22-05RPT Airport Monitoring Report D06

Airport monitoring
report 2020–21
June 2022
accc.gov.au
Australian Competition and Consumer Commission
23 Marcus Clarke Street, Canberra, Australian Capital Territory, 2601
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Contents
Glossary and abbreviations v
Airport Monitoring Report 2020–21 viii
Overview ix
Executive Summary 2
Key performance indicators for 2020–21 10
1. Introduction 11
1.1 Airports’ importance to the Australian economy 11
1.2 Services provided by airports 11
1.3 Airport market power 15
1.4 History of airport regulation in Australia 16
1.5 The ACCC’s monitoring role 19
1.6 The ACCC’s regulation of regional air services at Sydney Airport 22
1.7 Terminals within scope of 2020–21 Airport Monitoring Report 23
1.8 Industry consultation 23
1.9 Structure of the report 24
2. Negotiation of aeronautical service agreements 25

2.1 Introduction to negotiation of aeronautical service agreements 25
2.2 Aeronautical Pricing Principles 26
2.3 Negotiation of aeronautical service agreements 31
2.4 Impact of the COVID-19 pandemic on negotiation of ASAs 41
2.5 Security charges 43
3. Total airport operational and financial performance 44

3.1 Trends in passenger numbers at the monitored airports 44
3.2 Impact of the COVID-19 pandemic on airports and airlines 46
3.3 Long-term trends in the overall financial performance of the monitored
airports before the COVID-19 pandemic 49
4. Aeronautical services 52
4.1 The impact of the COVID-19 pandemic on monitored airports’
aeronautical financial results 52
4.2 Long-term trends in provision of aeronautical services before the
COVID-19 pandemic 53
5. Car parking 63
5.1 Monitoring airports’ car parking prices 63
5.2 Impact of the COVID-19 pandemic on car parking services 64
5.3 Long-term performance of airport car parking services before the
COVID-19 pandemic 69
6. Landside access 78
6.1 The impact of the COVID-19 pandemic on landside access activity 78
6.2 Long-term trends in landside access at the monitored airports 81
iii Airport monitoring report 2020–21

7. Commercial 95
7.1 The impact of the COVID-19 pandemic on commercial activities at
the monitored airports 95
7.2 Relief provided by monitored airports to commercial operators 97
7.3 Challenges to recovery from the COVID-19 pandemic 98
8. Investments by monitored airports 99

8.1 Monitoring airports’ investments 99
8.2 Long-term trends in investment by monitored airports 100
8.3 Impact of the COVID-19 pandemic on investment 108
8.4 Future investment plans 110
Appendix A: Landside access options – access, pricing and facilities 112
Appendix B: Supplementary results 116
Appendix C: Background information 129
iv Airport monitoring report 2020–21

Glossary and abbreviations
AAA Australian Airports Association
ACCC Australian Competition and Consumer Commission
AER Australian Energy Regulator
Aerobridge Allows passengers to board and disembark aeroplanes directly from/to the
terminal gate lounge. Avoids need for passengers to go outside and use the
apron.
Aircraft-related Services and facilities provided by airports that are specifically utilised by
services and aircrafts (for example, runways, aircraft parking bays and taxiways). The full
facilities list of aircraft-related services and facilities for monitoring purposes are listed
in the Airports Regulations 1997.
Airline surveys Each year, the ACCC sends domestic and international airlines a survey in
which they are asked to rate on a scale of 1 to 5 the availability and standard
of services and facilities provided by the monitored airports.
Airports Act Airports Act 1996
Airports Regulations Airports Regulations 1997
Airside Refers to areas specifically in the airport that are dedicated to the provision of
aircraft-related services and facilities and most passenger-related services and
facilities – for example, terminal buildings, runways and taxiways.
Aeronautical As defined under the Airports Regulations 1997, services and facilities at an
services and airport that are necessary for the operation and maintenance of civil aviation
facilities at the airport (including both passenger-related and aircraft-related services
and facilities).
APPs Aeronautical Pricing Principles
Apron Airport aprons are areas where planes park and are refuelled, passengers
embark and disembark and/or where planes are loaded and unloaded.
ASA Aeronautical Service Agreements (between airports and airlines)
At-airport car park A car parks that is located on the airport’s land which could be either
at-distance or at-terminal car park.
At-distance car park A car park that is located within the airport precinct but outside of reasonable
walking distance to the terminal. Access to the terminal is via a shuttle that is
operated by the airport.
At-terminal car park A car park that is within walking distance of the terminal.
BARA Board of Airline Representatives of Australia, which represents airlines
operating international flights.
BBM Building block model
BITRE Bureau of Infrastructure and Transport Research Economics
CBD Central business district
CCA Competition and Consumer Act 2010
CoU Conditions of Usage agreement
COVID-19 Coronavirus pandemic declared by the World Health Organisation on
11 March 2020.
v Airport monitoring report 2020–21

DTL Domestic terminal lease
EBIT Earnings before interest and taxes.
EBITA Earnings before interest, taxes, and amortisation.
EBITDA Earnings before interest, taxes, depreciation and amortisation.
FAC Federal Airports Corporation
FIFO Fly-in fly-out
FY Financial year
General aviation Aircraft operations that are not regular public transport, such as private
charter and aircraft training flights, and Royal Flying Doctor Services.
IATA International Air Transport Association
Landside Parts of an airport that are not airside areas – for example, access roads and
walkways within airport precincts.
Long-term parking Parking for a period of one or more days.
Monitored airports Airports which are subject to price and quality of service monitoring and are
specified in Parts 7 and 8 of the Airports Regulations 1997; currently Brisbane,
Melbourne, Perth and Sydney airports.
MTOW Maximum take-off weight
Objective indicators Airport services and facilities listed in the Airports Regulations 1997 to be
monitored and evaluated by the ACCC and of which monitored airports are
required to keep records. Includes both physical infrastructure (for example,
the number of check-in desks and flight information display screens) and
other measurements (for example, number of passengers during peak hour).
Off-airport car park A car park that is located outside of the airport precinct and operated by
a third party. Access to the terminals is provided by a shuttle bus that is
provided by the off-airport car park operator.
On-carriage Passengers that arrive on one flight and depart on another flight generally
passengers without leaving the airport.
Operating profit Measured by earnings (revenue less cost) before interest, taxation and
amortisation.
Operating profit In this report, this is the ratio of EBITA (earnings before interest, taxes, and
margins amortisation) to total revenue.
Passenger-related Services and facilities provided by airports that are specifically utilised by
services and passengers (for example, check-in desks, aerobridges and gate lounges). The
facilities full list of passenger-related services and facilities for monitoring purposes are
listed in the Airports Regulations 1997.
Passenger surveys The monitored airports arrange for annual passenger surveys to be conducted
by market research companies in order to provide information to the ACCC as
required under the Airports Regulations. These surveys ask passengers to rate
on a scale of 1 to 5 the availability and standard of services and facilities.
Part IIIA Part IIIA Pricing Principles set out in section 44ZZCA of the Competition and
Consumer Act 2010.
PC Productivity Commission
2019 Productivity Productivity Commission 2019, Economic Regulation of Airports,
Commission inquiry Report no. 92, Canberra.
vi Airport monitoring report 2020–21

Peak hour The hour that, on average for each day in the financial year, has the highest
number of (arriving/departing/total of both) passengers.
Quality of A metric derived by aggregating the quality of aeronautical service monitoring
aeronautical service results sourced from objective indicators and surveys of airlines and
(QoS) passengers on the quality of services and facilities provided by the monitored
airports.
RAB Regulatory Asset Base
Real terms A value expressed in the money of a particular base time period (for example,
2020–21 dollars). Values in real terms remove the impact of inflation and
provide a better comparison of values over time.
Return on assets Ratio of EBITA relative to average tangible non-current assets.
Rex Regional Express airlines
Short-term parking Parking for a period of up to one day.
T1/T2/T3/T4 Terminal 1/Terminal 2/Terminal 3/Terminal 4
Taxiway A road for aircraft that connects runways with airport facilities including
ramps, hangers and terminals.
WACC Weighted average cost of capital.
vii Airport monitoring report 2020–21

Airport Monitoring Report 2020–21
COVID-19
The number of people flying through the Operating profits across all segments of
monitored airports in 2020–21 was 60–83% lower the monitored airports’ operations were
than pre-pandemic. This had a severe impact on significantly lower in 2020–21 compared to
the financial performance of all operators in the 2018–19, but Sydney, Brisbane and Perth
aviation sector reliant on passenger travel. airports still reported a profit.
Prior to the COVID-19 pandemic, The Supreme Court of Western The Australian Government’s
the monitored airports achieved Australia found that Perth Aeronautical Pricing Principles
sustained high profit margins. For Airport possesses, and has likely were designed to assist airlines
many years, aeronautical profit exercised, substantial market in negotiating reasonable prices
margins were between 40% and power in negotiating aeronautical with airports that have substantial
50% and car parking profit margins charges with airlines in 2018. This market power. However, the
were over 50%. finding indicates that light-handed APPs are not enforceable and are
regulatory regime is not working. currently insufficiently assisting
airlines in their negotiations.
viii Airport monitoring report 2020–21

Overview
The COVID-19 pandemic had a severe impact on all parts of the aviation sector in 2020–21. As new
variants emerged and the virus spread, state governments implemented lockdowns, border closures
and other travel restrictions to suppress the spread of the virus. These restrictions, combined with lower
consumer confidence due to the pandemic, caused the number of people flying on both domestic and
international routes to plummet. As a result, there was significant deterioration in financial performance
across all parts of the aviation sector that were reliant on passenger travel, including airports. With the
bulk of the Australian population now vaccinated and all travel restrictions lifted, passenger travel is
rebounding, and the aviation sector is now on the path to recovery.
Consistent with the rest of the aviation sector, the 2020–21 financial results of the 4 monitored airports
were substantially affected by the COVID-19 pandemic. The combined operating profits of the
4 monitored airports were 95% lower in 2020–21 than in 2018–19.1 However, despite COVID-19 causing
the biggest disruption to the aviation sector in history, Sydney, Brisbane and Perth airports still reported
a positive operating profit for 2020–21.2 With other parts of the aviation sector being even more
severely affected, the monitored airports provided some relief to airlines and some other commercial
entities operating at the airports.
The aviation industry plays a critical role in the Australian economy. Airports, as regional monopolies,
have substantial market power. As such, the ACCC will carefully monitor the airports’ profit margins as
the industry recovers from the COVID-19 pandemic.
On 18 February 2022, the Supreme Court of Western Australia delivered its decision to resolve a
dispute over aeronautical charges that arose between Perth Airport and Qantas in 2018. As part of
its decision, the court found that Perth Airport possessed, and has likely exercised, substantial market
power.3 The Australian Competition and Consumer Commission (ACCC) is not surprised by this finding.
Prior to the COVID-19 pandemic, the ACCC raised concerns about sustained high profit margins
earned by the monitored airports. In the period between 2007–08 and 2018–19, the monitored airports’
aeronautical profit margins predominantly ranged between 40% and 50%, while their car parking profit
margins have consistently been above 50% for some monitored airports and above 60% for others.
When the Australian Government was setting up its light-handed regulatory regime for major Australian
airports, it released the Aeronautical Pricing Principles (the APPs) to assist airlines in negotiations
of Aeronautical Service Agreements (ASAs) with airports that have market power.4 The APPs
establish a framework for airports and airlines to use when negotiating prices and service levels. Both
airlines and airports have generally acknowledged that the APPs provide sound principles to use in
commercial negotiations.
However, the outcome of the Perth Airport case against Qantas as well as the ACCC’s findings in this
report indicate that the APPs are currently not assisting airlines in negotiations as intended. The APPs
are not enforceable, which means that airlines do not have any formal recourse to address any conduct
by an airport that is inconsistent with the APPs. There is also limited guidance available to the parties on
how to interpret various elements of the APPs.
When material disputes between airports and airlines arise, there is currently no effective process
available to airlines to assist them to resolve the dispute in accordance with the APPs. Therefore, even
though most disputes between airports and airlines are ultimately settled, the outcomes of negotiations
do not necessarily result in prices that reflect long-term efficient costs of aeronautical services because
of uneven bargaining power between the parties.
1 All references in the Overview and the Executive Summary to ‘profit’ refer to earnings before interest, tax and amortisation
(EBITA). All references to ‘profit margins’ refer to EBITA as a percentage of revenue.
2 Brisbane Airport attributed this to resilient investment property revenues and operating cost reductions. Sydney Airport
noted that its financial results included a one-off gain from non-aeronautical transaction (it would have still reported a
profit if this transaction was excluded).
3 Perth Airport Pty Ltd [2022] WASC 51.
4 The Aeronautical Pricing Principles originated as ‘Review Principles’ in the Australian Government’s response to the 2002
inquiry of the Productivity Commission.
ix Airport monitoring report 2020–21

The ACCC welcomes the fact that the Supreme Court of Western Australia resolved the dispute
between the parties in a manner consistent with the APPs – by using a building block model (BBM) to
determine the efficient long-run costs of the aeronautical services provided by Perth Airport. However,
the court case lasted for over 3 years and resulted in substantial litigation expenses to both parties. In
addition, the WACC calculated by the court was significantly higher than the WACC determined by
some Australian and overseas regulators in 2018 and 2019.
The ACCC will consider what can be done to improve the operation of the APPs in commercial
negotiations. If the APPs can be made more effective, this would unlock the full benefits of the APPs
to airlines and thereby protect Australian businesses and consumers from excessive prices or declining
service quality.
1 Airport monitoring report 2020–21

Executive Summary
About this report
This report presents the results of the ACCC’s monitoring of the quality, prices, costs and profits at
Brisbane, Melbourne (Tullamarine), Perth and Sydney (Kingsford Smith) airports. The monitoring relates
to airports’ supply of aeronautical, car parking and landside services.
Developments in 2020–21
The COVID-19 pandemic had a significant impact on the aviation industry in 2020–21. State and federal
governments implemented lockdowns, border closures and other travel restrictions to suppress the
spread of the virus. This, combined with lower consumer confidence due to the pandemic, led to a
significant drop in the number of people flying on both domestic and international routes.
The number of passengers visiting the monitored airports in 2020–21 was 60–83% lower compared to
pre-pandemic levels, with Melbourne and Sydney airports being the most affected. This significantly
impacted on the monitored airports’ financial performance, as many of their operations are reliant on
passenger travel.
Table 1 shows the change in total airport operating profit (EBITA) and margin (EBITA as a percentage
of total airport revenue) over the past 3 monitoring periods.
Table 1: Total operating profit and margin, by airport: 2018–19 to 2020–21
Airport profit ($millions) Airport profit margin (%)

