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Discussion paper

Economic regulation of airports: issues paper

Airports Privatisation Australia
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apo-nid181641.pdf 499.76 KB

Airports operated by the Federal Airports Corporation were privatised during the period 1997–2002. Whilst privatisation has resulted in significant airport infrastructure investments at major airports, successive governments have asked the Productivity Commission (PC) to undertake periodic reviews to determine whether the economic regulatory oversight of these airports remain in line with community and industry expectations.

Prior to 1997, airport pricing and conditions were set by the government. For the five years 1997–2002, some of these airports were subject to a price capping regime.

In 2002 a Commission inquiry into the price regulation of airport services found concerns regarding the significant market power held by some major airports did not warrant the strict regulation imposed, and indeed, believed it was negatively affecting productivity and airport investment. The price capping regime was replaced with a price and quality of service monitoring regime in which pricing terms and conditions became subject to commercial negotiations between the airports and the airlines, monitored annually by the Australian Competition and Consumer Commission (ACCC).

The 2006 Commission inquiry into price regulation of airport services examined the price monitoring regime and recommended the arrangements continue for Adelaide, Brisbane, Perth and Sydney airports. In 2008 the monitoring regime was extended to include prices, costs and profits relating to car parking at these five major airports. In 2009, the Government introduced a second tier self-administered price and quality of service monitoring and reporting regime for Canberra, Darwin, Gold Coast and Hobart airports.

The 2011 Commission inquiry examined the effectiveness and efficiency of the economic regulation and quality of service monitoring regime for airports and found that the regulatory oversight had been effective and should be maintained for Brisbane, Melbourne, Perth and Sydney airports, with a further review to be conducted in 2018.

The purpose of this Inquiry is to determine the effectiveness and efficiency of the current arrangements and determine whether they remain appropriate.

Initial submissions are due by Monday 3 September 2018.


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