Australia’s airports need stricter economic regulation, IATA says
The International Air Transport Association (IATA) on May 31, 2018, has called for economic regulation of airports in Australia to be strengthened amid concerns about the effectiveness of the country’s price monitoring regulatory regime for airport charges. Other topics on their mind? Air traffic management, airport security and the new Western Sydney Airport.
Air travel is cheaper today than it was a decade ago. But we have not seen similar decreases in airport costs. Why? “The difference is that airlines operate in a competitive environment while airports have much more market power,” said Alexandre de Juniac, IATA’s Director General and CEO. “We must find an effective regulatory solution to ensure that Australia is well served with competitive infrastructure,” he added.
In 2017, the Australian Competition and Consumer Commission (ACCC) expressed its concerns about the effectiveness of the country’s price monitoring regulatory regime for airport charges and whether it does enough to constrain the market power of Australia’s main airports. IATA states it agrees with the ACCC’s view.
“At a time when we have an infrastructure crisis globally, Australia has a good story to tell. The plans for a new airport at Badgerys Creek (Western Sydney Airport) are encouraging, as are efforts for cooperation between civil and military authorities to more efficiently use airspace. But we need to take a serious look at airport charges,” de Juniac said in a keynote address to the Australasian Aviation Press Club.
Hence IATA says it is currently working with Airlines for Australia and New Zealand (A4ANZ), an industry group representing airlines based in the two countries, and with the Board of Airline Representatives Australia (BARA), an industry association representing international airlines serving Australia, to provide input to the Productivity Review on Economic Regulation of Airport Services taking place in 2018. Last time an inquiry by the Productivity Commission was undertaken was in 2011.
Security, air traffic management, and the Western Sydney Airport
At the Australasian Aviation Press Club, de Juniac also discussed other topics regarding Australian airports. Australia has embarked on the transformation of air traffic management by launching the OneSKY project, which is set to manage air traffic congestion by taking a holistic view of civil and military capabilities. But IATA’s chief emphasizes the need “to make sure that the expected benefits are realized within an acceptable budget and timeframe,” and that, “there should not be cross-subsidization by civil aircraft operators for military air traffic management.”
IATA welcomed the progress on the Western Sydney Airport, a site for the second Sydney airport located at Badgerys Creek. “It has taken over half a century to get to this point. Looking ahead, the challenge is solid execution,” said de Juniac. “This includes developing a vision on the roles of Badgerys Creek (Western Sydney Airport) and Kingsford-Smith (Sydney Airport) and the connectivity between the two airports,” he added, pointing out that until the – domestic and international – Western Sydney Airport opens in 2026, it is imperative to find ways to use Sydney Airport to its full capabilities as travel demand continues to rise.
As for airport security, the terrorist plot targeting Sydney Airport that was thwarted in July 2017, reminded many that aviation is still a target for terrorists, leading to the launch of a massive security upgrade in Australian airports this year. “We welcome the nearly A$300 million that the federal government has allocated to further improve security at airports. As this is rolled-out, we must carefully ensure that associated cost don’t leak back to the airlines,” said de Juniac.
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