2018–19 2019–20 2020–21 2018–19 2019–20 2020–21
Brisbane Airport 511.88 329.04 48.14 59.14 43.69 10.76
Melbourne Airport 593.30 338.94 -106.82 56.49 40.55 -32.83
Perth Airport 244.49 128.43 26.89 48.08 32.71 10.35
Sydney Airport 987.08 631.37 148.46 59.49 45.89 18.78
Source: ACCC analysis of information received from monitored airports as part of the monitoring regime.
Note: Values in 2020–21 dollars.
Table 1 shows that total operating profits and profit margins were significantly lower at all monitored
airports in 2020–21 compared to 2018–19. However, despite the COVID-19 pandemic causing the
biggest disruption to the aviation sector in history, Brisbane, Sydney and Perth airports reported a
profit in 2020–21.5 Melbourne Airport performed the worst of the monitored airports, as it was the most
affected by COVID-safe government measures.
Breaking down the monitored airports’ financial performance across the service segments shows that:6
aeronautical operating profits were $113m to $570m lower in 2020–21 than in 2018–19, with
monitored airports incurring aeronautical operating losses between $35m (Perth Airport) and
$170m (Melbourne Airport) in 2020–21
car parking operating profits were $21m to $89m lower in 2020–21 than in 2018–19, with Melbourne
Airport incurring an operating loss of $8.7m and the other 3 monitored airports earning an operating
profit between $4.8m (Sydney Airport) and $25.5m (Brisbane Airport) in 2020–21
landside access revenues were $2.1m to $23.3m lower in 2020–21 than in 2018–19, with monitored
airports earning between $2.8m (Brisbane Airport) and $4.5m (Sydney Airport) in 2020–21
revenues collected from retail tenants were $46m to $175m lower in 2020–21 than in 2018–19
5 Brisbane Airport attributed this to resilient investment property revenues and operating cost reductions. Sydney Airport
noted that its financial results included a one-off gain from non-aeronautical transaction (it would have still reported a
profit if this transaction was excluded).
6 All dollar figure comparisons are made in real terms in 2020–21 dollars.

the pandemic had a much more limited impact on monitored airports’ revenue from commercial
property (buildings and other space on the airport’s land, including business parks and offices), as
this segment is less directly linked to passenger movements.
The significant fall in passenger numbers also severely affected all other parts of the aviation supply
chain. Both domestic and international airlines lost a significant proportion of their revenue. For
example, Qantas reported that in 2020–21, its total revenue loss from the COVID-19 pandemic reached
$16 billion, with Qantas posting a $2.35 billion loss for the financial year, following a loss of $2.7 billion in
the previous financial year.7
Retail chains operating at the 4 monitored airports have indicated that their sales turnover in 2020–21
was up to 95% lower than prior to the pandemic. Many retailers at the monitored airports have struggled
to survive and had to close their operations.
Multiple car rental operators at the monitored airports indicated to the ACCC that their revenue had
fallen between 50% and 90% compared to pre-pandemic level. Some closed car hire booths at various
airports and sold off parts of their fleets to generate sufficient cashflow to maintain their operations.
In the early stages of the COVID-19 pandemic, the monitored airports provided financial relief to some
of these operators. The monitored airports have informed the ACCC that they provided assistance to
airlines which included:
free aircraft parking to domestic and international airlines
rent relief to airlines for services such as lounges, aeronautical services and facilities
the use of aeronautical facilities and services on similar terms to previous agreements
reduced fees and prices to domestic airlines seeking to establish new services.
The monitored airports also informed the ACCC that they provided financial support to some
commercial operators (such as retail chains and car rental operators) by offering rent relief, rent deferral
and waiving fixed payments. Commercial operators consulted by the ACCC commented that the level
of relief varied between the monitored airports and some airports ceased offering this assistance in
2021 despite passenger numbers remaining low.
The ACCC consulted with various aviation sector participants about the challenges of recovering from
the COVID-19 pandemic. Some airlines and commercial operators expressed concerns that recovery
of the aviation sector may be undermined if airports in Australia significantly raise their prices to
recover their pandemic losses. These parties commented that this would ultimately flow through to
end-consumers via higher prices. The major airports consulted by the ACCC stated that they have not
sought, and do not intend to seek, to recover their pandemic losses through higher prices in new ASAs.
Long-term trends
Monitored airports achieved sustained high profit margins prior to the
COVID-19 pandemic
Leading up to the COVID-19 pandemic, the monitored airports had been earning relatively stable and
consistent returns over a long period of time. Figure 1 shows the total airport profit margins of the
monitored airports since 2007–08.8
7 Qantas, Qantas Group posts significant loss from full year of COVID [media release], accessed 7 February 2022
and Qantas Group FY20 financial results – Navigating exceptional conditions [media release], 20 August 2020,
accessed 7 February 2022.
8 The ACCC has chosen 2007–08 as a starting point for the analysis because this is the first year that the ACCC collected
financial data under the line-in-the-sand approach.

Figure 1: Total airport profit margins, by airport: 2007–08 to 2020–21
100
80
60
Profit margin (%)
40
20
-20
-40
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Brisbane Airport Melbourne Airport Perth Airport Sydney Airport
Figure 1 shows that in the period between 2007–08 and 2018–19, the total airport profit margins of
Sydney, Melbourne and Brisbane airports have consistently remained in the range between 55% and
65%. Perth Airport’s profit margins have fluctuated between 45% and 80%. As discussed above, total
airport profit margins have been affected by the COVID-19 pandemic in the last 2 years.
The ACCC’s monitoring has predominantly focused on aeronautical and car parking services. The ACCC
has observed very similar trends in each of these segments. Figure 2 shows aeronautical profit margins
of the monitored airports since 2007–08.9
Figure 2: Aeronautical profit margins, by airport: 2007–08 to 2020–21

100
50
Profit margin (%)
-50
-100
-150
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Figure 2 shows that in the period between 2007–08 and 2018–19, aeronautical profit margins of the
monitored airports have predominantly ranged between 40% and 50%. As discussed above, aeronautical
profits margins have been affected by the pandemic in the last 2 years.
9 ibid.

Figure 3 shows car parking profit margins of the monitored airports since 2004–05.10
Figure 3: Car parking profit margins, by airport: 2004–05 to 2020–21

100
80
60
Profit margin (%)
40
20
-20
-40
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Figure 3 shows that over the period 2004–05 to 2018–19, car parking profit margins have somewhat
decreased across all monitored airports. However, prior to the pandemic, car parking profit margins
consistently remained over 60% for Brisbane and Sydney airports, and above 50% for Melbourne and
Perth airports. As discussed above, in the last 2 years, car parking profit margins have been affected by
the COVID-19 pandemic.
A key limitation of the ACCC’s monitoring regime is that the data collected does not allow the ACCC
to make conclusive assessments about whether monitored airports are earning economic returns that
are consistent with the degree of risks they face or whether monitored airports have been operating
efficiently. This is mainly because the various financial indicators and measures the ACCC reports
(including those shown in figures 1–3) are based on historical accounting data. Given accounting rates
of return do not necessarily correspond to economic rates of return, the ACCC cannot conclusively
assess whether airports’ profits have been excessive.11
However, various studies found that the monitored airports’ profit margins prior to the COVID-19
pandemic were high by international standards:
In 2018, Frontier Economics (commissioned by A4ANZ) found that the average profit margins of
the 4 Australian monitored airports were much higher than of non-Australian airports.12 Around the
same time, IATA also found that Australian monitored airports’ profit margins were much higher than
comparable airports worldwide.13
In February 2020, IBISWorld reported that the broader car parking services industry earned a
profit margin of 16.9%.14 Even when accounting for the different profit measure used by IBISWorld
compared to the ACCC, this still appears to be significantly lower than car parking profit margins
earned by the monitored airports.15
10 The ACCC has chosen 2004–05 as a starting point for the analysis because this is the first year that the ACCC collected
consistent data from all monitored airports on car parking revenue, costs and profits.
11 Refer to section 1.5.3 for further details.
12 Airlines for Australia and New Zealand (A4ANZ), The performance & impact of Australia’s Airports since privatisation: A
preliminary report prepared by Airlines for Australia & New Zealand, A4ANZ, May 2018, pp 9–10, accessed 13 April 2022.
13 IATA, Submission No. 27 to the Productivity Commission, Inquiry into Economic Regulation of Airports (2019), pp 13–14.
14 IBISWorld, Parking Services in Australia S9533, IBISWorld website, February 2020, p 7, accessed 7 April 2022.
15 IBISWorld uses earnings before interest and taxes (EBIT) as an indicator of a company’s profitability rather than EBITA.

Further, in March 2022, Sydney Aviation Alliance (the Alliance) completed a $32 billion purchase of
Sydney Airport, which has been described as the largest cash purchase of an Australian company
in history.16 In the midst of the COVID-19 pandemic, the Alliance had to increase its offer on multiple
occasions before it was accepted by the shareholders of the Sydney Airport.
The ACCC considers that monitored airports continue to have substantial market power in provision
of their services and there remains a need for to ensure that the monitored airports are not taking
advantage of their market power to the detriment of the Australian businesses and consumers.
Importantly, monitoring by the ACCC has limited influence on behaviour of airports that is detrimental
to the market and consumers, particularly as a longer-term measure where the threat of regulation is
diminished. Monitoring does not directly restrict monitored airports from increasing prices or allowing
service quality to decline. It also does not provide the ACCC with the ability to intervene in airports’
setting of terms and conditions of access to airports’ infrastructure.
Perth Airport vs Qantas case indicates that light-handed regulatory regime

is not working
On 18 February 2022, the Supreme Court of Western Australia delivered its decision in the dispute
between Perth Airport and Qantas. The dispute was over the aeronautical charges that Qantas
was liable to pay to Perth Airport between 1 July and 17 December 2018, while the 2 parties were
negotiating a new aeronautical service agreement following expiry of the previous one.17
The court ruled that the calculation of fair and reasonable prices payable by Qantas had to be done
using a method consistent with the APPs. Accordingly, the court determined the fair and reasonable
prices by using a BBM to estimate the efficient long-run average cost of Perth Airport providing
services to Qantas.
The court found that Qantas underpaid Perth Airport and ordered Qantas to pay Perth Airport an
additional $9.5m in unpaid fees and interest. However, the court also found that Perth Airport acted
inconsistently with the APPs in establishing its aeronautical prices. In particular, the court found that
Perth Airport:
arbitrarily set its Conditions of Use prices at 10% above the highest prices negotiated with other
airlines for services provided at other terminals
possesses, and has likely exercised, substantial market power
sought to include in its aeronautical prices to Qantas some categories of costs that were unrelated to
the provision of aeronautical services (for example, marketing costs).
The ACCC considers that these findings indicate that the current light-handed regulatory regime is not
working well enough to effectively protect Australian businesses and consumers from the exercise of
monopoly power.
The ACCC also notes that the WACC calculated by the court was significantly higher than the WACC
determined by some Australian and overseas regulators around that time. The court determined a
nominal vanilla WACC of 9.6% for Perth Airport for the period from July to December 2018, which is
3.25 percentage points higher than the 6.34% WACC that the New Zealand Commerce Commission
determined for Wellington International Airport for 2019.18
On 15 March 2022, Qantas announced that it will appeal the court’s ruling on some aspects of the
court’s calculations, particularly the WACC.19
16 Ticky Fullerton, Super funds take the keys to Australia’s gateway, The Australian, 10 March 2022, accessed 12 May 2022.
18 NZCC, Cost of capital determination for disclosure year 2019 – Electricity distribution businesses and Wellington International
Airport, [2018] NZCC 7, NZCC website, 30 April 2018, accessed 13 April 2022.
19 Geoffrey Thomas, ‘Qantas to appeal Supreme Court ruling on Perth Airport charges’, The West Australian, 15 March 2022,
accessed 7 April 2022.

The Aeronautical Pricing Principles are not assisting airlines as intended
The Australian Government considers the APPs to be a critical part of its light-handed regulatory
regime for Australian airports. The Australian Government has described the APPs as an important
framework for establishing prices and service delivery levels and has made it clear that it expects all
airports and airport users to have regard to the APPs when conducting their commercial negotiations.20
If the APPs worked as intended, they would provide for:

an open and transparent exchange of information between negotiating parties
prices being established using financial models, such as a BBM, to recover efficient long-run costs of
providing services
effective process for resolving disputes between parties.
Most of the major airports in Australia stated to the ACCC that they are providing detailed information
to airlines and are using a BBM to inform their price offers. However, as the Perth Airport case
illustrates, this is not necessarily leading to prices that reflect efficient long-run costs. The problem is
that the APPs are unenforceable, so there is no independent oversight of application of the APPs. As a
result, there appears to be disparity in compliance with, and understanding of, the APPs across airports
in Australia.
Airports in Australia seem to have adopted different approaches to the type and breadth of information
that they provide to airlines during negotiations. Airports also differ in the way they use a BBM in
negotiations. One major airport informed the ACCC that it does not use any financial modelling for the
purpose of making price offers.
While most other major airports state that they use a BBM, this by itself does not mean that the
aeronautical prices they agree with airlines reflect efficient long-run costs. Whether a BBM produces
reasonable outputs on revenue and prices depends on the inputs used in the model. Some airports and
airlines have informed the ACCC that they can have significant disagreements about the appropriate
BBM inputs, particularly WACC, which can result in parties being very far apart on what they consider
to be reasonable prices.
The Perth Airport case illustrates the benefits that the APPs can provide in commercial negotiations
to resolve the dispute between the parties in such circumstances. Where both parties use a common
framework to negotiate prices (a BBM), an independent arbiter can systematically resolve a dispute
between the parties about the appropriate parameters of a BBM. Although, for dispute resolution to be
relatively quick and inexpensive, such an independent arbiter should not be a court. The Perth Airport
court case lasted over 3 years and resulted in substantial litigation costs to both parties.
However, most major airports have stated that they do not support using binding commercial
arbitration to resolve disputes. In fact, at least some airports generally prefer to avoid getting ‘bogged
down in BBM discussions’, effectively choosing to ‘agree to disagree’ with airlines about the BBM inputs.
Specifically, it appears that at least some airports:
do not provide adequate information to airlines during negotiations to substantiate their BBM
calculations and justify their assumptions and input values
do not engage in a process with airlines designed to resolve their differences of view about
appropriate BBM inputs.
Instead, those airports prefer to reach an agreement with airlines through discussion of ‘value’ and
typically offer various non-price arrangements to sweeten the deal (for example, rebates, access to
facilities and agreements about quality of service).
An airport that does not see the need to be accountable on how it determines its price offer, can fix
the inputs of a BBM to achieve its desired price and then proceed to bargain with the airline on some
other basis.
20 Department of the Treasury, Australian Government response to the Productivity Commission Inquiry into the Economic
Regulation of Airports, Treasury website, 11 December 2019, p 7, accessed 13 April 2022.

