A number of airlines and airport retailers are calling on the Australian government to act on recommendations made by the Australian Competition & Consumer Commission (ACCC) to improve consumer protections at airports. This is because Australia’s airports are the only privatised infrastructure asses in the country not properly regulated for consumers.
“For decades now, Australian travellers have felt the impact of monopoly pricing at our airports, and the ACCC has repeatedly said that we have a problem. But while other sectors have caught up with regulatory regimes that better reflect consumer interests and expectations, the Productivity Commission (PC) – inexplicably – seems intent on retaining the status quo for airports. In practice, this means inefficient, protracted negotiations, disputes that end up in court, costing millions of dollars, and creating uncertainty over investment. The system has passed its use-by date; it’s neither efficient nor effective”, says Professor Graeme Samuel, a former chairmen of the ACCC.
Retailers that are in airports are also seeking a better deal. The executive director of the Australian Retail Association, Russell Zimmerman, said: “With current economic conditions and retail spending, it is hardly the time for the government to endorse the Productivity Commission’s recommendation that permits airports to continue to charge monopoly rents unchecked. Compared to traditional shopping centres, there is a lack of transparency on lease terms at some airports, and airport rents are much higher. But there is no scope for negotiation on terms and conditions, and many airport lease clauses prohibit retailers from speaking out. There needs to be a system to hold the monopolists to account, just like there is in other sectors.
A large part of the problem is that air travel for many Australians is not an option but a requirement due to the size of the country and many publicly owned airports are seen as cash generators for the government that owns them rather than as an essential community transport service.
For its part, the International Air Transport Association (IATA) is urging the Australian government to take the necessary and “long overdue steps to strengthen the economic regulation of services provided by airports”.
There is currently a monopoly on retail space within airport – with much of the cost passed on to consumers
“It is a fact that the current light-handed regime of economic regulation is ineffective in protecting the interests of airlines, passengers, and the people and businesses accessing the terminal precinct. With the aviation industry being an important economic contributor, supporting over 700,000 Australian jobs, and contributing US$69 billion or 5.5 percent of the country’s GDP, the Australian government needs to put in place policies that support the sustainable development of the industry and its contributions to the Australian economy,” said Conrad Clifford, IATA’s regional vice president for Asia-Pacific.
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