The Australian Competition and Consumer Commission today announced that its preliminary view is that it would object to Airservices Australia's proposed price increases for air services such as air traffic control.
The ACCC's preliminary view is that the proposed prices are higher than required to cover costs and provide a reasonable return. The ACCC has also asked Airservices to better demonstrate that its forecast costs are prudent and efficient.
Airservices has proposed to increase prices for terminal navigation and aviation rescue and fire-fighting services over the next five years. These charges are levied on airlines and other operators of aircraft landing at Australian airports and flying in Australian airspace.
“Airservices' proposed price increases are driven by a significant increase in capital expenditure over the next five years,” ACCC chairman Graeme Samuel said today.
The ACCC needs to be satisfied that Airservices undertakes its capital expenditure prudently and efficiently. Airservices' customers are in a strong position to advise on whether or not this is the case.
"In the current matter it appears that Airservices has not provided users with sufficient information that would have allowed them to assess the costs and benefits of some major capital projects."
Mr Samuel said there is scope for Airservices to have improved consultation processes prior to it submitting a formal long-term pricing proposal.
The ACCC also considers that Airservices needs to improve the transparency and accountability of its operating performance, which will provide greater certainty that it is operating efficiently. Further, the ACCC considers that Airservices needs to adjust its proposed prices as Airservices would over-recover its costs by $101 million (or 2 per cent) over the five years.
Under the prices surveillance provisions of the Competition and Consumer Act 2010 the ACCC has a role in assessing proposed price increases for Airservices' terminal navigation, aviation rescue and fire-fighting services and en route navigation services. The ACCC can decide to object or not object to the proposed price increases.
The ACCC is now seeking comments from interested parties on its preliminary view. Submissions should be provided to the ACCC by C.O.B. on Monday 1 August 2011.
The ACCC's preliminary view, which includes details on making a submission, will be available on the ACCC website.