According to some airlines, in negotiations where parties remain far apart on their positions, some
airports start making ‘take it or leave it’ offers or threaten that the airline will lose access to facilities or
other forms of access. There are very few viable options available to airlines in these circumstances.
Airlines cannot do anything to rectify airport’s non-compliance with the APPs. Airlines cannot compel
airports to use a BBM, or any other financial model, in negotiations. Airlines cannot compel airports to
provide the information they need for the purpose of negotiations. Airlines cannot compel airports to
enter binding commercial arbitration to resolve their dispute.
For many years, some airports have asserted that airlines have countervailing power due to airports’
obligations under the terms of their Commonwealth leases to provide access to airlines. However, the
Perth Airport case illustrates that conditions in airports’ Commonwealth leases do not provide material
protection to airlines from airports using their market power during negotiations.

Key monitored airports’ results 2020–21
NUMBER OF PASSENGERS
50
BNE MEL
40
Passengers (millions)
PER SYD International Domestic
30 0.3m 95% BNE 7.6m 43%
20 0.2m 97% MEL 5.9m 68%
10 0.1m 97% PER 5.8m 31%
0
2018–19 2019–20 2020–21 0.6m 95% SYD 7.3m 64%
MONITORED AIRPORTS’
LOCATIONS AND TOTAL
AIRPORT PROFIT MARGINS*
BNE
10.8%
32.9 pp
PER
10.3%
22.4 pp SYD
18.8%
MEL 27.1 pp
-32.8%
73.4 pp
AERONAUTICAL INVESTMENT AERONAUTICAL PROFIT MARGINS*
MEL MEL
$133m SYD SYD
-133.2%
5% of aero $279m -56.5%
9% of aero 152.1 pp
BNE assets 81.9 pp
assets BNE
$23m
PER -59.9%
1% of aero PER
assets $61m 87.2 pp
-37.8%
6% of aero
assets 59.3 pp
AVERAGE DAILY CAR PARKING CAR PARKING PROFIT MARGINS*

THROUGHPUT
12000
BNE MEL BNE 57.3%  3.2 pp
10000 PER SYD
8000 MEL -23.5%  72.1 pp

6000
4000 PER 43.9%  9.2 pp

2000
0 SYD 14.5%  45.2 pp

2018–19 2019–20 2020–21
* Profit margin is measured as earnings before interest, taxes and amortisation (EBITA) as a percentage of revenue.
Notes: Items described as qpare comparisons to 2019–20.
pp means percentage point(s).

Key performance indicators for 2020–21
Table 1: Key aeronautical indicators for 2020–21
Aero Aero Aero Profit

Passenger revenue Aero revenue per operating (EBITA) margin Return on aero
Airport numbers (m) ($m) passenger ($) profit ($m) (%) assets (%)
Brisbane 7.9 141.4 18.0 -84.6 -59.9 -2.8
Melbourne 6.2 127.3 20.6 -169.6 -133.2 -6.4
Perth 5.9 93.2 15.8 -35.2 -37.8 -3.6
Sydney 7.9 270.9 34.5 -153.1 -56.5 -4.9
Table 2: Changes in key aeronautical indicators from 2019–20 to 2020–21
Aero revenue Aero

Passenger Aero revenue per passenger operating Aero profit Return on aero
Airport numbers (%) (%) (%) profit (%) margin (pp) assets (pp)
Brisbane -56.6 -59.6 -6.9 -188.5 -87.2 -5.8
Melbourne -77.4 -69.0 36.9 -319.0 -152.1 -9.3
Perth -49.7 -51.3 -3.1 -185.9 -59.3 -7.7
Sydney -75.7 -62.6 53.6 -183.3 -81.9 -10.5
Table 3: Key car parking indicators for 2020–21
Revenue Operating Revenue share

Operating Profit Car per car park profit per car of total airport
Revenue profit margin parking space park space revenue
Airport ($m) ($m) (%) spaces ($) ($) (%)
Brisbane 44.4 25.5 57.3 19,091 2,327 1,333 9.9
Melbourne 37.1 -8.7 -23.5 26,654 1,393 -328 11.4
Perth 34.7 15.2 43.9 11,636 2,981 1,308 13.4
Sydney 33.5 4.8 14.5 14,710 2,276 329 4.2
Table 4: Changes in key car parking indicators from 2019–20 to 2020–21
Car Revenue Operating Revenue share

Operating Profit parking per car park profit per car of total airport
Revenue profit margin spaces space park space revenue
Airport (%) (%) (pp) (%) (%) (%) (pp)
Brisbane -47.5% -50.3% -3.2 0.0% -47.5% -50.3% -1.3
Melbourne -66.5% -116.3% -72.1 0.0% -66.5% -116.3% -1.8
Perth -31.4% -43.2% -9.2 -47.3% 30.3% 7.8% 0.5
Sydney -67.5% -92.1% -45.2 1.5% -68.0% -92.2% -3.2
Note: pp = percentage points. Changes for financial data are presented in real terms (base year = 2020–21).

1. Introduction
1.1 Airports’ importance to the Australian economy
Airports perform a vital role in supporting economic activity across a number of Australian industries.
Air travel itself has become increasingly popular and essential to several industries over the last
few decades. Over the 20 years to 2019, prior to the onset of the COVID-19 pandemic, the number
of passengers travelling through Australia’s airports more than doubled to over 160 million.21 The
4 monitored airports accounted for the majority (72%) of passenger movements across Australian
airports in 2018–19.22
Apart from airports’ core activities, which employ a relatively small number of staff23, airport precincts
support a much larger sphere of economic activity. This includes retail, office space, logistics and other
aviation sector activity, accounting for some estimated 206,400 full-time equivalent staff in 2016–17.24
Outside the airport precinct, airports are essential in facilitating economic activity in other industries.
One of the most notable is tourism, which (prior to COVID-19) contributed around 6% to Australia’s
gross domestic product and was its fourth largest export industry.25 The overwhelming majority
(some 97%) of international tourists arrive in Australia by plane.26 The mining, construction and oil
and gas industries also rely heavily on airports to facilitate transport of their fly-in fly-out (FIFO)
workforce to remote parts of Australia.27 Numerous other industries rely on airports to facilitate
business-related travel.
Airports also play a role in facilitating air freight. While this only accounts for 0.1% of freight transported
between Australia and the rest of the world in volume, it represents around 20% of trade by value.28 The
majority of the goods transported by air are high value and time critical, such as eCommerce parcels,
perishable goods (particularly seafood) and medical supplies.29
Apart from facilitating economic activity, airports also play a role in connecting family, friends and
communities throughout Australia.
1.2 Services provided by airports

Airports provide a range of services to various users, including:
aeronautical services to airlines
car parking services to passengers, airport staff and employees of businesses located at the airport
landside access services to transport operators, including taxis, rideshare services, private cars
(including limousines), and public and private buses (including shuttle buses for off-airport parking)
commercial services (particularly leasing space) to retail outlets, car rental operators, hotels,
corporate parks and factory outlets.
The following sections discuss these in more detail.
21 ACCC calculation based on BITRE Airport Traffic Data (1985–86 to 2020–21).

22 ACCC calculation based on BITRE Airport Traffic Data (1985–86 to 2020–21). Note that this share of total passenger
movements decreased to 56% in 2020–21.
23 IBISWorld estimated that airports directly employed some 12,593 in 2018–19 prior to the pandemic; see IBISWorld, Airport
Operations in Australia I5220, IBISWorld website, 2021, p 13, accessed 7 April 2022.
24 Deloitte, Connecting Australia – The economic and social contribution of Australia’s airports, Deloitte website, 2018, p ii,
25 Department of Infrastructure, Transport, Regional Development and Communications (DITRDC), Future of Australia’s
Aviation Sector, Issues paper, 2020, p 5, accessed 7 April 2022.
26 Deloitte, Connecting Australia, p 37.
27 DITRDC, Future of Australia’s Aviation Sector, p 5.
28 ibid.
29 Deloitte, Connecting Australia, p iii; DITRDC, Future of Australia’s Aviation Sector, p 5.

1.2.1 Aeronautical services
Broadly, aeronautical services are services and facilities that airports provide to airlines for the operation
and maintenance of civil aviation at the airport.30
Airlines operate aircraft on scheduled routes domestically and internationally to transport both
passengers and freight. Airports provide services and facilities to assist with airlines’ use of the aircraft,
including:
runways, taxiways, aprons, airside roads and airside grounds
airfield and airside lighting
aircraft parking sites
ground handling (including equipment storage and refuelling)
airside freight handling and staging areas essential for aircraft loading and unloading.
Airports also provide services and facilities to assist airlines’ passengers, including:
necessary departure and holding lounges, and related facilities
aerobridges and buses used in airside areas
facilities to enable the processing of passengers through customs, immigration and biosecurity
(quarantine)
check-in counters and related facilities (including any associated queuing areas)
terminal access roads and facilities in landside areas (including lighting and covered walkways)
baggage, handling and reclaiming facilities.
Airports and airlines engage in commercial negotiations to reach an agreement on the terms and
conditions of use of airport’s aeronautical services and facilities, including charges and service levels.
Under these agreements, aeronautical charges could be based on a variety of factors, such as the
number of passengers, maximum take-off weight, duration and time of day. While some airports levy
charges for each aeronautical service component, other airports bundle some of those services into
a singe charge. Airports generally levy charges for access to terminals on the basis of the number of
passengers per aircraft and type of flight.
Many airports also have standard conditions of use or standard terms of service that apply to all airlines
which use the airport’s services and facilities, but which have not entered into a service agreement with
the airport.
1.2.2 Airport car parking services

Each of the 4 monitored airports provides a range of on-site car parking facilities for the public and
staff. Each airport offers at-terminal and at-distance parking on both a short-term and long-term basis
as well as a range of products and services in between. For some airports, this offering has broadened
to include premium services such as valet car parking and ‘guaranteed space’ allocations.
The most common form of parking at airports is motorists parking near the terminal as they drop-off
or pick-up friends and relatives. At‑distance car parking is generally not located within walking distance
of the terminals and therefore requires shuttle bus access. Despite the lower level of convenience,
at-distance car parks are often favoured by motorists parking for extended durations because of the
cheaper parking rates.
Airports charge the motorists directly for parking based on their choice of parking facilities and length
of stay. Prices charged for parking near the terminal are typically higher than those for parking at some
distance from the terminal. Most airports offer promotions that motorists can access online, such as for
off-peak periods, providing discounts on the standard drive-up rates.
30 Part 7 of the Airports Regulations.

The following section provides a brief overview of each airports’ car parking service offerings.
Brisbane Airport
Brisbane Airport has 3 separate car parking precincts, 2 of which are within walking distance of the
terminals. The third precinct is located at a distance from the terminals, with access provided via a free,
regular shuttle bus service.
The 2 facilities that are located at-terminal are both multi-level car parks. One is located near
the international terminal and one is located near the domestic terminal (comprising of P1 and
P2 car parks):
The International terminal offers short-term (up to 4 hours of parking, also known as ParkShort),
long-term (over 4 hours of parking, also known as ParkLong) and valet parking services.
P1 offers ParkShort, ParkLong, valet, premium parking and guaranteed space services.
P2 offers long-term and guaranteed space parking services.
The car park that is located at a distance from the terminals (Airpark) provides open air and undercover
parking for longer stays. A shuttle bus service picks up and drops off customers from 3 designated bus
stops close to the entrance of both terminals. It is part of the central parking area that also includes staff
car parking facilities as well as landside operator facilities and amenities.
Melbourne Airport
Melbourne Airport provides multiple car parking facilities for both domestic and international
passengers. There are 2 main multi-level car parks that are located ‘at-terminal’: At-Terminal T123 (for
access to Qantas, Virgin and international terminals) and At-Terminal T4 (for access to other domestic
airlines, including Jetstar, Rex and Airnorth). While both offer premium parking options, the T123 car
park also offers valet parking services.
The at-distance Value Car Park provides open air parking for longer stays. It is serviced by a free
shuttle bus that picks up and drops off customers at the entrance of all terminals every 15 minutes
between 4 am and 1 am.
Perth Airport
There are 2 main car parking precincts at Perth Airport: T1/T2 and T3/T4. T1/T2 are serviced
by individual at-terminal car parks and common at-distance car parks, while T3/T4 are serviced
by common at-terminal and at-distance car parks. The T3/T4 precinct also includes a premium,
undercover ‘Fast Track’ car park in front of the terminals.
Perth Airport’s at-distance parking areas are serviced by free shuttle buses that operate every
10 minutes. The airport also offers free parking for 10 minutes at the at-terminal car parks and for the
first hour in all at-distance car parks. At-terminal and at-distance parking can be booked online except
for some short-term durations.
Sydney Airport
Sydney Airport provides a range of car parking services and facilities. There are 2 at-terminal precincts
that are located close to the domestic terminal and international terminal respectively.
The domestic precinct consists of 2 multi-level facilities (P1/P2 and P3) that provide both short-term
and longer-term parking. The P1/P2 car park is located closest to the domestic terminals and includes
a dedicated ‘Guaranteed Space’ area, while the P3 car park is a longer (8 minute) walk away from the
domestic terminals and offers discounted day rates as well as an express pick-up area.
The international precinct consists of a multi-level facility (P7) that provides both short and longer-term
parking, as well as the relatively new northern multi-level car park (P6) that provide short and
longer-term parking to the public.
There is also a third long-term car park (Blu Emu) located at a short distance from the terminals. A free
regular shuttle bus service transports users between the car park and the domestic terminal

1.2.3 Landside access services
Airports provide landside access services to a range of third parties seeking to access the airport
to drop off or pick up passengers. These include various landside transport operators, as well as
independent providers of car parking services.
Landside transport operators

