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Airport Profits Continue To Grow in Australia

Chennai:

Port Wings News Network:

Brisbane, Melbourne, Perth and Sydney airports all significantly increased their profits from aeronautical activities in 2016-17, with profits per passenger also rising, according to the ACCC’s annual Airport Monitoring Report.

The four airports earned a combined $757.6 million in operating profits (EBITA) from aeronautical activities in 2016-17, up 9.9 per cent in real terms from the previous year. Sydney Airport alone earned $360.8 million.

“It is not surprising that the airports are so profitable, given that they face little competitive pressure and no price regulation,” ACCC Chairman Rod Sims said.

Sydney Airport earned $18.3 per passenger in aeronautical revenue (up 4.4 per cent) while revenue per passenger at Perth Airport grew by 7.2 per cent to $15.8.

“Profits per passenger have also risen at each of the four airports and travellers are paying for this through higher ticket prices,” Mr Sims said.

OVERALL PASSENGER NUMBERS

“We remain concerned that the current regulatory regime which is limited to monitoring the covered airports, doesn’t constrain the market power of four of Australia’s major airports. Unconstrained monopolies often have an incentive and ability to charge excessive prices while lacking strong incentives to improve services.”

While overall passenger numbers across the four airports grew by three per cent last financial year, international passengers remain the driving force in growing passenger numbers, increasing by 6.7 per cent, compared with just 0.9 per cent growth for domestic passengers.

“The four airports are handling 30 million passengers a year more today than they did a decade ago,” Mr Sims said.

“But we are pleased the monitored airports appear to be dealing with the challenge of congestion, and three of the four airports are in the process of either constructing or planning a new runway.”

Perth and Brisbane airports maintained their ‘good’ rating for overall service quality on aeronautical and car parking operations, based on data analysis and user feedback. Melbourne and Sydney were rated at the top end of ‘satisfactory’.

Perth Airport overtook Brisbane Airport with the highest overall quality rating of the four airports.

“It is clear that Perth Airport’s investment program over the past few years has significantly improved the quality of the airport in the eyes of both airlines and passengers,” Mr Sims said.

The Australian government has directed the ACCC to monitor the performance of the four largest airports until 2020. It is required to monitor both aeronautical and car parking activities. It is required to consider prices, costs, profits and quality of service.

The ACCC’s monitoring role does not include the power to intervene in the airports’ setting of prices for parking and aeronautical activities. However, the ACCC is required to assess any proposal by Sydney Airport to raise charges for regional air services.

The ACCC derives its quality of service information from responses to surveys of passengers and airlines, and from objective data from the monitored airports. The ‘overall quality of service’ measure is calculated as an average of these ratings.

Price and quality comparisons between airports should be treated with some caution because results can be affected by factors such as different terminal configurations, domestic/international passenger mix, and different approaches to valuing assets.

The ACCC’s monitoring role for aeronautical services relates only to those terminals that are owned and directly operated by the airports. Domestic terminals that are leased to and operated by domestic airlines are not subject to the ACCC’s monitoring. These terminals are the Qantas domestic terminals at Melbourne, Brisbane and Perth airports, as well as the Virgin Australia terminal at Brisbane Airport.

ACCC Chairman Rod Sims

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