1 May, 2013

FREE Download: Australian Consumer Commission Report Shows Numbers Up, Service Standards Down at Airports

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“The 2011-12 report shows that monitored airports continued to be profitable but the overall quality of service was lower at all airports compared with the previous year,” ACCC Chairman Rod Sims said.

A combination of strong domestic demand from fly in fly out passengers, increased international passengers and higher average prices for some services contributed to higher aeronautical revenues at all monitored airports, except for Adelaide.

Overall ratings for the quality of service at each of the monitored airports decreased in 2011-12. For the first time since 2007-08 no airport achieved an overall rating of at least ‘good’.

“It is apparent that continued growth in passenger numbers at most airports is placing pressure on existing aeronautical infrastructure, contributing to lower service standards. More investment is required to avoid excessive congestion, and ensure that the needs of Australia’s travellers can be adequately accommodated,” Mr Sims said.

In this year’s report, the ACCC has outlined evidence of congestion which in the absence of additional investment may lead to possible capacity constraints in the future. For example, over the past ten years, there has been a falling trend in the proportion of flight movements that are “on-time”.

“Overall, Sydney Airport is perhaps of greatest concern given the pattern of price and earnings increases, lower service standards and low investment levels compared with other airports,” Mr Sims said.

Background

The Australian Competition and Consumer Commission has submitted its annual monitoring report on the performance of Adelaide, Brisbane, Melbourne, Perth and Sydney Airports for 2011-12 to the Assistant Treasurer, the Hon David Bradbury MP. This report provides information on monitored airports including:

• price changes for services provided to airlines (aeronautical charges such as aircraft landing and parking charges) and to consumers (car parking charges)

• revenues, costs and profits, and

• quality of service indicators derived from airlines, passengers and border agencies’ qualitative surveys and other indicators from quantitative measures.

The 2011 Productivity Commission (PC) inquiry into the economic regulation of airport services found that four of the five monitored airports retain sufficient market power to be of policy concern. In 2012, following the PC inquiry, the Australian Government directed the ACCC to monitor the performance of the four largest airports until 2020. The 2011-12 report is the last to include Adelaide Airport.

Sydney Airport

The main demand driver at Sydney Airport during 2011-12 were international passengers which increased by 3.6 per cent while domestic travellers fell 1.7 per cent. Average prices and margins increased. While some passenger survey ratings improved, overall rating for quality of service fell in 2011-12, mainly reflecting lower airline ratings for airside services and facilities – airlines’ ratings for quality of service fell from “satisfactory” to “poor” in 2011‑12. Sydney Airport has been consistently rated lowest among the monitored airports for overall quality of service since 2006‑07. Sydney Airport remains the airport with:

• the highest aeronautical revenue per passenger and the highest aeronautical margin per passenger

• highest car parking revenue per car park space and margin per car park space

• the lowest ranking for overall quality of service.

Brisbane Airport

Domestic and international passenger numbers rose solidly at Brisbane Airport contributing to an overall increase in passenger throughput of 4.6 per cent during 2011-12. Average prices and margins increased while ratings for overall quality of service fell relative to 2010-11. While Brisbane Airport remains the airport with the highest ranking for overall quality of service among monitored airports, in 2011-12 airlines lowered their rating of runway availability from “good” to “poor”.

Perth Airport

Passenger numbers rose strongly during 2011-12: domestic passenger numbers increased 20 per cent while international passengers were 7 per cent higher. On average, prices and margins fell at Perth Airport. The rating for overall quality of service fell also in 2011-12. Airline ratings for the international terminal and airside services and facilities both decreased within the category of “poor”.

Melbourne Airport

Increases in international passengers were the main demand driver at Melbourne Airport during 2011-12: international passenger numbers increased by 7.6 per cent while domestic numbers fell 2.0 per cent. Average prices increased but average margins fell in 2011-12. While Melbourne Airport’s overall quality of service ratings fell, some airline ratings increased slightly compared to 2010-11. Melbourne Airport continues to be the airport with:

• the highest level of car parking revenues

• the highest proportion of total revenues from car parking activities

• the third highest rating for overall quality of service.

Adelaide Airport

The cessation of Tiger Airways and industrial disputes at Qantas contributed to Adelaide Airport recording decreases in passenger numbers, average revenues and average margins during 2011-12. Adelaide Airport’s overall quality of service ratings continued to be rated the second highest of all monitored airports. This is the last year that Adelaide Airport will be monitored by the ACCC.

The full report is available by clicking here.