Apart from driving and parking on airport land, the public can access airports via a range of landside
transport operators, including taxis, rideshare services, terminal pick-up and drop-off, private cars (for
example, limousines), public and private buses, and (in some cases) trains.
Airports provide access and facilities to all these landside transport operators such as forecourt and
transport hubs, drop-off and pick-up bays, taxi stands, waiting areas and roads to facilitate movements
around the airport. A table showing the alternative ground transport options and facilities available at
the monitored airports can be found at Appendix A. Airports often charge landside transport operators
an access fee each time they drop-off or collect passengers.
Independent car parking service providers

At each monitored airport, the public also has access to a range of off-airport parking options.
Customers typically drop off their vehicles at the relevant off-airport parking facilities and are
transported by a courtesy shuttle bus to their respective airport departure terminal, and later picked up
from the relevant arrival terminal. The off-airport parking operator may obtain airport access by way
of a licence agreement granted by each airport operator. This permits the off-airport parking operator
restricted airport precinct entry and usage rights.
Off-airport parking operators may also pay airports an access fee each time they enter the airport
precinct to drop-off or collect passengers.
Each of the monitored airports is serviced by a varying number of off-airport and independent
parking operators:
Brisbane: some 4 independent off-airport car parking facilities are located near Brisbane Airport.
The shuttle buses from these operators have a typical travel time ranging between 10 minutes and
17 minutes from the car park to the terminals.
Melbourne: at least 17 independent off-airport car parking facilities are located near Melbourne
Airport. The shuttle buses from these operators have a typical travel time ranging between 6 and
Perth: some 6 off-airport car parking facilities are located near Perth Airport, and one independent
operator on-airport. The shuttle buses from these operators typically take between 5 minutes and
12 minutes to transport passengers from the car park to the terminals.
Sydney: at least 8 independent off-airport car parking facilities are located near Sydney Airport.
The shuttle buses from these operators have a typical travel time ranging between 5 minutes and
1.2.4 Commercial services

Airports derive revenue through their ownership of property on airport land, most notably through
leasing airport premises and land to a variety of parties. These include car rental businesses, retail
outlets and other commercial tenants.31
Car rental
Car rental businesses located at, or near, airports lease vehicles primarily to arriving international and
domestic travellers.
31 Recognition of revenue from car rental operators varied between airports, with some including it as part of property, while
some included it as part of landside access. As noted in chapter 6 of this report, ACCC has historically analysed landside
access excluding car rental data.

Car rental businesses negotiate and enter into lease agreements (sometimes known as licence
agreements) with airports to acquire facilities which allow them to operate their businesses. These
include counter spaces at terminals and car parking bays, as well as signage providing directions to
these facilities. Car rental businesses compete on convenience by locating themselves at, or in close
proximity to, airports and require sufficient parking bays to accommodate their fleet.32
Some car rental companies also partner with airlines and various tourism service operators.
Retail
Retail outlets operate within airport terminals, providing goods and services to passengers before
or after boarding their plane. These include food and beverage vendors, newsagencies, fashion
outlets, souvenirs, travel-related goods and currency and phone services. All the monitored airports’
international terminals also have duty free shops.
Retail outlets enter into lease agreements with airports to acquire the necessary facilities to operate
their businesses. These primarily include the physical site within the airport’s terminal, although airports
will also provide additional services such as storage space and promotional activities.
Other commercial activities

Monitored airports’ commercial activities also include lease of terminal space, buildings and other
space on the airport’s land for hotels, business parks, office space and industrial business operators.
For example, various hotels are located at Melbourne Airport while its Business Park spans more than
430 hectares with various types of tenants like a large plumbing supplies warehouse and many freight
and logistics companies.33 Likewise, Perth Airport is home to a large supermarket and a shopping
outlet.34
Airports typically enter into lease agreements with these parties to use airport premises and land.
However, in some cases, airports themselves will own and derive revenue from these assets, such as
hotels.35
1.3 Airport market power

It is generally accepted that many airports in Australia are regional natural monopolies. Due to
economies of scale and scope there is usually only one airport in a certain region. These airports
typically have market power, as they do not face any effective competition from other airports for
provision of air transportation services in the relevant region. The extent of that market power depends,
in part, on how essential the airport is to those seeking to use it. Airports that act as a critical ‘hub’ for
economic activity will typically have substantial market power. The Productivity Commission (PC) has
found in its previous inquiries that at least the 4 monitored airports in Australia have significant market
power.36
Each airport, just as any other private business in Australia, seeks to maximise its profits. As monopolies
that are not constrained by competition, airports seek to achieve this by charging monopoly prices,
while limiting output and service levels. Airports may also under- or over-invest in their infrastructure
and lack incentives to operate efficiently or to adopt innovative technologies and service models.
Such actions hamper productivity and lead to efficiency losses to the detriment of consumers and the
broader Australian economy.
32 IBISWorld, Car Rental in Australia OD5485, IBISWorld website, 2021, p 34, accessed 7 April 2022.
33 Australia Pacific Airports Corporation Limited (APAC), APAC FY21 Annual Report, Melbourne Airport website, 2021,
pp 34–5, accessed 7 April 2022.
34 Perth Airport, Perth Airport Annual Report 2020/21, Perth Airport website, 2021, p 22, accessed 7 April 2022.
35 For example, Melbourne Airport is constructing a 464-room hotel on airport land, which it intends to operate through a
third-party manager: see M Bleby, ‘As demand takes off, Melbourne Airport gets its first new hotel since 2002’, Commercial
Real Estate, 17 April 2019, accessed 7 April 2022. Note that this project is currently on hold: see APAC, APAC FY21 Annual
Report, p 34, accessed 7 April 2022.
36 Productivity Commission, Price Regulation of Airport Services (2002), Inquiry report, Productivity Commission website,
2002, p 133, accessed 7 April 2022; Productivity Commission, Economic Regulation of Airport Services (2012), Inquiry
report, Productivity Commission website, 2012, p 63, accessed 7 April 2022; Productivity Commission, Economic
Regulation of Airport Services (2019), Inquiry report, Productivity Commission website, 2019, p 89, accessed 7 April 2022.

Key infrastructure service providers with natural monopoly characteristics, similar to those exhibited by
the major airports, are typically regulated to ensure that they will not exploit their market power to the
detriment of consumers. Since 2002, the Australian Government has adopted a light-handed regulatory
regime for Australian airports, discussed in the next section.
1.4 History of airport regulation in Australia

Until the 1980s, Australia’s main airports were owned and operated by the Commonwealth
Government, through the Department of Aviation (and the forerunner Department of Civil Aviation).
Following the recommendations in the 1984 Report of the Independent Inquiry into Aviation
Cost Recovery (‘Bosch Report’), the Australian Government announced the corporatisation of
the major Australian airports in 1985, with the goal of improving efficiency in airport operations,
investment and pricing. This was part of a wide-ranging program of ‘microeconomic reform’ with a
corporatisation model giving the management of airports greater commercial freedom and intended
to emulate governance, management, and incentive systems used in the private sector. A total of
23 Commonwealth Airports were transferred from the Department of Aviation to a statutory enterprise,
the Federal Airports Corporation37 (FAC), that began operations on 1 January 1988.
In 1996, the Australian Government commenced the phased privatisation (through long-term leasing
arrangements) of 22 airports, previously owned and managed by the FAC, to improve the efficiency
of airport investment and operations, and to facilitate innovative management.38 The Airports Act
1996 sets out a number of public-policy objectives for the corporatised FAC airports, that included the
promotion of the ‘efficient and economic development and operation of airports’.
Following the decision to privatise these airports, the Australian Government established a transitional
price regulation regime, administered by the ACCC.39 This was designed to limit the potential for
airports to exercise their market power, and included price notification, price monitoring, price cap
arrangements and special provisions for necessary new investment. Some 12 airports were designated
as ‘core-regulated’ airports under s. 7 of the Airports Act 1996 and subject to price regulation (Adelaide,
Alice Springs, Brisbane, Canberra, Coolangatta, Darwin, Hobart, Launceston, Melbourne, Perth, Sydney
and Townsville).40 These airports were also subject to quality of service monitoring to ensure that airport
assets were not allowed to run down at the expense of service standards.
1.4.1 2002 PC inquiry

In December 2000, the Australian Government directed the PC to inquire into the price regulation of
airport services, including the price cap regime.
The PC released its inquiry report in early 2002, which concluded that many of the major airports did
have substantial market power (particularly Sydney, Melbourne, Brisbane and Perth).41 It also concluded
that the abuse of market power could manifest itself as one or more of:
increasing prices above efficient costs
deterioration in quality
inefficient investment
selective denial of access to airport facilities.
37 The Australian Government established the Federal Airports Corporation (FAC) in the 1980s to own and manage
airports on a commercial basis. Initially the FAC was required to notify the relevant Minister prior to setting or varying
aeronautical charges.
38 Department of the Parliamentary Library Australia, Turbulent Times: Australian Airline Issues 2003 – Research Paper No. 10,
2003, p 29, accessed 13 April 2022.
39 This was under Part VIIA of the then Trade Practices Act 1974.
40 Productivity Commission, Price Regulation of Airport Services (2002), pp 2–3.
41 ibid, p 133.

However, the PC considered that, while major airports did have market power, it was either:
not exercised
was exercised but did not cause inefficiency
was exercised but offset by the countervailing power of airlines.
Furthermore, it considered that factors such as the countervailing power of airlines and the threat of
re-regulation would act as a constraint on the exercise of market power in commercial negotiations
between airports and users in the future.42
The PC concluded that price caps distorted production and investment decisions due to the inability
of regulators to set prices accurately.43 Consequently, it recommended that the price regulation regime
be replaced with a more ‘light-handed’ price monitoring regime, which the ACCC would continue to
administer. This would apply to 7 of the 12 core-regulated airports (Adelaide, Brisbane, Canberra,
Darwin, Melbourne, Perth and Sydney), with the remainder no longer subject to airport-specific price
regulation or quality monitoring. Additionally, a price-cap regime would apply only to Sydney Airport in
respect of regional air services (within New South Wales) (see section 1.6).
Later in 2002, the Australian Government accepted this inquiry recommendation and replaced the
price regulation regime with a price monitoring regime. This was intended to facilitate investment
and innovation. The move also sought to promote transparency while retaining some oversight of the
exercise of market power by airports in their dealings with airlines and other customers.
2006 PC inquiry
In 2006, the Australian Government requested the PC conduct a second inquiry into the regulation
of airports. The PC found that the commercial constraints on airports’ market power it had identified
in its 2002 inquiry were not as effective as originally supposed.44 The inquiry recommended that
price monitoring be continued until 2013, with some adjustments to the scope of monitoring.
Darwin and Canberra airports were removed from the monitoring regime following the inquiry’s
recommendations, based on the PC’s conclusion that these airports did not have a level of market
power warranting regulation.
Following this review, the Australian Government set out the Aeronautical Pricing Principles (APPs),
which build on the more general Part IIIA pricing principles in the Competition and Consumer Act 2010
(CCA) for infrastructure of national significance (box 1.1).
42 ibid, p XLII.
43 ibid, pp 307–8.
44 See for example, Productivity Commission, Economic Regulation of Airport Services (2007), p 39.

Box 1.1: Aeronautical Pricing Principles
The monitored airports together with the other FAC airports are required to follow the APPs in
negotiating with airlines and setting aeronautical prices.
The Australian Government specified a number of overarching ‘Review Principles’ when changing
from a price regulation to a price monitoring regime following the initial PC review in 2002.45 The
principles specifically referred to:
pricing to recover efficient long-run costs, including an appropriate return on assets
the scope for price discrimination and multi-part pricing
the use of efficient peak/off-peak prices to deal with capacity constraints
quality-of-service outcomes consistent with users’ reasonable expectations
the negotiation of commercial agreements between airports and airlines.
The Review Principles were intended to provide guidance on appropriate outcomes under the
new regulatory arrangements. They were later extended based on Part IIIA pricing principles and
renamed the Aeronautical Pricing Principles.
The Government has promoted the APPs as an expression of its expectations on the pricing
behaviour and outcomes that should apply to aeronautical services and facilities that are subject
to significant market power. The APPs are not part of any legislative instrument and are therefore
not enforceable by private entities. However, the Australian Government has made it clear that it
expects all airports, whether monitored or not, to comply with the APPs (see section 2.2). While not
enforceable, the PC also draws on the APPs in its assessment of whether airports have exercised
their market power and in its assessment of parties’ conduct in commercial negotiations.46
Additionally, in its response to the 2006 review, the Australian Government supported the PC’s
recommendation for introducing a ‘show cause’ mechanism. Under this, a persistent failure to comply
with the APPs could lead to more detailed scrutiny. The Government would have regard to the ACCC’s
annual monitoring report and other relevant information in assessing the behaviour of the airport to
determine whether to request the ‘show cause’.47
In 2008, the Australian Government directed the ACCC to formally monitor prices, costs and profits
relating to car parking at Australia’s 5 major airports. In addition to its prices monitoring role, schedule 2
of the Airports Regulations provided for the ACCC to monitor the quality of service of car parking at the
5 specified airports.

In 2012, the PC released its third inquiry report on the economic regulation of airports, following a
direction from the government in December 2010. The PC considered evidence of airports’ misuse of
market power and again recommended the continuation of price monitoring. Adelaide Airport was
subsequently removed from the monitoring regime following recommendations from this inquiry.
The PC also recommended that the ACCC, as part of its annual monitoring reporting, should be able to
request an airport to ‘show cause’ why its conduct should not be subject to a Part VIIA price inquiry.48
Where it is dissatisfied with an airport’s response, it should recommend to the relevant minister to
invoke a Part VIIA inquiry, to be guided by the APPs.
45 Minister for Transport and Regional Services and Treasurer, Productivity Commission Report on Airport Price Regulation
[media release], Treasury website, 13 May 2002, accessed 7 April 2022.
46 Productivity Commission, Economic Regulation of Airport Services (2019), p 298.
47 Treasurer (Peter Costello), Productivity Commission Report – Review of Price Regulation of Airport Services [media
release], Peter Costello, 30 April 2007, accessed 7 April 2022.
48 Productivity Commission, Economic Regulation of Airport Services (2012), p 179.

