Airlines lobby for airport fees shake-up

Australia has launched a review of its so-called "light-handed" regulation of airport pricing, while carriers in New Zealand are calling for a "regime change". A war of words has erupted in both countries as airlines press lawmakers to reimpose price controls that were dropped during or after airport privatisation. Airports defend the status quo.

Australian airports were under price caps for their first five years after privatisation, but the government dropped those caps four years ago in favour of its light-handed approach, which only consists of an annual report on airport charges. Predictably, airlines argue that this gives airports a free hand to charge whatever they want after going through the charade of consulting with the airlines. The opposition in parliament claims this has allowed airports to enjoy "a blatant abuse of power".

The only exception to this approach came in a lawsuit last year where Virgin Blue convinced a tribunal to declare that Sydney airport was maintaining a monopoly. As a result, the competition commission may now step in as referee if Sydney and the airlines reach a deadlock over fees. The Australian Office of Transport minister Warren Truss said he did not favour this ruling.

The light-handed approach is due for review next year and the government has directed a commission to conduct a formal inquiry into how well it is working and whether it should be replaced by something else. Truss warns airports that the government will not support any "windfall gains". Australia's privatised airports insist the current system works well and this arrangement should be made permanent. They have attracted the investment needed for capital improvements while keeping prices well within global norms, they argue. For example, Sydney's fees, according to the airports, rank only the 16th most expensive in the world.

Australian carriers have a different view. As Rex chief executive Geoff Breust says: "The big airports are monopoly service providers and the light-handed approach simply doesn't work." He points out most airport infrastructure was handed over free of charge.

Airlines serving New Zealand have also declared war. Air New Zealand says it is "shocked" at fee increases Auckland airport is proposing. New Zealand's carriers are asking the transport minister to launch a review of legislation that removed airport price controls.

Stewart Milne, executive director of the board of airline representatives of New Zealand, argues that airports were subject to local government oversight until they were privatised 15 years ago. Now, Milne claims, they set charges "as they think fit". ■

Source: Airline Business