Extraordinary year in Australian aviation: ACCC

The past 12 months had been an extraordinary year in Australian aviation, Australian Competition and Consumer Commission Chairman, Professor Allan Fels, will tell the Airports and Aviation Outlook 2001 Conference in Sydney* tomorrow (Monday 12.11.01).

Professor Fels will indicate that the optimism connected with new domestic entrants Impulse and Virgin Blue received a jolt with the financial crisis of Impulse, leading to its acquisition by Qantas, the well-publicised problems with Ansett and the events of September 11.

The ACCC has dealt with complex aeronautical pricing issues at Sydney Airport and the Federal court ruled on taxi charges. Currently the industry and the Government are grappling with questions about the future regulation of airports following the recent release of the Productivity Commission's report on that subject.

In his address, Professor Fels reviews the year's events and then discusses future airport regulatory arrangements. He then turns to airlines and possible measures to promote effective competition in the industry.

The year in review includes the implications for airport operators of Ansett's failure, the ACCC's decision on proposals by Sydney Airports Corporation Limited to increase aeronautical charges at Kingsford Smith Airport, and the Canberra Airport's unsuccessful Federal Court appeal against the ACCC's about whether or not the $2 taxi charge introduced by the airport operator was in the price cap or not. Professor Fels will also issue the ACCC's regulatory report on Sydney Airport.

On the future, Professor Fels will indicate that the ACCC favours continuing use of incentive regulation in the form of CPI-X price caps.

"Price caps provide clarity and certainty for all of the parties about pricing outcomes. They also provide strong incentives to service providers to reduce production costs. If well designed they can also provide good incentives for new investment, a point made by the PC.

"The approach is consistent with the approach adopted in regulating electricity and gas transmission and distribution in Australia and airports in the United Kingdom".