In its response, the Australian Government considered that the ACCC has the power to seek additional
information from airports where necessary, and it can make a recommendation to the minister
responsible for competition policy for appropriate action under the CCA.49

In 2019, the PC conducted its most recent inquiry into the economic regulation of Australian airports,
following a direction from the government in June 2018. The PC reported that it had found that
the existing reporting framework remained fit for purpose and that, on balance, most indicators of
operational efficiency including costs and service quality, aeronautical revenue and charges, and
profitability are within reasonable bounds. It recommended improvements to the monitoring regime to
better inform reviews of airport performance.
The Australian Government accepted these views and supported the inquiry’s recommendations.50
These included the recommendation that the ACCC should undertake a review of quality of service
indicators. This would ensure quality of service monitoring has a greater focus on outcomes and more
closely reflect the expectations of passengers, airlines and other airport users.
In each of the 4 inquiries above, while the PC has recommended various adjustments to the monitoring
regime, it has consistently favoured continuing with the existing price monitoring regime rather than
reintroducing price controls or any other form of regulation. While the Australian Government has
accepted the PC’s main recommendations from each inquiry, it has reserved the right to reconsider the
existing ‘light-handed’ approach to regulation in the future.51
1.5 The ACCC’s monitoring role

The ACCC’s monitoring functions originate from directions issued pursuant to section 95ZF of the CCA
as well as from the Airports Act 1996 and associated regulations.
The ACCC monitors revenues, costs and profits of aeronautical services at the monitored airports,
along with some non-aeronautical activities (car parking and landside access activities). The ACCC
reports this information annually under a dual-till approach. This means that the ACCC separately
reports on aeronautical, car parking and landside access services. This allows the ACCC to assess
trends in each of these segments. The ACCC generally does not monitor, or report on, airports’ financial
performance in other non-aeronautical services, such as retailing, business parks and factory outlets.
The following sections describe these directions and how they relate to the ACCC’s monitoring role in
greater detail.
1.5.1 Prices, costs and profits monitoring

Aeronautical and car parking services monitoring
Under directions made pursuant to s. 95ZF of the CCA, the ACCC is required to monitor the prices,
costs and profits related to the supply of aeronautical services and facilities and car parking services by
Brisbane, Melbourne, Perth and Sydney airports.
Subsection 95G(7) of the CCA requires the ACCC to have particular regard to the following matters in
performing this monitoring function:
The need to maintain investment and employment, including the influence of profitability on
investment and employment.
The need to discourage a person who is in a position to substantially influence a market for goods or
services from taking advantage of that power in setting prices.
49 Department of Treasury, Government Response to the Productivity Commission Inquiry into the Economic Regulation of
Airport Services, Treasury website, 30 March 2012, accessed 7 April 2022.
50 Treasury, Australian Government Response to the Productivity Commission Inquiry into the Economic Regulation of
Airports, Treasury website, 11 December 2019, accessed 7 April 2022.
51 ibid, p 8.

The need to discourage cost increases arising from increases in wages and changes in conditions of
employment inconsistent with principles established by relevant industrial tribunals.
Financial accounts
Under Part 7 of the Airports Act 1996 and Part 7 of the Airports Regulations 1997, the ACCC collects
and reports annual regulatory accounting statements, including an income statement, balance sheet
and statement of cash flows, from the 4 monitored airports.
Under Part 7 of the Airports Regulations, airports must:

prepare a financial report which separately shows the financial details in relation to the provision of
aeronautical and non-aeronautical services (reg 7.03)
lodge these accounts with the ACCC within 90 days of the end of the relevant accounting period
(reg 7.06).
The ACCC’s price monitoring and financial reporting information requirements for airport operators are
outlined in the ACCC Airport prices monitoring and financial reporting guideline from June 2009.52
Box 1.2 explains the choice of profit measures used in ACCC monitoring.
Box 1.2: Profit measures used in the Airports Monitoring Report

The ACCC uses profitability to measure an airport’s financial performance.
There are typically 3 ways to measure operating profit (as a dollar amount):
Earnings before interest and taxes (EBIT)
Earnings before interest, taxes and amortisation (EBITA)
Earnings before interest, taxes, depreciation and amortisation (EBITDA).
As a measure of airport operating profit, each can be calculated using accounting data collected as
part of the ACCC’s monitoring activities.
Historically, the ACCC used EBITA as the profit measure. Compared to EBIT and EBITDA, EBITA
includes depreciation but excludes the associated financing costs and amortisation of any intangible
assets. By excluding amortisation of externally acquired intangibles, EBITA provides a consistent
profit estimate.
In previous Airport Monitoring Reports, the ACCC typically reported 2 profitability measures:
Operating profit margin – EBITA as percentage of total revenue. This is the percentage of total
revenue remaining after paying off the operating expenses and depreciation.
Return on assets – EBITA as a percentage of average tangible non-current assets. This shows the
rate of return earned on the relevant assets. This measure looks at how effectively a business is
using its resources to make a profit.
The ACCC recognises that both EBIT and EBITA can be a more appropriate measure of operating
profit in the utility sector than EBITDA, as they account for depreciation of tangible assets in the
overall cost. As a measure of post-depreciation earnings, they cover gross earnings to equity holders
and debt holders.
The ACCC considers that measurement of the return on assets by means of EBIT is the accounting
measure that most closely resembles the WACC concept. However, as the value of intangible assets
(other than goodwill and leasehold land) is small or negligible for the monitored airports (other than
Sydney Airport), the resulting difference in EBIT and EBITA is not material.
Consequently, for airport monitoring reporting, the use of EBITA compared to EBIT will not have a
material difference in assessing profitability.
52 Available at https://www.accc.gov.au/publications/airport-prices-monitoring-financial-reporting-guideline.

The ACCC also uses the line-in-the-sand approach to asset valuation. Box 1.3 explains how the
line-in-the-sand approach operates.
Box 1.3: The use of a line-in-the-sand approach to aeronautical asset

valuations
In its 2006 report into the review of price regulation of airport services, the PC noted that most of the
monitored airports had revalued above ground assets since the major airports became privatised.
The PC noted that one possible effect of these revaluations was to justify higher charges over time.53
For instance, an upward revaluation of airports’ aeronautical assets usually results in a lower return on
assets measure. The lower rate of return on average assets could be used to argue for the raising of
airport charges.
The PC recommended that under the monitoring regime, the value of an airport’s asset base should
be rolled forward as follows:
the value of tangible (non-current) aeronautical assets reported to the ACCC as at 30 June 2005,
adjusted as necessary to reflect the proposed service coverage of the new regime
plus new investment
less depreciation and disposals.
The line-in-the-sand approach removes the effect of revaluations of aeronautical assets by airports
for monitoring purposes. For example, an upward revaluation of a tangible non-current aeronautical
asset is recognised in the regulatory accounts prepared under Australian International Financial
Reporting Standards (AIFRS) but not in the line-in-the-sand asset base after 30 June 2005. As
a result, to the extent that subsequent revaluations took place, the line-in-the-sand asset base
will be lower. There is also a flow-on effect of a lower value of depreciation and, therefore, lower
operating expenses.
The ACCC required airport operators to provide information regarding the aeronautical asset base
under the line-in-the-sand approach for the first time in the 2007–08 report. This information was
required in addition to the airport operator’s regulatory accounts based on AIFRS which included any
revision to the value of the assets recorded since 20 June 2005.
Since this time, only Sydney and Brisbane airports have revised the value of their assets. Past
monitoring reports have presented 2 sets of financial accounts for these airports: one based on the
line-in-the-sand approach, and one based on AIFRS. However, the 2020–21 monitoring report only
presents the line-in-the-sand data to support the rationale for the recommendation by the PC.
For Sydney Airport, landfill assets were not included in the asset base as at 1 July 2005. However,
Sydney Airport has advised that the value of landfill is included in the asset base that was used in
the pricing modelling for airport charges for airlines. This report presents data which reflects the
exclusion of the landfill assets unless otherwise specified.
1.5.2 Quality of service monitoring

Part 8 of the Airports Act 1996 provides for the ACCC to monitor the quality of services and facilities at
the specified airports. More specifically, Part 8 provides for:
quality of service aspects to be specified in the Airport Regulations
the ACCC to monitor and evaluate the quality of the aspects of airport services and facilities against
criteria determined by the ACCC
records to be kept and retained in relation to quality of service matters
information to be provided to the ACCC by airport operators and other relevant parties, including
airlines, relevant to quality of service matters
53 Productivity Commission, Review of price regulation of airport services (2006), p XXII.

the ACCC to publish reports relating to the monitoring or evaluation of the quality of aspects of
airport services and facilities.
The ACCC’s approach to its quality-of-service monitoring role is outlined in its airport quality of service
monitoring guideline from June 2014.54
The ACCC did not collect quality of service data in 2020–21, to reduce the reporting burden on airports
following the onset of the pandemic.
1.5.3 Limitations of the ACCC’s monitoring role

There are some limitations in monitoring. Typically monitoring is limited in its ability to address
behaviour that is detrimental to the market and consumers, particularly as a longer-term measure
where the threat of regulation is diminished. Monitoring does not directly restrict airports from
increasing prices or allowing service quality to decline. It also does not provide the ACCC with the ability
to intervene in airports’ setting of terms and conditions of access to airports’ infrastructure. Further
discussion of the limitations of the ACCC’s monitoring role can be found in Appendix C.
Limitations on assessing airport profits

In this report, we undertake both long-term trend analysis of, and the impact of the COVID-19
pandemic on, the operational and financial performance of the monitored airports. The ACCC can
make some observations about trends and recent movements in the measured performance and can
also make some comparisons across the monitored airports. Where relevant supporting information is
available, we provide a qualitative assessment of the factors driving the trend. Caveats for consistency
and limitation of data and interpretation of the results are also provided where necessary.
There are limitations using the monitoring data. One of the key limitations of the existing monitoring
regime is that the data collected does not allow the ACCC to make conclusive assessments about
whether monitored airports are earning economic returns that are consistent with the degree of risks
they face or whether monitored airports have been operating efficiently.
This is mainly because the various financial indicators and measures the ACCC reports are based
on historical accounting data. As noted in box 1.2, the ACCC has typically used 2 profitability
measures – operating profit margin and return on assets. These measures reflect accounting rates of
return, which rely on book values of investment, depreciation, and accounting profits. As they do not
properly account for time value of money, the measured accounting rate of return does not coincide
with the economic rate of return.
The latter is most appropriate for analysing monopoly profits. This is because an economic rate of
return is what provides signals to entry and exit for firms and resources, and therefore should be used
and compared to an appropriate airport rate of return, over the long term, when assessing whether
a firm is making excessive profits on a sustainable basis. However, the ACCC cannot estimate the
economic rate of return because it currently does not obtain information needed to estimate economic
valuation of airport assets or to assess the efficient long-run costs of providing airport services.
The ACCC also has a limited power in collecting information for the monitoring purpose. For example,
information on landside access is provided by airports on a voluntary basis. The incomplete and
inconsistent financial information received from the airports over time has limited the scope of
our analysis.
1.6 The ACCC’s regulation of regional air services at

Sydney Airport
Prices charged by Sydney Airport for aeronautical services and facilities provided to regional air
services are regulated under the price notification regime in Part VIIA of the CCA. A declaration issued
54 Available at https://www.accc.gov.au/publications/guideline-for-quality-of-service-monitoring-at-airports.

under s. 95X of the CCA requires Sydney Airport to notify the ACCC if it intends to increase the prices
for regional air services.55 This declaration commenced on 1 July 2019 and will cease on 30 June 2022.
The ACCC must assess any proposed price and either:

not object to the increase
not object to an increase that is lower than the proposed increase, or
object to the proposed increase.
In undertaking its assessment of price notifications provided by Sydney Airport, the ACCC is required
by a direction made under s. 95ZH of the CCA to give special consideration to government policy.56 This
direction commended on 1 July 2019 and ceases on 30 June 2022.
To facilitate continuing access to Sydney Airport by operators of regional air services, the direction
required that the total revenue-weighted percentage increase in prices over 3 years from 1 July 2019
(or part thereof) should not exceed the total percentage increase in the Consumer Price Index over that
same period.
1.7 Terminals within scope of 2020–21 Airport

Monitoring Report
Table 1.1 sets out the terminal configurations at the monitored airports.
Table 1.1: Terminals covered by the 2020–21 Airport Monitoring Report
Airport Terminal
Brisbane Domestic Terminal
International Terminal
Melbourne Terminal 1 Domestic
Terminal 2 International
Terminal 3 Domestic
Terminal 4 Domestic
Perth Terminal 1 International & Domestic
Terminal 2 Domestic
Terminal 3 Domestic
Terminal 4 Domestic
Sydney Terminal 1 International
Terminal 2 Domestic
Terminal 3 Domestic
Source: Information received from monitored airports as part of the monitoring regime.
The ACCC’s monitoring role for aeronautical services and facilities relates only to those terminals that
are owned and operated by each of the monitored airports. For many years, some terminals at the
monitored airports have been operated on an exclusive basis by a single airline under a domestic
terminal lease (DTL). All terminals that previously operated under a DTL have now reverted back to
airport control. The implications of these changes on the ACCC’s reporting of aeronautical data are
discussed further in box 4.1.
55 Competition and Consumer (Price Notifications – Aeronautical Services to NSW Regional Airlines) Declaration 2019;
available at https://www.legislation.gov.au/Details/F2019L00555.
56 Competition and Consumer (Prices Surveillance – Aeronautical Services to NSW Regional Airlines) Direction 2019; available
at https://www.legislation.gov.au/Details/F2019L00556.

1.8 Industry consultation
In preparing this report, the ACCC consulted with 22 parties in the aviation industry, including airports
(both monitored and non-monitored), airlines, industry bodies, at-airport retailers, at-airport car rental
operators and off-airport parking operators.
The ACCC held some meetings and sent out targeted surveys/information requests to these parties.
The survey/information requests to all parties contained questions about the impact of the COVID-19
pandemic. The ACCC also sought information from both airports and airlines regarding their approach
to negotiating aeronautical service agreements both prior to, and during, the COVID-19 pandemic.
Market participants provided this information on a voluntary basis. This consultation formed a vital part
of this year’s report preparation and the ACCC thanks participants for their time and contributions.
1.9 Structure of the report

The structure of the remainder of the report is as follows:
Chapter 2 covers issues in the negotiation process between airports and airlines.
Chapter 3 provides an overview of the operational and financial performance of the
monitored airports.
Chapter 4 covers trends in aeronautical services at the monitored airports.
Chapter 5 covers trends in car parking services at the monitored airports.
Chapter 6 covers trends in landside access at the monitored airports.
Chapter 7 covers commercial services at the monitored airports, including retail, property and
car rentals.
Chapter 8 covers trends in investments made by the monitored airports.
The appendices contain further information on landside access options, supplementary tables
and charts presenting data gathered as part of the ACCC monitoring regime, as well as additional
background information on the ACCC’s monitoring role.
This and past airport monitoring reports can be found on the ACCC website at https://www.accc.gov.
au/regulated-infrastructure/airports-aviation/airports-monitoring. The webpage for each report will
include links to supplementary information such as the regulatory accounts for the monitored airports
for that year and the various forms of data used in that report.

