SYDNEY ON THE GRAVY TRAIN IN AIRPORT STAKES
Written on the 23 March 2016 by Nick Nichols
A LACK of competition is reaping big rewards for Australia's major airports, and Sydney has been singled out as a master of getting more bang for its buck from the travelling public.
The Australian Competition and Consumer Commission has found that Sydney Airport enjoyed the fattest profit margin from group operations, but Melbourne Airport managed the biggest earnings of any airport from its car park operations.
But in a major slap on the wrists, the consumer watchdog says the increased take hasn't translated into an increase in service by the airports.
It also says the federal government has missed an opportunity to create more competition in the Sydney market by granting Sydney Airport Ltd (ASX:SYD) first right of refusal to operate the city's next major airport at Badgerys Creek.
The ACCC's annual Airport Monitoring Report for 2014-15 has revealed profit margins across parking facilities at Brisbane, Melbourne, Perth and Sydney airports ranged from a low of 63.7c in the dollar to 73.2c. Perth's car park margins were the lowest and Melbourne's were the highest.
However, from a group perspective, including aeronautical revenue, Sydney Airport is taking a bigger share of the travelling pie with a margin of 50.1c in the dollar. This compares with Perth at the lower end of the scale at 40.2c.
The ACCC says Sydney Airport's figure is the highest recorded by an airport over the10 years that it has been collating the data.
"The high profit margins of the airports indicate that they do not face much competitive pressure," says ACCC chairman Rod Sims.
Simms says that while more travelers are taking advantage of discounts through online booking for carparks, he says this may be a form of 'price discrimination'.
"The ACCC found that consumers parking at the airports could save up to 66.5 per cent for longer durations by booking online," he says.
The ACCC says the airport rail links at Brisbane and Sydney appear to do little to ease the cost of parking, but instead compete with other modes of transport such as buses and taxis.
While the ACCC offers little comfort on car park pricing, it does take a swipe at the lack of improvement in services at Australia's airports.
It has found Brisbane Airport offers the highest quality of service of the four that it monitors annually, while cash cow Sydney ranks as 'satisfactory' along with Melbourne.
The ratings are compiled through feedback from airlines and passengers.
The ACCC says service levels may improve through new capital works programs undertaken at Melbourne, Brisbane and Perth.
These include a new runway for Brisbane, a new domestic terminal for Melbourne and new domestic and international facilities at Perth.
"Although airport investment tends to be lumpy in nature, the record levels of investment made by Melbourne, Brisbane, and Perth in 2014-15 will possibly drive welcome service improvements for passengers," says Sims.
"There is also some optimism regarding better quality of service at Sydney Airport in future, which agreed to a formalised service level agreement with international airlines."
The biggest tick from the ACCC was for a rise in on-time flights in 2014-15, which was at the highest since 2006-07.
Across the four airports, passenger numbers rose 3.7 per cent for international and 0.7 per cent for domestic. Perth was the major drag on the numbers dues to the resources downturn, leading to a 1 per cent fall in passenger numbers in the west.
Author: Nick Nichols