The Australian Competition and Consumer Commission has objected to a proposal by Sydney Airport to increase charges for regional airlines that serve passengers travelling within New South Wales.
The airport wanted to raise charges for the provision of terminal, check-in, passenger security and bag screening, runways and apron parking services to regional airlines by up to 2.9% from 23 October.
"Although Sydney Airport's charges for regional airlines have not increased since 2001, there has been strong growth in demand, particularly in the number of passengers. This has had the effect of increasing Sydney Airport's revenues," says the ACCC's chairman Graeme Samuel.
"Sydney Airport has not satisfied the ACCC that the costs of providing services to regional airlines have increased to the extent that a price increase is required."
Considering Sydney Airport's claims that the proposed price increases were required to signal efficient use of scarce capacity, Samuel says: "While the ACCC recognises that this is an important issue, Sydney Airport did not demonstrate the extent of such scarcity or how the proposed prices would lead to more efficient use."
The CEO of Sydney Airport, Russell Balding, however retorts that the proposed increase of 2.9% was significantly less than the 28.9% increase in the consumer price index since 2001. After adjusting for inflation, regional aeronautical fees at Sydney Airport have fallen by 20% since 2001, he adds.
"Since 2001 a host of costs have increased, which is why an increase was sought. Sydney Airport felt it fair and reasonable to seek a modest increase given that regional fees had not increased since 2001," says Balding.
"The failure of the regulatory system to deliver a fee increase after 10 years is disappointing and difficult to comprehend, particularly given that the increase sought was so far below the CPI."
Balding adds that the airport will continue to work with airlines to expand the route network available for passengers to and from Sydney Airport despite the ruling.
"Since the proposed increases were first announced in June, Brindabella Airlines has announced a new service to Cobar and Aeropelican has announced that it will be expanding its Snowy Mountains service to an all year schedule," he says.
"Sydney Airport is a very attractive airport for regional passengers, offering a good location conveniently close to the heart of Sydney, a broad range of connections to other regional, domestic and international destinations, and charges which are considerably cheaper than those at most major regional airports.
Source: Air Transport Intelligence news