2. Negotiation of aeronautical
service agreements
Over the course of 2021, some airlines have expressed concerns to the ACCC about their experiences
in negotiating aeronautical service agreements (ASAs) with some airports both during and prior to the
COVID-19 pandemic. In preparation for this report, the ACCC consulted with domestic airlines, each of
the monitored airports and 4 large non-monitored airports (that were in the top 10 of Australia’s busiest
airports prior to the pandemic) about their approach to negotiations.
In this chapter, the ACCC discusses its findings about the negotiation process, based on the
information obtained through this consultation process and other information the ACCC has obtained
through monitoring.
This chapter covers:

description of aeronautical service agreements and typical negotiation processes (2.1)
explanation of aeronautical pricing principles (2.2)
issues the ACCC has identified in relation to the negotiation process between airports and airlines
prior to the COVID-19 pandemic (2.3)
additional challenges that airports and airlines have reported to the ACCC in relation to negotiating
ASAs during the COVID-19 pandemic (2.4)
security charges (2.5).
2.1 Introduction to negotiation of aeronautical

service agreements
2.1.1 Aeronautical service agreements
Since 2002, airports and airlines in Australia have engaged in commercial negotiations to reach an
agreement on the terms and conditions for use of airport services and facilities, including charges,
services and capital investments. The parties set out the agreed terms in ASAs, which typically cover
airside services (for example, runways, aerobridges) and terminal services (for example, lounges and
baggage handling services).
Airports and airlines typically seek to enter a single ASA for a period of about 5 years that governs the
use of both airside services and terminals. However, the parties may agree to different arrangements,
particularly when significant capital investment is required. For example, Brisbane Airport entered into
11-year ASAs with airlines for the new runway system and separate, shorter ASAs, for terminals, aprons
and related infrastructure.57
Table 2.1 sets out the commencement and expiry dates of the most recent ASAs entered by the
monitored airports.
57 Brisbane Airport Corporation, Submission No. 38 to the Productivity Commission, Inquiry into Economic Regulation of
Airports (2019), Productivity Commission website, September 2018, p 19, accessed 13 April 2022.

Table 2.1: ASA commencement and expiry dates for monitored airports
ASA Commencement Date ASA Expiry Date

Brisbane: runway ASA 1 September 2012 30 June 2023
Brisbane: airside ASA Various 30 June 2023
Melbourne 2017 2022
Perth 1 July 2018 30 June 2025
Sydney: ASAs with some domestic and Various 30 June 2022
international airlines
Sydney: ASA with a domestic airline 1 September 2015 30 June 2025
Note: Sydney and Brisbane airports entered ASAs with a range of domestic and international airlines at different times.
Sydney Airport’s ASAs initially expired over 2019–20, but Sydney Airport has rolled them all over during the
COVID-19 pandemic.
Many airports have Conditions of Use (CoU) or other standard terms of service, including prices, that
they seek to apply to airlines which use the airport’s services and facilities but have not entered into an
ASA with the airport. This includes airlines that use the airport on an ad-hoc basis and airlines that are
still negotiating a new ASA following expiry of the old one.
2.1.2 The process of negotiating a new ASA

Domestic airlines individually negotiate the terms of their ASAs with each airport in Australia.
International airlines individually negotiate the terms of airline-specific services (for example, access to
lounges), while the Board of Airline Representatives of Australia (BARA) bargains collectively on behalf
of most major international airlines in relation to access to common-use services.
The key elements of the negotiation process include:

exchange of information
exchange of offers
bargaining
dispute resolution.
While the ASAs contain a range of terms and conditions, the parties often roll over many of these terms
from one ASA to the next, with some minor, non-contentious adjustments. The concerns expressed by
airlines to the ACCC typically centre on negotiation of aeronautical charges and capital investments by
the airport.
Where parties are unable to reach an agreement on the terms of a new ASA, they can agree to engage
in private mediation as well as binding or non-binding arbitration to resolve their dispute. The ACCC is
not aware of many instances of airports and airlines agreeing to a binding arbitration. The parties also
have recourse to court processes.
2.2 Aeronautical Pricing Principles

2.2.1 Introduction to the APPs
As discussed in chapter 1, the Aeronautical Pricing Principles (the APPs) originated as ‘Review
Principles’ in the Australian Government’s response to the 2002 inquiry of the Productivity Commission
(PC). The APPs were first published in full in 2007 as part of the Government’s response to the 2006 PC
inquiry.58
The APPs are not part of any legislative instrument and are therefore not enforceable by private
entities. However, the Australian Government considers the APPs to be a critical part of its light-handed
58 Treasurer (Peter Costello), Productivity Commission Report – Review of Price Regulation of Airport Services [media
release], Peter Costello, 30 April 2007, accessed 7 April 2022

regulatory regime for Australian airports. The Australian Government has made it clear that it expects
all airports, whether monitored or not, to comply with the APPs:
The Australian Government considers the Aeronautical Pricing Principles set an important
framework for establishing prices, service delivery and the conduct of commercial
negotiations at airports. The Australian Government expects all airports and airport users
to have regard to the Aeronautical Pricing Principles when negotiating future airport
services.59
A critical objective of the APPs is to assist airlines in negotiations with airports that have market power.
The APPs are designed to arm airlines with essential information, and to provide them with an objective
framework, to:
assess reasonableness of airports’ offers
identify specific factors that are causing the parties to disagree on what prices are fair and
reasonable
seek an effective resolution of disputes between the parties.
The Australian Government also uses the APPs to review the state of regulation of airports in Australia.
This review is done by the PC, which conducts 4 yearly inquiries to assess whether airports have
exercised their market power. The PC draws on the APPs to assess the conduct of parties in the
negotiation process and the commercially negotiated outcomes that parties have reached.60
The PC has the option of recommending reform to airport regulation should it find that an airport
operator had breached the APPs in a material way (for example, by setting unduly high aeronautical
charges, earning excessive profits or conducting commercial negotiations in breach of the APPs). In
each of its 4 inquiries to date, the PC has found that the monitored airports have not systematically
exercised their market power.61
59 Department of the Treasury, Australian Government response to the Productivity Commission Inquiry into the Economic
Regulation of Airports, Treasury website, 11 December 2019, p 7, accessed 13 April 2022.
60 Productivity Commission, Economic Regulation of Airport Services (2019), Inquiry report, Productivity Commission
website, 2019, p 81, accessed 13 April 2022.
61 For the most recent restatement of this, see Productivity Commission, Economic Regulation of Airport Services (2019),
Inquiry report, Productivity Commission website, 2019, p 2, accessed 26 April 2022.

Box 2.1: The Aeronautical Pricing Principles
The current pricing principles for aeronautical services and facilities (as defined at regulation 7.02A
in Part 7 of the Airports Regulations 1997) provided by airports are:
a) that prices should:
(i) be set so as to generate expected revenue for a service or services that is at least sufficient
to meet the efficient costs62 of providing the service or services; and
(ii) include a return on investment in tangible (non-current) aeronautical assets, commensurate

with the regulatory and commercial risks involved and in accordance with these Pricing
Principles;
b) that pricing regimes should provide incentives to reduce costs or otherwise improve productivity;
c) that prices (including service level specifications and any associated terms and conditions of
access to aeronautical services) should:
(i) be established through commercial negotiations undertaken in good faith, with open and
transparent information exchange between airports and their customers and utilising processes
for resolving disputes in a commercial manner (for example, independent commercial
mediation/binding arbitration); and
(ii) reflect a reasonable sharing of risks and returns, as agreed between airports and their
customers (including risks and returns relating to changes in passenger traffic or productivity
improvements resulting in over or under recovery of agreed allowable aeronautical revenue);
d) that price structures should:
(i) allow multi-part pricing and price discrimination when it aids efficiency (including the
efficient development of aeronautical services); and
(ii) notwithstanding the cross-ownership restrictions in the Airports Act 1996, not allow a
vertically integrated service provider to set terms and conditions that discriminate in favour
of its downstream operations, except to the extent that the cost of providing access to other
operators is higher;
e) that service-level outcomes for aeronautical services provided by the airport operators should be
consistent with users’ reasonable expectations;
f) that aeronautical asset revaluations by airports should not generally provide a basis for higher
aeronautical prices, unless customers agree; and
g) that at airports with significant capacity constraints, peak period pricing is allowed where
necessary to efficiently manage demand and promote efficient investment in and use of airport
infrastructure, consistent with all of the above Principles.
62 For the purpose of determining aeronautical prices through commercial negotiations, these should be efficient long-run
costs unless another basis is acceptable to airports and their customers.

2.2.2 Key elements of the APPs: commercial negotiations and pricing
The APPs reflect the Australian Government’s expectations that prices charged by airports under
the light-handed regulatory regime should be established through effective commercial negotiations,
which do not reflect the use of market power. Specifically, paragraph (c)(i) of the APPs sets out that the
Australian Government expects commercial negotiations to be conducted:
in good faith
with open and transparent information exchange between airports and their customers
utilising processes for resolving disputes in a commercial manner (for example, independent
commercial mediation/binding arbitration).
For example, the Australian Government’s view is that a ‘take it or leave it’ approach is inconsistent with
commercial negotiations undertaken in good faith between an airport operator and its customers.63
Paragraphs (a), (b) and (d) of the APPs set out the Australian Government’s expectations of how the
prices charged by airports to their customers should be set. These expectations are closely based on
the Part IIIA Pricing Principles set out in section 44ZZCA of the CCA (see box 2.2).
Box 2.2: Part IIIA Pricing Principles

44ZZCA Pricing principles for access disputes and access undertakings or codes
The pricing principles relating to the price of access to a service are:
(a) that regulated access prices should:
(i) be set so as to generate expected revenue for a regulated service or services that is at least
sufficient to meet the efficient costs of providing access to the regulated service or services;
and
(ii) include a return on investment commensurate with the regulatory and commercial risks
involved; and
(b) that the access price structures should:
(i) allow multi‑part pricing and price discrimination when it aids efficiency; and
(ii) not allow a vertically integrated access provider to set terms and conditions that
discriminate in favour of its downstream operations, except to the extent that the cost of
providing access to other operators is higher; and
(c) that access pricing regimes should provide incentives to reduce costs or otherwise improve
productivity.
In areas of infrastructure regulation where the Part IIIA Pricing Principles apply, the independent
regulator uses a building block model (BBM) as a basis for ex ante determination of prices consistent
with the efficient recovery of costs determined on a long-run basis. In principle, the BBM is a
supervision system for cost control and provision of efficiency incentives.
The main benefit of using BBM in regulation is that it is a relatively straight-forward, stable, certain
and understandable process which yields sufficient incentives for service providers to seek cost
efficiencies.64 The ‘building blocks’ in the BBM are various components of the expected efficient costs of
the business, which are added together to form the allowed revenue that the business can earn.
63 Treasurer (Peter Costello), response to recommendation 4.4, Productivity Commission Report – Review of Price Regulation
of Airport Services [media release], Peter Costello, 30 April 2007, accessed 26 April 2022
64 Australian Energy Market Commission, Perspectives on the building block approach – Review into the use of total factor
productivity for the determination of prices and revenues, 30 July 2009, pp 3–4.

For example, the Australian Energy Regulator (AER) uses a BBM to set the revenue that electricity and
gas networks are allowed to recover from their customers, generally made every 5 years. The building
blocks of the BBM, as shown in figure 2.1, are outlined in the National Electricity Rules and National Gas
Rules.65
The AER estimates the various costs the network businesses need to incur to efficiently provide
network services to customers over the regulatory period and adds them together to determine the
maximum amount of revenue that the network business is allowed to recover from its customers over
the regulatory period. Prices are set based on forecast demand over the regulatory period to recover
the allowed revenue. Business can then adjust the prices annually, subject to various adjustments
to revenue for factors such as true-up cost variations and correcting for prior year under- or
over-recoveries.
The AER makes revenue adjustments at the reset for the outcomes from incentive schemes such as
the efficiency benefit sharing scheme, capital expenditure sharing scheme and demand management
incentive scheme. It also makes revenue adjustment annually for the service target performance
incentives scheme. These schemes provide important balancing incentives to encourage businesses
to pursue expenditure efficiencies and demand side alternatives, while maintaining the reliability and
overall performance of its network.
Figure 2.1: The building blocks used by AER to forecast network revenues66
Taxation costs
Allocation of asset costs

over asset life Depreciation
Revenue
approved
by AER
Regulatory asset base
Operating expenditure
(RAB)
Asset financing costs =

RAB x WACC Return on capital
New investment
(capital expenditure)
AER sets rate of return Revenue adjustments from
(WACC) AER incentive schemes
Source: AER, State of the Energy Market, July 2021, p 134.
Variants of the BBM are currently used in Australia in the regulation of electricity and gas transmission
and distribution networks, railways, postal services, urban water and sewerage services, irrigation
infrastructure, port access, and fixed-line telecommunications services.
The BBM is used in negotiating or setting aeronautical prices in many overseas jurisdictions. In Australia,
BBM is widely recognised as a means of applying the APPs. The BBM is used by some airports and
airlines in their negotiations (discussed further below). The BBM was also used by the Supreme Court of
Western Australia to determine the reasonable prices that Qantas should have paid to Perth Airport for
services it received (discussed in more detail below).67
65 The building block approach is specified in clauses 6.4.3 and 6A.5.4 of the National Electricity Rules (NER) and rule 76 of
the National Gas Rules. Clause 6.3.1(c) of the NER sets out that the BBM must be prepared in accordance with the post-tax
revenue model.
66 AER, State of the Energy Market, AER website, July 2021, p 134, accessed 13 April 2022.
67 Perth Airport Pty Ltd v Qantas Airways Ltd [No 3] [2022] WASC 51.

