Posted on: 21 December 2010 by Ross McSweeny
Regional Express (Rex) has welcomed the Australian Government’s stance regarding the interests of regional aviation against what the airline calls “the monopolistic pricing behaviour of Sydney Airport Corporation Limited (SACL)”.
Commenting on the Government’s initiatives, Rex managing director Jim Davis said that it showed decisiveness and leadership in taking concrete action to protect regional interests at Sydney Airport.
"The Government has clearly demonstrated that it intends to take firm action against any monopoly pricing practices at Sydney Airport by ordering an extension on the price cap of aeronautical service charges for regional carriers for three years as well as bringing forward the Productivity Commission (PC) inquiry by two years," Davis noted.
"However Rex has firm legal advice from its Trade Practices lawyers that the PC does not have the legal powers to compel SACL to open up its books and be fully transparent. This resulted in the two previous PC deliberations having, based on SACL’s unsubstantiated submissions, a false confidence in SACL doing the right thing.
“In 2002, the PC recommended that airport pricing be deregulated in favour of light-handed price monitoring. Although the PC found that four airports (including Sydney airport) had substantial market power, it believed that if prices were deregulated the scope for airports to use this market power would be constrained by commercial pressures and opportunities to benefit from increased passenger traffic.
“In 2007, the PC took the view that price capping for regional aeronautical service charges should be allowed to lapse because the PC thought it was not clear that SACL would treat regional airlines less favourably than other users. However,” Davis continued, “this year SACL tried to impose on Rex astronomical price increases in excess of $3 million per annum which were only averted by the intervention of the ACCC.
"This is why Rex put in a submission in November to the government to order an ACCC inquiry into SACL where it could exercise its full legal powers to examine SACL’s pricing policy and practices. This inquiry would be a prelude to the PC inquiry and would furnish the PC with an objective and authenticated basis on which to make its recommendations."
Rex has written to the New South Wales stakeholders on this matter and reports being overwhelmed with more than 500 petitions to the government. State and Federal Members of Parliament as well as local governments and other regional stakeholders have also written in to express their support for an ACCC inquiry.
"It is very clear that there is a ground swell of people in the NSW community who believe that it is time to get the true picture of SACL. Almost a decade has passed since the last inquiry which was conducted after the Ansett collapse when conditions were understandably drastically different. The people have spoken and it is now left to the Government to explain to its constituents why it appears to be shielding SACL from the full scrutiny of an unbiased ACCC inquiry,” Davis concluded.