ACCC approves long-term pricing proposal for aviation services and a review of airport firefighting services

The Australian Competition and Consumer Commission today approved a long-term, five year approach to pricing from Airservices Australia for its air navigation services. Airservices' prices for its firefighting services will also be maintained at current levels while Airservices conducts a review of pricing arrangements for these services.

"This is the first time Airservices has proposed a long-term pricing arrangement and the ACCC has welcomed this approach", ACCC Chairman, Mr Graeme Samuel, said.

"The ACCC believes a longer-term approach to pricing will provide real benefits to the industry", he said.  "These benefits include increased certainty about Airservices' future pricing of its services as well as providing the opportunity for a better sharing of risks between Airservices and its stakeholders".

However the ACCC has some concerns about Airservices' current approach to pricing of firefighting services. In particular it is concerned that these arrangements may not always lead to efficient or equitable outcomes for specific user groups including some aircraft operators located at airports where new firefighting services are to be established.

"The ACCC welcomes Airservices' approach to consult with its stakeholders to review the structure of its firefighting charges before entering into long-term pricing arrangements for these firefighting charges".

A copy of the ACCC's decision will be available on the ACCC's website.

Background

Airservices Australia is the monopoly provider of en-route air navigation, terminal navigation and aviation rescue and firefighting services in Australia. These services are declared under Part VIIA of the Trade Practices Act 1974, which means that Airservices must notify the ACCC when it wishes to increases prices. The ACCC may object or not object to the proposed increases.

On 5 November 2004, the ACCC made a draft decision in relation to a five-year pricing proposal from Airservices. In that decision the ACCC agreed to proposed changes in terminal navigation and en route charges but did not accept Airservices' proposals for fire fighting services.

On 29 November 2004, the ACCC received a five-year pricing proposal from Airservices. This pricing proposal contained recommendations for increases in the prices of terminal navigation and decreases in the prices charged for en route navigation services. The proposal also sought maintenance of current pricing levels for firefighting services.