Airports are coming under increasing scrutiny of the Australian Competition and Consumer Commission, ACCC Chairman Professor Allan Fels told an Ord Minnett seminar today.
"Recently, the Government announced the selection of successful bidders for the long term leases of Melbourne, Perth and Brisbane airports. These leases will be granted tomorrow. The Government has also announced its intention to grant leases on a further 15 airports by mid-1998.
"It has put in place arrangements for economic regulation of the leased airports and has given the ACCC primary responsibility for implementing them. "The regime comprises a package of measures under the Airports Act, the Trade Practices Act and the Prices Surveillance Act. The main measures are a price cap on aeronautical services and access arrangements. The package also includes a number of complementary measures including formal monitoring, quality of service monitoring and a review of regulatory arrangements.
"The Government has given the ACCC primary responsibility for the economic regulation of airports. In doing so it has established a regulatory regime that gives the Commission a range of tools to assist it in its new regulatory role. "For its part the ACCC is working to ensure that the regime is administered effectively. "The regulatory package is reasonably comprehensive. It is more comprehensive than the arrangements that currently apply to the Federal Airports Corporation. It is also more comprehensive than the regulatory arrangements that apply to privatised airports in the United Kingdom.
""An important element of the new measures is the price cap. It ensures significant reductions in aeronautical charges over the next five years - 20 per cent or more at Melbourne, Brisbane and Perth airports.
"Access arrangements will be central to the regulatory arrangements to apply to the privatised airports. They provide a framework in which airport operators and their customers are encouraged to negotiate directly and resolve terms and conditions of use of airport services. In administering the access arrangements, and in particular in assessing access undertakings and in arbitrating disputes, the ACCC must take into account the interests of the various parties including the interests of airport users and potential airport users and the public interest.
"As part of its regulatory role the ACCC will monitor the conduct of airport operators. The ACCC has extensive information collection powers under the regulatory regime. The regulatory regime includes a number of measures designed to improve transparency about the airport operators performance and assist in the assessment airport performance. They will also provide information for the Commissions review of pricing oversight arrangements."
One of the measures is formal monitoring of certain prices and costs under the Prices Surveillance Act. On Friday the Treasurer announced the list of services to be covered by prices monitoring at each of Melbourne, Brisbane and Perth airports. These include services provided by the airport operator in relation to:
car parks; aircraft maintenance sites and buildings; cargo facilities and sites; check-in counters; and aircraft refuelling services.
The Commission will report on its prices monitoring program on a regular basis. It will also report on quality of service and information collected on financial accounts. The ACCC's objective in reporting is to assist public scrutiny and assess airport performance over time. If the ACCC has concerns about the airport operators conduct it will highlight these concerns as part of the reporting process.
"The price cap and the other prices oversight arrangements will be reviewed by the ACCC. The Government has stated that a key objective of the review is to ensure that the aviation industry retains appropriate protection. One of the main considerations for the ACCC in conducting the review will be airport operator conduct. The ACCC will take a firm line on inappropriate conduct. If operators have a track record of abusing their market power the ACCC is likely to recommend more stringent regulatory arrangements."
Further information Professor Allan Fels, Chairman, (03) 9290 1812 or pager (016) 373 536 Ms Lin Enright, Director, Public Relations, (06) 264 2808
"Recently, the Government announced the selection of successful bidders for the long term leases of Melbourne, Perth and Brisbane airports. These leases will be granted tomorrow. The Government has also announced its intention to grant leases on a further 15 airports by mid-1998.
"It has put in place arrangements for economic regulation of the leased airports and has given the ACCC primary responsibility for implementing them. "The regime comprises a package of measures under the Airports Act, the Trade Practices Act and the Prices Surveillance Act. The main measures are a price cap on aeronautical services and access arrangements. The package also includes a number of complementary measures including formal monitoring, quality of service monitoring and a review of regulatory arrangements.
"The Government has given the ACCC primary responsibility for the economic regulation of airports. In doing so it has established a regulatory regime that gives the Commission a range of tools to assist it in its new regulatory role. "For its part the ACCC is working to ensure that the regime is administered effectively. "The regulatory package is reasonably comprehensive. It is more comprehensive than the arrangements that currently apply to the Federal Airports Corporation. It is also more comprehensive than the regulatory arrangements that apply to privatised airports in the United Kingdom.
""An important element of the new measures is the price cap. It ensures significant reductions in aeronautical charges over the next five years - 20 per cent or more at Melbourne, Brisbane and Perth airports.
"Access arrangements will be central to the regulatory arrangements to apply to the privatised airports. They provide a framework in which airport operators and their customers are encouraged to negotiate directly and resolve terms and conditions of use of airport services. In administering the access arrangements, and in particular in assessing access undertakings and in arbitrating disputes, the ACCC must take into account the interests of the various parties including the interests of airport users and potential airport users and the public interest.
"As part of its regulatory role the ACCC will monitor the conduct of airport operators. The ACCC has extensive information collection powers under the regulatory regime. The regulatory regime includes a number of measures designed to improve transparency about the airport operators performance and assist in the assessment airport performance. They will also provide information for the Commissions review of pricing oversight arrangements."
One of the measures is formal monitoring of certain prices and costs under the Prices Surveillance Act. On Friday the Treasurer announced the list of services to be covered by prices monitoring at each of Melbourne, Brisbane and Perth airports. These include services provided by the airport operator in relation to:
car parks; aircraft maintenance sites and buildings; cargo facilities and sites; check-in counters; and aircraft refuelling services.
The Commission will report on its prices monitoring program on a regular basis. It will also report on quality of service and information collected on financial accounts. The ACCC's objective in reporting is to assist public scrutiny and assess airport performance over time. If the ACCC has concerns about the airport operators conduct it will highlight these concerns as part of the reporting process.
"The price cap and the other prices oversight arrangements will be reviewed by the ACCC. The Government has stated that a key objective of the review is to ensure that the aviation industry retains appropriate protection. One of the main considerations for the ACCC in conducting the review will be airport operator conduct. The ACCC will take a firm line on inappropriate conduct. If operators have a track record of abusing their market power the ACCC is likely to recommend more stringent regulatory arrangements."
Further information Professor Allan Fels, Chairman, (03) 9290 1812 or pager (016) 373 536 Ms Lin Enright, Director, Public Relations, (06) 264 2808