The Australian Competition and Consumer Commission (ACCC) has noted that the return on aeronautical assets of Australia’s major airports increased over the 2017-18 financial year, in contrast to previous years where returns have been falling.

The regulator disclosed the trend in its annual monitoring report that covers the profits and service quality at Sydney, Melbourne, Brisbane and Perth airports.

“A contributing factor to this result is that airports have significantly scaled back their investment in the last few years, which means that asset bases have not been growing at the rate they were a few years ago,” the report reads.

“The rate of investment may pick up again over the next few years with new runways either planned or under construction at a number of the monitored airports, as well as planned investment in terminals.”

Collectively, the four airports made an operating profit of A$802 million ($573 million) in operating profit from their aeronautical activities, which was up 6.2% on the previous year. Over half of that was contributed by Sydney airport, while the ACCC adds that profit increased at Brisbane due to higher charges, while Perth’s profit was aided by lower costs.

Melbourne, however, reported a marginal fall in aeronautical revenue, profit and return on assets as it reduced charges to airlines over the year.

For the first time in a decade, all four airports’ quality was rated “good” with Perth airport achieving the highest quality service rating.

The ACCC also noted in the report its submission to the Productivity Commission’s inquiry into airport economic regulation that it suggested the adoption of an arbitrator in negotiations between airlines and airports to overcome the natural monopoly power that airports have.

It is similar to calls from Airlines for Australia and New Zealand, which used the latest report to attack the Commission’s draft recommendation that the present monitoring system was adequate, and no further regulation required.

A4ANZ chief executive Alison Roberts says that the report exposes a long trend of airports making above-average returns thanks to their monopoly power and light-handed regulation.

“This is on top of independent analysis showing that, unlike other businesses, Australian airport profit margins have been shielded from all major economic events and operators have enjoyed ‘super-normal’ profits,” she says.

Source: Cirium Dashboard