SM4 Pirate
16th Aug 2006, 21:45
http://theaustralian.news.com.au/story/0,20867,20152882-643,00.html
Regulate airports, cut fees: IATA call
Steve Creedy, Aviation writer
August 17, 2006
AUSTRALIA'S policy of light-handed regulation has been slammed as an embarrassment that has allowed its privatised airports to take advantage of their monopoly positions.
International Air Transport Association director general Giovanni Bisignani said he would be calling on the Howard Government to re-regulate airports when he speaks to Transport Minister Warren Truss over the next few days.
"We want a set of rules," he said.
The IATA chief said airports could be overseen by a regulator, as occurs in Britain, or a benchmarking system similar to that proposed in Europe.
He warned that leaving monopoly providers to operate under market forces did not work, and pointed to increases in charges at Australian airports of 14 to 48 per cent over the past four years.
Singling out Macquarie Airports-owned Sydney Airport as a major offender, he said its margin in earnings before interest and tax was 57 per cent, among the highest in the world.
"If you see what are the margins of the most profitable, successful companies in the world, you see they are all far behind these numbers. Exxon-Mobil, at a moment where the oil industry is making a lot of profit, has EBIT of 16 per cent (and) General Electric, the most successful company in the world for many years, 15 per cent."
Mr Bisignani said even Microsoft, a symbol of success and profitability, had a lower EBIT margin than Sydney Airport.
"Clearly, there is something wrong here in Australia."
Light-handed regulation removed an annual cap on aeronautical charges - fees for runways, taxiways, aprons and terminals - imposed on 11 of the nation's biggest airports.
It allowed airports to set their own prices but gave the Australian Competition and Consumer Commission a monitoring role, with the threat that price controls could be reimposed if the airports abused their monopoly.
The ACCC found in February that aeronautical revenue received by airports from each passenger rose by as much as 76 per cent for the first three years of light-handed regulation, while overall revenues from aeronautical services rose between 37 per cent and 163 per cent.
The report and claims by airlines of price gouging prompted the federal Government to bring forward a Productivity Commission investigation into whether price controls should be reimposed.
Sydney Airport yesterday rejected Mr Bisignani's claim, saying aeronautical charges had remained stable for five years and it was proposing a plan that would keep them that way for another five years.
"Profit growth at Sydney Airport has been driven by efficiencies and expanding commercial businesses," a spokesman said.
Mr Bisignani said airlines still faced tough times and $US3 billion ($3.93 billion) in global losses this year, down slightly from $US3.2 billion in 2005.
This was despite average falls across IATA's 270 member airlines of 13 per cent in non-fuel costs, 33 per cent in labour costs and 10 per cent in distribution costs as well as 5 per cent rise in fuel efficiency. But fuel remained a wild card with the global bill this year expected to be $US110 billion, up from $US91 billion last year.
Now was the whole point of degregulation to improve efficiency and reduce fees by increasing competition… It’s funny though, people going to Sydney want to actually fly to Sydney… So who exactly is SACL competing with?
I suspect that if you did a similar thing with oh say Airservices Australia (which many here advocate) there would be very similar results, and why wouldn’t it, private companies try to maximize their profitability…
Regulate airports, cut fees: IATA call
Steve Creedy, Aviation writer
August 17, 2006
AUSTRALIA'S policy of light-handed regulation has been slammed as an embarrassment that has allowed its privatised airports to take advantage of their monopoly positions.
International Air Transport Association director general Giovanni Bisignani said he would be calling on the Howard Government to re-regulate airports when he speaks to Transport Minister Warren Truss over the next few days.
"We want a set of rules," he said.
The IATA chief said airports could be overseen by a regulator, as occurs in Britain, or a benchmarking system similar to that proposed in Europe.
He warned that leaving monopoly providers to operate under market forces did not work, and pointed to increases in charges at Australian airports of 14 to 48 per cent over the past four years.
Singling out Macquarie Airports-owned Sydney Airport as a major offender, he said its margin in earnings before interest and tax was 57 per cent, among the highest in the world.
"If you see what are the margins of the most profitable, successful companies in the world, you see they are all far behind these numbers. Exxon-Mobil, at a moment where the oil industry is making a lot of profit, has EBIT of 16 per cent (and) General Electric, the most successful company in the world for many years, 15 per cent."
Mr Bisignani said even Microsoft, a symbol of success and profitability, had a lower EBIT margin than Sydney Airport.
"Clearly, there is something wrong here in Australia."
Light-handed regulation removed an annual cap on aeronautical charges - fees for runways, taxiways, aprons and terminals - imposed on 11 of the nation's biggest airports.
It allowed airports to set their own prices but gave the Australian Competition and Consumer Commission a monitoring role, with the threat that price controls could be reimposed if the airports abused their monopoly.
The ACCC found in February that aeronautical revenue received by airports from each passenger rose by as much as 76 per cent for the first three years of light-handed regulation, while overall revenues from aeronautical services rose between 37 per cent and 163 per cent.
The report and claims by airlines of price gouging prompted the federal Government to bring forward a Productivity Commission investigation into whether price controls should be reimposed.
Sydney Airport yesterday rejected Mr Bisignani's claim, saying aeronautical charges had remained stable for five years and it was proposing a plan that would keep them that way for another five years.
"Profit growth at Sydney Airport has been driven by efficiencies and expanding commercial businesses," a spokesman said.
Mr Bisignani said airlines still faced tough times and $US3 billion ($3.93 billion) in global losses this year, down slightly from $US3.2 billion in 2005.
This was despite average falls across IATA's 270 member airlines of 13 per cent in non-fuel costs, 33 per cent in labour costs and 10 per cent in distribution costs as well as 5 per cent rise in fuel efficiency. But fuel remained a wild card with the global bill this year expected to be $US110 billion, up from $US91 billion last year.
Now was the whole point of degregulation to improve efficiency and reduce fees by increasing competition… It’s funny though, people going to Sydney want to actually fly to Sydney… So who exactly is SACL competing with?
I suspect that if you did a similar thing with oh say Airservices Australia (which many here advocate) there would be very similar results, and why wouldn’t it, private companies try to maximize their profitability…