Source: ABC News Author: Bronwyn Herbert 05/28/2009
Subject Concerned: Government Opinion Airlines Airport
Aviation experts have supported calls by Qantas for Australian airports to do their bit to cut costs, saying the privatised industry is putting profit before public interest.
Qantas chief Alan Joyce told a business lunch the airline pays more than AU$700 million a year in airport charges and during these tough economic times airlines need relief.
He says Australian airports could follow the lead of airports overseas and cut their charges.
Aviation analyst Geoffrey Thomas says the root of the problem is the privatisation of airports whose main consideration is now shareholder profits.
"Airports are strategically important assets critical to our economy and they are in the hand of private companies whose interests are separate from Australia's interests," he said.
"When it comes to downturns like we are experiencing at the moment, airlines like Qantas and Virgin Blue are doing it very, very tough indeed, but the providers like the airports are still extremely profitable, and they should be certainly sharing the pain of the air transport industry and making concessions to stimulate travel.
"I would say they should cut their charges by 50 per cent, in line with what the airlines are cutting their fares at the moment."
Sydney Airport is predominantly owned by the Macquarie infrastructure fund.
In its first quarter results, Sydney Airport's earnings were up 2 per cent to AU$165 million, despite a 4 per cent drop in air traffic.
The airport charges AU$14 an hour for parking and an average AU$13 on each domestic fare.
It also slugs taxi drivers AU$3 for each passenger pick up.
An Australian Competition and Consumer Commission (ACCC) report this year listed Sydney as the country's most expensive airport.
Sydney Airport declined a request from ABC Radio's PM program to confirm its domestic charges, but says its fees are a "very small proportion of an average airfare".
Virgin Blue has joined Qantas' call to lower airport charges.
A spokeswoman says responsible pricing is in the national interest to sustain passenger demand and affordable air services.
"Profit Before The Public"
Professor Phillip O'Neill is the director of the Urban Research Centre at the University of Western Sydney.
He says airports, like other major infrastructure projects sold to private companies, are now about profit rather than public benefit.
"It means that as we have slowly privatised infrastructure like airports and telcoms, in a time of downturn the tools governments have to provide economic activity are limited," he said.
"They are limited to probably fiscal and monetary measures and except for building their own new infrastructure, governments have privatised infrastructure they used to own, they can't rally or mobilise that infrastructure that might provide more broad economic benefit."
Professor O'Neill says there are lessons to be learnt from this situation.
"What we now realise is that when we privatise things like airports we should make sure that the contractual obligations of the airport operators remain in a way that in times such as now, in a downturn, there is still the possibility for governments to call a way to do particular things," he said.
"The community service obligations and the broader economic obligations of the airport aren't really spelt out sufficiently clearly to enable governments to call on the airports to undertake acts that would be seen to be in the broader public good."