ACCC draft decision on domestic terminal access at Melbourne Airport

Access to domestic terminals at Melbourne Airport should not be regulated by the Australian Competition and Consumer Commission, ACCC Acting Chairman, Mr Rod Shogren, announced today.

"Virgin Blue asked the ACCC to determine that the new Domestic Express Terminal at Melbourne Airport is covered by the access regime. Virgin Blue is already using the terminal but has not reached a long term agreement on terms of access.

"In a draft decision issued today, the ACCC notes that access regulation would give businesses wanting to compete in related markets the right to negotiate to use the facility on reasonable terms. The regime also gives a right to arbitration by the ACCC if the parties cannot agree terms of access.

"However, the terminal is already covered by price controls under the Prices Surveillance Act. In August 2000 the ACCC approved a price of $1.65 per arriving and departing passenger for use of the new terminal. This followed careful analysis of costs and passenger projections. All interested parties, including Virgin Blue, had input into the decision.

"The ACCC believes it is not desirable in the present circumstances to regulate access to domestic terminals at Melbourne Airport. In forming this view the ACCC took account of the possible impact of an access determination on investment in facilities for new entrants.

"This draft decision is based on the specific facts surrounding Virgin Blue's application. Any future request for access regulation of airport terminals will be considered on its merits.

"This draft decision is a step in an ongoing consultation process. The ACCC invites further submissions by 16 November 2001".

Background

Under section 192 of the Airports Act 1996 the ACCC may determine that a service is an Airport Service. Airport Services are declared under Part IIIA of the Trade Practices Act 1974. This means parties have a right to negotiate with airport operators to gain access to these services. Access seekers also have a right to ACCC arbitration if they cannot agree terms with the airport operator.

The Airports Act states that Airport Services are services which are 'necessary for operating or maintaining civil aviation services' and are 'provided by significant facilities that cannot be economically duplicated' section 192(5). The ACCC's draft decision finds that domestic terminal services at Melbourne Airport meet this test.

However the ACCC has discretion to determine that a service is not an Airport Service, even if it meets these criteria. The ACCC is concerned that unnecessary uncertainty may arise if the terms of access to the new domestic terminal are reopened, as the ACCC has already made a decision on the price of services at this terminal. Accordingly the ACCC's current position that the services provided through domestic terminals at Melbourne Airport are not Airport Services.