The challenge with (some) airports

A report into the performance of Australian airports was released this week. And there was one finding that should make every traveller stop and think. 

It’s this: Australia’s four major airports are collecting 25 per cent more revenue per passenger in real terms than they were 10 years ago. Yet over the same period, airfares have fallen more than 40 per cent.

Companies deserve to make a profit. For airlines, that has meant being more efficient and delivering more value in a highly competitive market. We are better businesses as a result and the travelling public is the big winner (think free inflight Wi-Fi, new aircraft like the 787, lower fares). 

But the major Australian airports are monopolies. They have very few constraints on their market power. That’s driven higher charges for passengers (like airport car parking) and higher charges for airlines – usually without a corresponding improvement in the product. 

Analysis by Frontier Economics in the report showed that the profit margins of some Australian airports are more than double the margins of other airports around the world. 

Qantas and Jetstar are among the backers of A4ANZ, which is the group behind the report. We strongly support its call for better regulation of monopoly pricing at airports. In the meantime, the travelling public will continue to wear the escalating cost.