Airport regulation

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We have had light handed regulation of airports for about a decade. This has allowed airports significant freedom to set ‘landside’ charges but not ‘airside’ charges. Given that ‘landside’ services (car parking for example) are complements for ‘airside’ services (e.g. landing fees for airlines) it is unsurprising that airports have used their market power to push up landside fees. This is a simple way to increase profits given the stronger regulatory constraints on ‘airside’ fees.

Put simply, if you can’t charge customers a monopoly price directly when they fly in and out of your airport, charge them a monopoly price indirectly via other services customers tend to use when flying in or out of your airport.

This was all predictable. So high parking charges, high retail rents, high charges for taxis to rank, and so on should not surprise us. They are a consequence of our regulatory regime.

The ACCC has again called for a review of this regulation. This is not the first such call – but let’s hope this time someone is listening.

2 Responses to "Airport regulation"
  1. Another review?  If the ACCC won’t accept the Productivity Commission saying there’s no problem here, whose view will it accept?
    If the ACCC thinks there’s monopoly pricing going on, where is its section 46 case?  Where is its application for declaration?  I thought Sims had said he was in favour of testing the law before running to government for changes.  That didn’t last long!

  2. what really annoys me about airport parking is that the people who make outrageous profits the longer I leave my car in the car park are the same people who save money on baggage handling staff.  It’s astonishing that they get away with taking up to 20 minutes longer to get bags to the carousel than it takes my 85-year-old mother to get off the plane and walk slowly, usually via a toilet stop, to the same place!

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