However, the APPs do not specifically prescribe the use of BBM. Therefore, airports and their
customers can use alternative approaches to establish aeronautical prices, provided those approaches
are consistent with the pricing principles set out in the APPs.
2.3 Negotiation of aeronautical service agreements

This section focuses on issues that the ACCC has identified in the process of negotiation between
airports and airlines. Other chapters of the report cover issues associated with the outcomes of
negotiation (that is, whether prices and investment are efficient).
Critically, the issues that the ACCC discusses in this section are not related to the COVID-19 pandemic.
These issues existed prior to the COVID-19 pandemic, during the pandemic and, if not addressed,
are likely to continue to affect negotiations between the parties after the pandemic. In section 2.4,
the ACCC separately discusses the challenges raised by airports and airlines that are specific to
the pandemic.
In addition, except where specified otherwise, the discussion in this section potentially relates to all
airports in Australia, not just the 4 monitored airports.
2.3.1 Concerns raised by airlines

Airlines with which the ACCC consulted have stated that some airports in Australia are not acting in
accordance with the APPs during commercial negotiations. Airlines have expressed a range of concerns
about the behaviour of airports set out below.
Airlines have acknowledged that compliance with the APPs varies across airports. Some airlines
have stated that some monitored and non-monitored airports are largely negotiating constructively,
however, others are failing to genuinely engage with airlines in a manner expected under the APPs.
Negotiation of aeronautical prices

Some airlines have stated that there is significant variance in use of the BBM by airports in Australia in
negotiating aeronautical prices:
some airports are using a BBM in negotiating aeronautical prices and some are providing information
to airlines about the inputs they use in their BBM calculations
some airports that previously used a BBM in negotiating aeronautical prices have ceased using it
some airports may have never used a BBM in negotiating aeronautical prices.
Airlines have stated that, in some cases, they are not concerned about airports not using a BBM to
negotiate aeronautical prices. For example, some airlines acknowledge that many small regional
airports are not sufficiently sophisticated and resourced to understand and apply a BBM. Therefore,
some airlines are not concerned about these airports negotiating using simpler pricing methods,
providing the agreed prices reflect recovery of efficient costs.
Some airlines have expressed concerns that an increasing number of airports are seeking to negotiate
aeronautical prices with reference to what they describe as a ‘market price’ or some other benchmark,
including:
prices that the airport has agreed with other airlines, or
prices that the airline paid to the airport under its previous ASA.
In addition, some airlines have raised concerns about some major airports justifying certain elements of
their offers by references to prices charged, or arrangements entered into, by other airports.
Further, some airlines have commented that some airports seek to unilaterally impose a Condition of
Use (CoU) on airlines while negotiating an ASA following expiry of the previous one. Those airlines have
raised concerns about some price and non-price terms of those CoU.

Provision of information during negotiations
Some airlines have raised concerns that many airports are not providing sufficient information in a
timely manner during their negotiations. Some airlines have provided examples to the ACCC where
some airports did not respond to certain requests for information.
Some airlines are particularly concerned that some airports are not engaging in an open and
transparent information exchange in relation to aeronautical charges and capital investment plans.
Some airlines have informed the ACCC that many airports are not providing adequate information
for airlines to allow them to estimate various BBM parameters, such as asset bases and operating
expenditure. This makes it hard for airlines to use the BBM to assess whether airports’ aeronautical price
offers are set to recover long-term efficient costs of providing the aeronautical services.
Some airlines have acknowledged that some airports do frequently provide a significant volume of
information to support the proposed capital investment underpinning price negotiations. However,
as Airlines for Australia and New Zealand outlined in its submission to the PC, the information is
generally not of the nature necessary to enable the airline to assess the efficiency or prudence of the
investment.68
Some airlines have also stated that airports provide limited transparency about their actual capital
expenditure. This means that airlines are unable to verify whether the charges they pay under the ASAs
to recover capital expenditure over time are reflective of the costs actually incurred by airports.
Resolution of disputes arising during negotiations

Airlines have stated that disputes between airports and airlines can arise during negotiations when the
parties cannot agree on prices or non-price terms of access. Some airlines have stated that the drivers
behind the disputes vary across airports and across negotiations. Some airlines provided a range of
such scenarios to the ACCC.
In some instances, disputes arise because some airports are not using a BBM or equivalent
methodology, and demand that airlines accept offers based on ‘market prices’ or some other
benchmarks (as discussed earlier), without demonstrating how those offers constitute recovery of
efficient long-run costs.
In other instances, disputes arise when airports seek to justify their offers based on recovery of
efficient costs, but do not provide sufficient information to airlines to enable them to adequately assess
those offers.
Finally, some disputes arise because parties disagree on BBM parameters, which results in the parties
coming up with offers that are very far apart. For example, one airline informed the ACCC that
some airports use a weighted average cost of capital (WACC) in negotiations with it that is around
3 percentage points higher than the airline’s estimate of WACC.
Some airlines have informed the ACCC that some airports agree to enter mediation or non-binding
arbitration to resolve those disputes, but mostly reject any offers to use independent binding
commercial arbitration. Some airlines have stated that mediation or non-binding arbitration is rarely
successful, as some airports do not approach these processes in good faith.
Some airlines have expressed concerns that, in circumstances where the parties remain in dispute after
mediation or non-binding arbitration, some airports are exerting undue pressure on airlines to accept
their terms by making ‘take it or leave it’ offers, and in some instances, resorting to threats.
2.3.2 Consultation with airports

As set out in the introduction, the ACCC consulted with 8 major airports about their approach to ASA
negotiations. Most of the consulted airports stated that they comply with the APPs in negotiating ASAs
with airlines. However, one airport did not refer to the APPs at all in its response.
68 Airlines for Australia & New Zealand, Submission No. 44 to the Productivity Commission, Inquiry into Economic Regulation
of Airports (2019), Productivity Commission website, September 2018, p 23, accessed 18 April 2022.

Negotiation of aeronautical prices
Most of the consulted airports stated that they use a BBM during ASA negotiations. Some airports
informed the ACCC that they engage independent advisors to assist them to determine the appropriate
parameters of the BBM. However, one airport informed the ACCC that it does not use a BBM and that
the offers that it made in a particular negotiation with a large domestic airline were not based on any
financial modelling.
For airports that use the BBM, the way they employ it during the negotiation process appears to
vary. Some airports stated that they provide their BBM (in its entirety or just the key parameters), and
supporting information, to airlines during the ASA negotiations. Other airports appear to use their
BBMs internally to arrive at price offers, but do not discuss the BBM parameters that led to those offers
during negotiations.
Some airports have stated that the way in which the domestic airlines use the BBM during negotiations
also varies. Some domestic airlines seek to make the BBM a central part of their negotiations, while
others appear content to negotiate without the use of the BBM.
Some airports have informed the ACCC that the price offers they make to airlines based on the airport’s
BBM can vary substantially from the price offers that airlines make to airports based on the airline’s
BBM. Airports have explained that this is due to airports and airlines having a different view on the key
parameters of the BBM, particularly:
WACC
capital expenditure and asset base
depreciation.
For example, one airport informed the ACCC that during negotiations with a particular domestic
airline, the airport’s WACC estimate was around 3 percentage points higher than the airline’s WACC
estimate. Some airports have also stated that the price differences in their offers can also be due to
disagreements about passenger projections and capital investment plans.
Given these differences, some airports stated that they use the BBM to inform their aeronautical price
offers, but they do not directly use the BBM to determine final terms agreed with airlines. For example,
one airport commented that it ‘strives for negotiations to not get ‘bogged down’ in the BBM’. These
airports explained that commercial terms they reach with airlines are typically based on the overall
‘value’ of their offer and typically include non-price arrangements (for example, rebates, access to
facilities and agreements about quality of service).
The ACCC also notes that the Australian Airports Association (AAA) has previously stated that the
outcomes of BBMs are not binding, but rather act as a tool for exploring the relationship between
capital and operating costs and prices.69

All consulted airports informed the ACCC that they consider that the level of information they provide
to airlines is sufficient to inform the ASA negotiations. Some airports listed the type of information they
provide, which includes information about their asset base, capital investment plans, forecast operating
expenditure and forecast passenger volumes. Some airports stated that they provide all the information
upfront. Some airports also commented that during the negotiations they provide additional
information reasonably requested by airlines.
69 AAA, Submission No. 50 to the Productivity Commission, Inquiry into Economic Regulation of Airports (2019), Productivity
Commission website, September 2018, p 35, accessed 7 April 2022.

For example, Perth Airport informed the ACCC that in 2017, prior to commencing bilateral negotiations,
it provided airlines and other stakeholders with all relevant information that supported the building
block methodology (via a website), including:
a 10-year capital plan for the Airfield and each of the terminals, accompanied by justification for
each project
forecast of operating costs for the next 10 years
an independently prepared passenger forecast.
Perth Airport stated that in early 2018 it revised the information on its website to incorporate airline
feedback. Perth Airport stated that ‘this information was provided to ensure that all negotiations were
grounded with common information’.

Airports have described the nature of their negotiations with airlines in very different terms. Some
airports stated that they were able to negotiate their most recent ASAs with airlines without needing
to resort to dispute resolution mechanisms. Several airports described their commercial discussions
with airlines as being ‘robust’, while one airport stated that ‘both parties put their respective
positions forcefully’.
Some airports commented on the tactics used by some airlines during negotiations, particularly
following expiry of the previous ASA. A few airports stated that a domestic airline has unilaterally paid
the price it deemed reasonable, rather than the CoU price that was set by the airport for all airlines that
use the airport in the absence of ASA.
Airports have generally expressed a preference to reach commercial agreements with airlines through
negotiation or by using a dispute resolution mechanism specified in the previously agreed ASA. For
example, one airport commented that it used a dispute resolution mechanism specified in the ASA to
seek advice from an independent expert on forecasting passenger numbers.
Most airports stated that they do not support binding commercial arbitration to resolve disputes,
although some said that they may be amenable to it. One airport stated that it is concerned that some
airlines may frequently refer matters to commercial arbitration to delay negotiations. Another airport
stated that its main concern is about non-price implications of arbitration decisions (for example, how
such decisions may affect airport’s provision of services to other airlines), with the airport being less
concerned about using binding commercial negotiations to resolve any dispute about the level of prices.
2.3.3 Perth Airport court case against Qantas

On 18 February 2022, the Supreme Court of Western Australia delivered its decision in the court
case between Perth Airport and Qantas.70 The dispute was over the aeronautical charges that Qantas
was liable to pay to Perth Airport between 1 July and 17 December 2018, while the 2 parties were
negotiating a new ASA following expiry of the previous one.
It was common ground that Qantas was liable to pay to Perth Airport ‘fair and reasonable’ remuneration
for the services that Perth Airport provided to Qantas during the relevant period. The key question
that the court considered was how to determine what fair and reasonable remuneration would be in
those circumstances.
Qantas submitted to the court that fair and reasonable prices should be determined by using a BBM to
determine the efficient costs of the aeronautical services provided by Perth Airport.
In contrast, Perth Airport submitted that the fair and reasonable price should be determined by
reference to ‘comparable transactions’ (being prices for aeronautical services that Perth Airport most
recently agreed with other airlines). Perth Airport also submitted that the reasonableness and fairness of
the sum arrived at using this methodology is confirmed by a range of other measures. Table 2.2 sets out
the court’s view of Perth Airport’s comparable transaction methodology and other proposed measures.

Table 2.2: Court’s ruling on the measures that Perth Airport submitted should be used to calculate or
confirm a fair and reasonable price
Perth Airport’s measure Court ruling

Comparable transactions (being prices Perth Airport Not relevant – Whether prices paid by other airlines are comparable
most recently agreed with other airlines) is a matter of fact and degree. The services provided are not the
same
Prices agreed and paid by Qantas under previous Not relevant – Those prices were set at a time when the cost of
ASA providing the services was different and the negotiations were
informed by different cost considerations
Prices under Perth Airport’s CoU that were payable Not relevant:
by airlines without ASAs at the time
Perth Airport set CoU prices unilaterally, so these were not
negotiated prices
Perth Airport arbitrarily set CoU prices 10% above the highest
prices negotiated with other airlines for services provided at other
terminals
Airport charges passed on by Qantas to its Not relevant – the evidence does not establish that the charges
customers (as recorded on passenger tickets) were passed on to customers in any relevant sense
The profit per passenger earned by Qantas on Not relevant – prices should be determined by reference to the
routes to, and from, Perth Airport value of services provided, not profits gained by recipient of the
services
The court ruled that, consistent with the Australian Government’s APPs, it would calculate the fair
and reasonable price by using a BBM to estimate the efficient long-run average cost of Perth Airport
providing services to Qantas.
The court considered evidence from both parties on the appropriate parameters of the BBM and
calculated a price that Qantas was liable to pay to Perth Airport during the relevant period.
In delivering its decision, the court found that:

Perth Airport possesses, and has likely exercised, substantial market power
Perth Airport sought to include in its aeronautical prices to Qantas some categories of costs that
were unrelated to the provision of aeronautical services (for example, marketing costs)
Qantas has underpaid Perth Airport for aeronautical services.
The court ordered Qantas to pay to Perth Airport:71

$7.66 million together with interest of $1.86 million for unpaid fees
Perth Airport’s litigation costs, including reserved costs, other than the costs incurred in relation to
4 specific issues on which the court rules that Perth Airport failed (and for which it ordered Perth
Airport to pay legal costs to Qantas).
WACC
The WACC was one of the key parameters that was disputed by the parties. Table 2.3 sets out the
WACC-related inputs that the court determined to be appropriate to use in its BBM.

