Vir­gin, air­port at odds on charges


Vir­gin Aus­tralia has called for ur­gent changes to the way air­ports im­pose charges at the same time as Aus­tralia’s big­gest air­port in­sists it has no abil­ity or in­cen­tive to over­charge air­lines or pas­sen­gers.

In sep­a­rate sub­mis­sions to a Pro­duc­tiv­ity Com­mis­sion in­quiry into the eco­nomic reg­u­la­tion of air­ports, Vir­gin Aus­tralia and Syd­ney Air­port have laid out di­ver­gent views of the cur­rent mon­i­tor­ing sys­tem.

Vir­gin Aus­tralia says the lighthanded regime al­lows air­ports to in­crease prices and re­duce the qual­ity of ser­vices of­fered. “The cost of air­port use is be­com­ing an in­creas­ingly ur­gent is­sue for Vir­gin Aus­tralia as these charges have risen, and are likely to con­tinue to in­crease, in­ap­pro­pri­ately in the ab­sence of any ef­fec­tive con­straint on air­ports,” the sub­mis­sion says.

How­ever, Syd­ney Air­port, which last month posted a $174 mil­lion half-year profit, said the threat of the cur­rent reg­u­la­tory regime was “real and suf­fi­cient to con­strain any ex­er­cise of mar­ket power”.

It also sug­gested the air­lines were not shy of ex­er­cis­ing their own power by “re­fus­ing to pay or de­lay­ing pay­ment of charges for aero­nau­ti­cal ser­vices while con­tin­u­ing to use air­port ser­vices”.

“In such cir­cum­stances, air­ports can­not in prac­tice deny ac­cess to an air­line, and must con­tinue to ne­go­ti­ate and com­pro­mise un­til an agree­ment is reached,” the sub­mis­sion says.

“This shifts the pres­sure of reach­ing a timely agree­ment from air­lines to the air­port.”

Although Syd­ney Air­port ac­knowl­edged the need for cer­tain air­lines to fly there as the main gate­way to Aus­tralia, the sub­mis­sion says it was a “mu­tu­ally de­pen­dent re­la­tion­ship”.

“Syd­ney Air­port is be­holden to its cus­tomers as much as its cus­tomers are be­holden to Syd­ney Air­port,” it says.

Vir­gin Aus­tralia’s sub­mis­sion ar­gued that air­ports held all the power in ne­go­ti­a­tions.

“Air­lines can­not cred­i­bly threaten to with­draw ser­vices from most air­ports, as do­ing so would typ­i­cally in­flict much greater harm on the air­line than the air­port,” its sub­mis­sion says.

“For an air­line it would have a sig­nif­i­cant im­pact on their network reach and the strength of their cus­tomer propo­si­tion.”

Mean­while Vir­gin’s low-cost part­ner Tig­erair will with­draw its busi­ness from a Philip­pines’ heavy main­te­nance fa­cil­ity af­ter a 737 had to be grounded for three weeks upon re­turn to Aus­tralia from a reg­u­lar check.

Prob­lems with the cock­pit voice recorder and cargo smoke de­tec­tion sys­tem were ap­par­ently over­looked by en­gi­neers.

The air­line had used the SIA Engi­neer­ing fa­cil­ity for the past two years but is now ex­pected to move its busi­ness to Sin­ga­pore.

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