Airline Groups Blast Australian Airport Economic Report

 - October 23, 2019, 9:54 AM

A final economic report recently made public by Australia’s Productivity Commission (PC) has drawn fire from the International Air Transport Association (IATA) as well the industry group Airlines for Australia and New Zealand (A4ANZ) for failing to stem monopolistic behaviors at the country’s airports. In two separate statements released Wednesday, both industry bodies urged the government to challenge the PC’s findings.

“We have consistently highlighted throughout the inquiry period the serious concerns of airlines and 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 airport precinct,” said Matteo Zanarini, IATA’s area manager for the Southwest Pacific. “The conclusion of PC’s final report is wrong. The existing regulatory regime is ineffective. Change is urgently needed.”

The comments come a day after the commission released its "Economic Regulations of Airports" inquiry report, which examines Australia’s current regulatory regime and barriers posed to airport operators when exercising market power.

“The Australian Government should continue with the current light-handed approach to economic regulation,” the report said. “Significant changes to the regulatory regime are not justified at this time, but the monitoring regime should be enhanced to increase the scrutiny of airport operators’ behavior and ensure that any airport that exercises its market power will be more readily detected.”

However, If the government adopted the PC’s findings, airports would be able to make unreasonable demands in their negotiations with airlines and airport users and enjoy a greater monopoly, argued A4ANZ chairman Graeme Samuel.

“This means more productivity-sapping disputes, and more cases of expensive, inefficient, and ineffective litigation through the courts,” he said. “This is not good for investment, innovation, or competition, and it means that consumers and the economy lose out. It’s a problem that isn’t going away.”

Meanwhile, IATA blasted the report, calling Australia’s existing regulatory regime not “Fit-For-Purpose,” and criticized the current monitoring regime for failing to address remedial action over monopolistic behavior as well as for falling short on delivering government outcomes. IATA also said PC incorrectly asserted that airlines have “countervailing power” at Australia’s key airports—Brisbane, Melbourne, Perth, and Sydney—and found a lack of effective market competition in jet fuel supply.

“We know that, like the majority of Australians, the government [is] convinced there is a problem with our monopoly airports. We believe the government will act to address this and await their response to this report,” said Samuel.