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Australia’s four major airports are making money again as the recovery from COVID-19 continues.
In its latest Airport Monitoring Report released this week, the ACCC found that Sydney, Melbourne, Brisbane and Perth Airports all returned to profit in the 2022–23 financial year, with boosts to aeronautical revenues as well as income from car parking and landside access.
All four airports had an overall rating of “good” in 2022–23, the first time rating data – including passenger and airline surveys, and objective performance measures – were collected since the pandemic.
“Australia’s four largest airports reported a significant increase in aeronautical revenues and a return to aeronautical operating profits in 2022-23, as interstate and international travel restrictions ended and people returned to the sky,” said ACCC commissioner Anna Brakey.
“The airports stayed open during the pandemic and continued to incur some aeronautical expenses, without their usual level of accompanying revenues. As passengers returned in 2022-23, aeronautical revenues increased more than expenses, which lifted profit margins closer to pre-pandemic levels.”
According to the ACCC’s figures, Perth Airport led the pack with an aeronautical operating profit margin of 34.6 per cent in 2022–23, followed by Sydney Airport at 29.1 per cent, Brisbane Airport at 28.8 per cent, and Melbourne Airport at 22.9 per cent. Perth was above 2018–19 margins, though the other three remained below pre-pandemic levels.
The consumer watchdog has recommended in its submission to the government’s Aviation White Paper that commercial arbitration should be available to resolve airport charge disputes between airports and airlines.
“We believe there needs to be greater requirements on airports to provide information to airlines, to address the imbalance of power in commercial negotiations,” said Brakey.
“We have also recommended the Aeronautical Pricing Principles be reviewed, including to make them mandatory and enforceable.”
Airline lobby group Airlines for Australia and New Zealand (A4ANZ) has jumped on the report, saying it shows reform is needed to correct a “power imbalance” between airports and airlines.
A4ANZ’s chairman, Professor Graeme Samuel, said the current monitoring-based regulatory regime for airports is “not fit for purpose”.
“This is consistent with the experiences of A4ANZ member airlines over many years. The government’s Green Paper asked the question of whether the Aeronautical Pricing Principles ought to be mandated. The answer – according to the ACCC – is clearly yes,” Samuel said.
“When negotiations break down – with disputes over prices and/or services – there is simply no mechanism for airlines to enforce the clause in the Aeronautical Pricing Principles for referring disputes to independent commercial mediation or arbitration.
“This leaves litigation as the only avenue for disputes to be resolved, which can take years to progress and cost millions of dollars. The important thing to note here is that there is a negative impact on consumer outcomes while such commercial relationships remain fractured.”
The Australian Airports Association (AAA), however, disputed the idea that airport charges are too high, with CEO James Goodwin pointing to the COVID-19 recovery as a reason for increased aeronautical revenues.
“The rebound in airport revenues simply reflects the increased number of travellers, with the reporting period the first without COVID border or travel restrictions,” he said.
“The report was during a period of high airfares but it is important to note airport charges remain a significantly and persistently low proportion of the airfares, only making up around 4.8% of the total cost of an airfare or less than $20.
“Calls to mandate the Aeronautical Pricing Principles are unnecessary with the report showing that airports are operating fairly, not holding back aviation growth nor contributing to high passenger airfares.”
Australia’s two major carriers last year criticised airport monopolies in respective responses to the Aviation Green Paper, with Qantas branding them “effectively unregulated monopoly infrastructure” and Virgin saying they impose “inefficient costs on the travelling public”.
A recent report from former ACCC chair Allan Fels also touched on the issue of airport monopolies, with Fels writing there is a “very strong case” for the introduction of price regulation of airports.
“In the area of airport charges, the power of regulation should be applied. This report also found the need for reviews of international and domestic restrictions on competition,” he said.
