Watchdog puts airports on notice over gouging claims

The competition watchdog has put Australia’s airports on notice following claims from airlines of being stung by aggressive fee increases, as the infrastructure operators look to recover ground lost during the pandemic.

Qantas chief executive Alan Joyce on Wednesday claimed that airports were acting “very aggressively to try to recover their losses from the pandemic” by pushing to increase landing and take-off fees.

Airlines have claimed airports are trying to hike up fees to recover profits lost during COVID-19. Credit:James Brickwood

“We’ve had a large regional airport seek to more than double passenger fees, increasing
from $25 per passenger to $55,” Mr Joyce said.

Qantas would not name the airport. Mr Joyce said the airports could hold airlines over a barrel because as “unregulated monopolies... there’s nothing really stopping them charging whatever they like”.

The Australian Competition and Consumer Commission chair Rod Sims said he had heard complaints from airlines about fee increases, and would closely monitor airport pricing as aviation activity ramps up over summer.

“We would be very concerned if the major Australian airports sought to use their monopoly position to charge airlines excessive prices,” Mr Sims said. “This could limit an already vulnerable sector’s ability to recover, and impact on both consumers and the economy.”

Under the federal Aeronautical Pricing Principles framework, airports can increase their airline charges to recover costs and deliver a risk-commensurate return on investment on their facilities.

But the ACCC’s latest quarterly report into the aviation sector, released on Wednesday, said that would not include recovering lost profits.

The Australian Airports Association (AAA) said the claims of gouging were “completely speculative, with no justification, details or examples provided”.

“It is disappointing the ACCC would publish unsubstantiated claims without seeking any input from airports,” AAA CEO James Goodwin said.

Sydney Airport and Melbourne Airport both said they had no intention of increasing fees to recover losses incurred during the pandemic.

The ACCC’s report covers the period in which the Delta wave of COVID-19 sent Sydney and Melbourne back into lockdown, causing airline capacity to drop to 23 per cent of pre-COVID levels in July - down from pandemic highs of 68 per cent in April.

Qantas still controlled more of the overall aviation market than it did before the pandemic (66 per cent in June 2021 versus 61 per cent in June 2019), the report said, although that has fallen back from almost 70 per cent in March 2021, with Virgin Australia growing to 30 per cent and Regional Express (Rex) holding 4 per cent.

The ACCC also said it was continuing to investigate claims from Rex that Qantas is dumping capacity on regional routes in retaliation for the country airline moving into the big city jet market earlier this year.

Qantas launched 13 new regional routes between March and June, for a total of 107, while Virgin has cut its by almost a third to 38 following its collapse into administration and restructure last year.

The ACCC’s report noted a growing gap between the cost of business class airfares on Qantas and Virgin, and said that premium Qantas customers may face higher prices if Virgin continues to shift toward more “value-conscious travellers”.

Overall, the ACCC said airfares continued to trend downwards between July and August, particularly on routes which Rex had entered as a competitor, such as Melbourne-Sydney and Sydney-Gold Coast.

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