ACCC allows temporary increase in aviation fire fighting charges

The Australian Competition and Consumer Commission will allow Airservices Australia to temporarily increase the prices of its aviation rescue and fire fighting services, while it conducts a comprehensive review of the structure of charging, ACCC Chairman, Mr Graeme Samuel, said today.

Airservices Australia is the monopoly provider of fire fighting and rescue services at Australian airports and is required under the Trade Practices Act 1974 to notify the ACCC of proposed price increases.
"Airservices' proposal, which increases the threshold under which airlines and other air operators are subject to fire fighting charges, addresses some of the ACCC's concerns with the current weight-based system of charges.

"However, it does not appear to address the ACCC's concerns about the efficiency of the structure of charges in the long term".

Mr Samuel said that Airservices Australia needed to undertake a comprehensive review of the structure of charging before introducing long-term prices.

"Allowing this temporary price increase will enable Airservices to recover a larger amount of the costs of providing aviation rescue and fire fighting services while it conducts this comprehensive review", Mr Samuel said.

Background

Airservices Australia is the monopoly provider of en-route air navigation, terminal navigation and aviation rescue and fire-fighting (ARFF) 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 May 2005, the ACCC received a draft price notification from Airservices Australia. This proposal contains increases in prices for ARFF services for customers operating aircraft weighing more than 15.1 tonnes.

Airservices Australia's proposal also involves:

• increasing the threshold under which aircraft are exempt from ARFF charges, from 2.5 tonnes to 5.7 tonnes
• maintaining existing prices from aircraft between 5.7 tonnes and 15.1 tonnes.

Airservices Australia's draft pricing proposal follows the ACCC's 2004 decision in relation to Airservices' long-term pricing proposal (2004-2009) to object to price increases for ARFF services on the basis that the structure of pricing was unlikely to be efficient and should be reviewed before being incorporated into long-term pricing arrangements.

The proposal will enable Airservices Australia to recover a greater amount of the costs of providing the ARFF services while it holds a review process with its customers to consider the structure of pricing for ARFF services to apply in the long term.