alison Roberts is its 2002.
chief executive. “While there is a time limit of
Its submission said the current 180 days for the ACCC to determine
regulatory model was “powerless to an access dispute under Part IIIA,
curtail airports’ market power”. it may ‘stop the clock’ in a range
“While airports reasonably of circumstances, including where
expect not to have to operate in the ACCC requests information or
a regulatory environment that is submissions from the parties,” the
overly burdensome or significantly Virgin Australia submission said.
impacts their profitability, so too “Altogether, there is real potential
is it reasonable that consumers are for this process to take four-five years
afforded some protection from the if the process plays out in full.

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