The ACCC has issued its price monitoring and financial report 2003–04 for the seven price-monitored airports—Adelaide, Brisbane, Canberra, Darwin, Melbourne, Perth and Sydney—reporting on the prices, costs and profits related to the supply of aeronautical services and aeronautical-related services.
The report shows that airport activity levels at all airports, as measured by passenger volumes, increased in 2003–04. Passenger volumes declined in 2001–02 following the collapse of Ansett, the SARS outbreak and the September 2001 terrorist attacks, but have since recovered with most airports now exceeding 2000–01 passenger volumes.
Since 2001–02 total aeronautical revenue generated by the price-monitored airports has increased by 49 per cent to $582 million, while at the individual airports increases ranged from 24 per cent to 133 per cent. Prices (as measured by aeronautical revenue per passenger) continued to increase in 2003–04 for most price-monitored airports, but less than last year. Since 2000–01 aeronautical revenue per passenger increased by between 46 per cent and 201 per cent and in 2003–04, the change in aeronautical revenue per passenger ranged from reductions of almost 2 per cent to increases of 16 per cent.
In 2003–04 aeronautical operating expenses per passenger generally fell, with changes ranging from increases of 1 per cent to reductions of 18 per cent. This largely reflects fixed overhead costs and increased traffic. Aeronautical operating margins per passenger increased at all airports in 2003–04 and ranged from $1.37 to $4.33 per passenger.
Returns on tangible non-current assets generally increased in 2003–04 at each airport and ranged from 3 per cent to 15 per cent for aeronautical services and from 5 per cent to 22 per cent for the total airport. However, these returns for some airports were significantly reduced in several periods by the effect of increases in asset bases due to revaluations.
The ACCC’s role of price monitoring is complementary to its quality of service monitoring. The ACCC released its quality of service monitoring report in December 2004.
On 14 December 2004 the joint venture participants in the PNG gas project applied to the ACCC for authorisation to negotiate the common terms and conditions (including price) under which gas produced by the project will be offered for sale (joint marketing).
The PNG gas project involves the development of petroleum fields in the Southern Highlands of PNG and the marketing of natural gas produced from those fields to Australian customers. The gas will be transported to customers through a pipeline from PNG to Queensland.
In addition to seeking authorisation to jointly market their gas, the applicants have proposed that the authorisation apply for the life of the project (estimated at 30 years) and also cover future participants in the project.
On 23 December 2004 the ACCC released an issues paper calling for submissions from interested parties. Submissions were due by 15 February 2005 and the ACCC has received eight submissions. The ACCC is currently preparing its draft determination.
On 5 November 2004 VENCorp applied to the ACCC proposing six minor variations to the authorisation of the Victorian gas market and system operations rules (MSO rules).
VENCorp stated that the proposed minor variations to the MSO rules provide for:
restructuring of provisions about compensation for directions to inject gas and/or the application of an administered price cap under market suspension, force majeure, and IT failure preventing normal determination of market price
amendments to the process for raising disputes on settlement outcomes and revising settlement statements to better manage billing periods.
On 16 November 2004 the ACCC sent out a consultation notice to interested parties inviting comments on the proposed variations to the MSO rules. Submissions were due by 30 November 2004. No submissions were received.
The ACCC has considered the current application for minor variation of these authorisations and is satisfied that the proposed rule amendments would not involve a material change in the effect of the authorisations.
The ACCC agrees with VENCorp’s argument that the proposed rule changes would not reduce the net benefit to the public caused by the authorisations, and would provide for enhanced efficiency and effectiveness of the application of MSO rules in the Victorian gas market.
The ACCC issued a final determination on 9 February 2005 granting authorisation.
On 5 November 2004 VENCorp applied to revise its access arrangement for the principal transmission system in Victoria. The proposed revisions relate to minor variations to the MSO rules which are incorporated into VENCorp’s access arrangement.
On 16 November 2004 the ACCC sent out a consultation notice to interested parties inviting comments on the proposed variations to VENCorp’s access arrangements. Submissions were due by 30 November 2004. No submissions were received.
The ACCC has concluded that the proposed revisions are not material to VENCorp’s access arrangement, and will not result in changes to the reference tariffs or to the services that are reference services.
The ACCC believes these rule amendments improve the efficiency and effectiveness of the application of the MSO rules of the Victorian gas market.
The ACCC issued a final decision on 9 February 2005 approving revision to the access arrangement.
On 19 January 2005 Alinta EA Pty Ltd submitted revisions to the access arrangement covering the Queensland gas pipeline (also known as the Wallumbilla to Gladstone via Rockhampton pipeline). Alinta as the owner and operator of this pipeline proposed to revise the access arrangement to reflect the present service provider arrangements by deleting references to the previous owner (Duke Energy).
The ACCC approved the proposed revisions to the access arrangement on 2 February 2005.
The ACCC has reached an agreement with Telstra resolving the matters raised about the competition notice issued on 19 March 2004.
Following the ACCC’s investigation into Telstra’s pricing of high-speed internet services, Telstra has reduced its wholesale DSL pricing over a period of time with the latest reduction taking effect from 1 January 2005. Telstra has also agreed to rebate $6.5 million to its affected wholesale customers.
The ACCC considers that efficient wholesale customers are now no longer hindered from competing with Telstra BigPond’s ADSL services on the basis of Telstra’s reduced wholesale DSL pricing. Since the ACCC commenced its investigation on 16 February 2004 Telstra has reduced its metropolitan list price for wholesale 256/64kbps access by approximately 30 per cent, while 512/128kbps and 1500/256kbps charges have been reduced by over 30 per cent. Telstra has also collapsed its regional 1 and regional 2 wholesale DSL prices, thereby providing all DSL services at metropolitan rates. The ACCC believes this will increase competition between broadband providers in regional areas.
Telstra has acknowledged that its February 2004 pricing changes for its retail broadband services may have adversely affected the competitive position of its wholesale broadband customers. To meet ACCC concerns Telstra has offered its wholesale customers reduced wholesale pricing and rebates.
The ACCC maintains that Telstra’s conduct may have breached s. 151AK of the Trade Practices Act.
The ACCC’s decision to accept the series of measures offered by Telstra to resolve this matter was reached after obtaining senior legal advice and taking account of evidence received from a number of Telstra’s wholesale customers, with which the ACCC has consulted extensively about the effect of the conduct described in the competition notice.
An important part of the resolution of this matter is the introduction of a safeguard mechanism to prevent the recurrence of similar conduct in the future. The ACCC has put in place a formal arrangement which obliges Telstra to advise the ACCC up to 15 working days in advance of future retail broadband prices and specials. The notification protocol should provide the ACCC with sufficient notice of future BigPond broadband price changes to conduct a preliminary assessment of their likely effect on competition and raise any concerns with Telstra. A copy of the notification protocol will be available on the ACCC’s website shortly.
In conjunction with this arrangement, the ACCC and Telstra, using independent expert advice, are engaging in a process for deciding the appropriate retail and wholesale price relativities in the future to avoid any recurrence of the conduct raised in the competition notice.
In light of the above, the ACCC does not propose to take any further action in relation to the competition notice.