Table 2.3: WACC parameters used by the Supreme Court of Western Australia in Perth Airports vs Qantas
decision for the period July–December 2018
Parameter Input
Risk free rate 3.3%
Leverage 20%
Cost of debt 5.7%
Asset beta 0.75
Equity beta 0.94
Market risk premium 7.7%
Cost of equity 10.5%
WACC 9.6%
Distribution rate 0.90
Utilisation rate 0.65
Gamma 0.585
As table 2.3 shows, the court has determined a nominal vanilla WACC of 9.6% for Perth Airport for
the period from July to December 2018. The ACCC notes that this WACC is significantly higher than
the WACC determined by some Australian and overseas regulators around that time. For example,
this WACC is 3.25 percentage points higher than the 6.34% WACC that the New Zealand Commerce
Commission determined for Wellington International Airport for 2019.72 73
The ACCC considers that the higher WACC for Perth Airport has been driven mainly by a higher
estimate of some market wide parameters such as risk-free rate, market risk premium and debt risk
premium, as well as the sector-specific parameter beta. The differing values of leverage that are
sector-specific also contribute to the difference with the Australian Energy Regulator’s estimates of
WACC at the time.
On 15 March 2022, Qantas announced that it will appeal the court’s ruling on some aspects of the
court’s calculations, particularly the WACC.74
2.3.4 The APPs are not assisting airlines in negotiations as intended

As discussed in section 2.2.1, one of the critical objectives of the APPs is to assist airlines in negotiations
with airports that have market power. However, the APPs are not enforceable, which means that airlines
do not have any formal recourse to address any conduct by an airport that is inconsistent with the
APPs. There is also limited guidance available to the parties on how to interpret various elements of
the APPs.
The ACCC considers that many airports have interpreted the APPs in a way that significantly
undermines the benefits of the APPs to airlines.
This section discusses the issues that the ACCC has identified in relation to:
compliance with, and understanding of, the APPs
application of pricing principles in negotiations
provision of information during negotiations
use of effective dispute resolution mechanisms.
72 NZCC, Cost of capital determination for disclosure year 2019 – Electricity distribution businesses and Wellington International
Airport, [2018] NZCC 7, NZCC website, 30 April 2018, accessed 13 April 2022.
73 In April 2018, AER determined a WACC of 5.69% for regulated transmission networks for the period from July 2018 to
June 2023. Source: AER ElectraNet - Determination 2018–23, AER website, 30 April 2018, accessed 13 April 2022; AER,
Murraylink - Dermination 2018–23, AER website, 30 April 2018.
74 Geoffrey Thomas, ‘Qantas to appeal Supreme Court ruling on Perth Airport charges’, The West Australian, 15 March 2022,

Compliance with, and understanding of, the APPs
There appears to be disparity in compliance with, and understanding of, the APPs across airports in
Australia. As was mentioned earlier, some airlines have informed the ACCC that some airports are
largely negotiating constructively. However, some airlines also provided various examples to the ACCC
to illustrate where this is not the case.
The ACCC has also come across such examples during its consultation with airports. As was
mentioned earlier, one airport did not refer to the APPs at all in explaining to the ACCC how it conducts
negotiations with airlines and informed the ACCC that it did not use any financial modelling for the
purpose of making price offers. Further, as discussed in section 2.4.2, the ACCC considers that
comments made by one airport to the ACCC in relation to inclusion of unrecovered costs into its asset
base are inconsistent with the APPs.
While most airports strongly assert that they take the APPs seriously, some of their actions appear to
be inconsistent with these assertions. For example, Perth Airport informed the ACCC that it ‘always has
regard to the APPs in its negotiations with airlines and its approach to developing aeronautical pricing
proposals’. Perth Airport further stated that ‘while the APPs do not prescribe the use of a BBM, Perth
Airport uses a BBM to inform its pricing negotiations with airlines’.
However, as discussed in section 2.3.3, the Supreme Court of Western Australia found that Perth
Airport unilaterally and arbitrarily set its CoU prices at 10% above the highest prices negotiated with
other airlines. In addition, the court found that Perth Airport possesses, and has likely exercised,
substantial market power.
Further to those findings, the ACCC is concerned that Perth Airport sought to argue in court that
the fair and reasonable price payable by Qantas should be determined based on prices agreed with
other airlines and confirmed by a range of other arbitrary measures. The ACCC considers that both
the comparable transactions methodology and all the other measures proposed by Perth Airport are
inconsistent with the APPs.
Some airlines have provided examples of other airports which have also sought to anchor their price
offers to similar arbitrary benchmarks during negotiations. The ACCC emphasises that under the APPs,
prices should be set to recover the efficient long-run cost of providing the service. Therefore, the
conduct by any airport in negotiating its prices by reference to some other arbitrary measures that are
irrelevant to the determination of efficient long-run cost is inconsistent with the APPs.
Application of pricing principles in negotiation of aeronautical prices

As discussed in section 2.2.2, economic regulators in Australia typically use a BBM as a tool to regulate
revenues or prices of infrastructure providers in various sectors. For this purpose, the economic
regulators develop a clear and transparent framework, determine the parameters of the BBM and then
seek to apply the BBM transparently and consistently across all the regulated entities, both within a
sector and across the sectors.
In aviation, the APPs set out the pricing principles that airports and airlines should use in commercial
negotiations of aeronautical prices. However, they do not prescribe a specific mechanism for the parties
to use to apply those principles. With the APPs being substantially based on Part IIIA Pricing Principles,
the largest airports and airlines in Australia have adopted a BBM as a means of applying the APPs in
their negotiations.
However, application of a BBM by Australian airports and airlines in commercial negotiations is

inherently different from its use by independent regulators. Without independent oversight, it is left to
the parties to bilaterally decide whether to use a BBM and how. As a result, the breadth and manner
of the application of a BBM in determining aeronautical prices varies greatly across both airports
and airlines.
Only some airports and airlines use a BBM during negotiations. All monitored airports, some
non-monitored airports and major Australian airlines state that they use a BBM to inform negotiations
of ASAs. It appears that at least one of the top 10 busiest airports in Australia does not use a BBM
or any other financial modelling. The ACCC does not have any evidence of regional airports using a

BBM. However, the AAA previously stated that ‘around one-third of regional airports use some form of
modelling to motivate charges discussions with airlines’.75 It appears that at least some airlines also do
not use a BBM in negotiating aeronautical prices.
A key reason for regional airports and small airlines not using a BBM appears to be complexity and cost
of doing so. For example, the AAA previously explained some of the reasons why it is challenging for
regional airports to use a BBM:
The implementation of a BBM is a complex task. Major airports often retain specialist
consultants to develop and/or validate such models as well as provide advice on its various
inputs, particularly the WACC. The AAA understands that for major airports the cost of
such advice will often run to in excess of $1 million.76
Given there is currently no central source of information on BBMs, each airport that wants to use a BBM
has to develop its own bespoke financial model and pay in full for the cost of any advice it would need
to do so. This is even more complicated and costly for airlines because they negotiate with multiple
airports at different points in time. Therefore, airlines need to constantly revise their BBM for negotiation
with each airport to calculate airport specific parameters (for example, asset base) and to update any
other parameters that may change over time (for example, WACC).
However, there is at least one large and well-resourced airport that has simply chosen not to use a BBM.
While many large airports state that they use a BBM, this by itself does not mean that the aeronautical
prices they agree with airlines reflect efficient long-run costs. Whether a BBM produces reasonable
outputs on revenue and prices depends on the inputs used in the model. If the inputs to the BBM are
biased upwards, the resulting revenues and prices will also be inflated.
Both airports and airlines generate BBM outputs using inputs they consider to be appropriate. As
mentioned earlier, airports and airlines can have significant disagreements about the appropriate
BBM inputs. To some extent, this is to be expected in a negotiation between 2 bargaining parties
with different incentives and objectives. However, this is exacerbated by the parties having different
information to underpin their assessment of the inputs, in part due to some airports not providing
adequate information to airlines. This is also exacerbated by the fact that some of the inputs can be
contentious and there is lack of clear objective standards to guide the parties in their discussions of
those inputs.
The disagreements on the inputs, particularly WACC, can result in parties being very far apart on what
they consider to be reasonable prices. Small differences in WACC can lead to significant differences in
outputs from the BBM. For example, the Essential Services Commission of Victoria found that by using
a WACC that was 2 percentage points higher than appropriate, the Port of Melbourne overstated its
revenue requirement by around $300–650 million.77 As discussed earlier, some airports and airlines have
stated that their views on the WACC can differ by as much as 3 percentage points.
Similarly, in the Perth Airport court case against Qantas, the expert consultants engaged by the parties
disagreed on the approaches to estimating some of the WACC parameters, as well as the estimate of
the overall WACC. The difference was 3.4 percentage points, as Perth Airport argued for a WACC of
10.2%, while Qantas argued for a WACC of 6.8%.78 For capital intensive infrastructure like airports, the
resulting difference on revenue requirement or prices is substantial.
This raises the question as to whether airlines receive any benefit from airports using a BBM, when the
inputs into the model differ materially between the negotiating parties. The ACCC considers that the
extent of any benefit from using BBM depends on how airports engage with airlines on details of the
application of BBMs and how they settle disagreements. As discussed in more detail below, it appears
that at least some airports:
75 AAA, Submission No. 50 to the Productivity Commission, Inquiry into Economic Regulation of Airports (2019), p 36.
76 ibid.
77 Essential Services Commission of Victoria (ESC), Inquiry into Port of Melbourne compliance with the pricing order 2021
[Final report], ESC website, 31 December 2021, pp 9–11, accessed 13 April 2022.
78 Perth Airport Pty Ltd [2022] WASC 51 at 88–89 [303]–[306].

do not provide adequate information to airlines during negotiations to substantiate their BBM
calculations and justify their assumptions and input values
do not engage in a process with airlines designed to resolve their differences of view about
appropriate BBM inputs.
The ACCC considers that by doing this, airports significantly undermine any potential benefits that
airlines obtain from airports using a BBM to substantiate their offers.

For airlines to be able to negotiate effectively with airports, they need to have access to timely and
relevant information. In particular, airlines need adequate information to:
form their own view of what is a fair and reasonable price for the service (which requires information
about an airport’s asset base, capital investments, operating costs and so on to assess efficient
long-run cost)
review the reasonableness of the airport’s financial modelling underpinning its price offers (which
requires information about the airport’s methodology, inputs and assumptions).
The APPs set out that commercial negotiations should involve an open and transparent exchange of
information, but do not provide specific guidance for the level or scope of information to be provided.
In the absence of independent oversight, airports in Australia have adopted different approaches to the
type and breadth of information that they provide to airlines during negotiations.
To the extent that provision of information by airports is untimely or inadequate, it undermines the
potential benefit of the APPs to airlines. For example, as mentioned earlier, some airports treat their
financial models as ‘internal’. Those airports present their initial price offers to airlines as being based
on BBM calculations and some may even share their BBM inputs with airlines. However, they may be
unwilling to share or fail to substantiate the basis for the underlying inputs and assumptions of their
model with airlines.
This means that airlines do not have sufficient opportunity to review the reasonableness of airports’
BBM inputs, calculations and outputs. The absence of transparency and accountability in the use of
a BBM by airports reduces the potential benefit to airlines of airports using those financial models
to generate price offers and makes it harder for parties to resolve their disagreements during
the negotiation.

The APPs state that in determining prices, airports and airlines should utilise commercial processes for
resolving disputes, such as independent commercial mediation or binding arbitration. These commercial
processes are more likely to work effectively for airports and airlines when both parties act consistently
with all the other principles of the APPs during negotiations.
In such a scenario, both parties would:

agree on a framework to use during negotiation to determine prices (for example, a BBM or an
equivalent financial model) and the methodology for how the framework is to be applied
engage in open and transparent exchange of information to enable each party to calculate each of
the inputs of a BBM (or an equivalent financial model)
provide offers to the other party clearly explaining how those offers were derived using a BBM (or an
equivalent financial model) and explaining the basis for their view about each of the inputs, including
any underlying assumptions
engage in open and transparent discussion about any inputs on which the parties have a materially
different view.
This process would lead to parties identifying specific inputs that the parties ultimately cannot agree
on. The parties can then seek independent commercial mediation or binding arbitration to resolve
disputes about the specific inputs. This would likely lead to a relatively quick and inexpensive resolution
of the dispute.

As was mentioned in section 2.3.2, one airport commented to the ACCC that it used a dispute
resolution mechanism agreed with an airline to seek advice from an independent expert on forecasting
passenger numbers. Provided that both parties accepted the outcome of the independent expert, this
dispute was resolved in a manner envisaged under the APPs.
However, dispute resolution becomes much more complicated, lengthy and costly when the parties do
not act consistently with the APPs during negotiations. One such scenario is where an airline is seeking
to negotiate based on a BBM, but an airport is seeking to determine prices using some alternative
measures not directly related to efficient cost of providing a future service (for example, prices paid by
the negotiating airline under the expired ASA). In the absence of a common framework for determining
prices, it is difficult for the parties, and any independent mediator or arbitrator, to resolve differences in
views between the parties of what constitutes fair and reasonable prices, and how they can be derived.
A second scenario is where both parties are using a BBM to formulate their initial offers, but the airport
does not provide adequate information to the airline about its underlying BBM inputs and assumptions
or does not wish to progress negotiations by making references to the BBM used. In other words, to
avoid getting ‘bogged down in BBM discussions’, the airport chooses to ‘agree to disagree’ about the
BBM inputs and insists on reaching an agreement through discussion of ‘value’ or some other basis
unrelated to the approach it used to determine its initial offer.
This approach can resolve the dispute where the parties are reasonably close on their initial offers and
are willing to sufficiently compromise to reach an agreement. However, where the parties are very
far apart or unwilling to compromise, such an approach is much less likely to sufficiently narrow the
difference in positions of the parties. Critically, by moving away from using a BBM as a framework
to negotiate prices, airports negate the benefit that airlines obtain by receiving the initial offer from
airports that is based on a BBM.
An airport that does not see the need to be accountable on how it determines its price offer, can fix the
inputs of a BBM to achieve its desired price and then proceed to bargain with the airline on some other
basis. In this scenario, the mere fact that the airport used a BBM in support of its initial offer does not
put the airline in a better position to negotiate with the airport on prices than the airline would have in
the first scenario (where the airport does not use a BBM) and is unlikely to lead to an agreed price being
based on recovery of efficient costs.
The ACCC acknowledges that behaviour of airlines during negotiations can also lead to a situation
where parties are unable to reach an agreement. The APPs require both parties to negotiate in good
faith. Therefore, an airline that is not, for example, willing to genuinely engage in discussion of BBM
parameters (for example, WACC) may also be acting inconsistent with the APPs.
It is in the circumstances where parties remain far apart on their positions and are not negotiating based
on an agreed framework that tensions tend to rise and parties start to ‘put their respective positions
forcefully’, as one airport described. According to some airlines, in these kinds of negotiations, some
airports start making ‘take it or leave it’ offers or threaten that the airline will lose access to facilities or
other forms of access.
Critically, the ACCC does not consider this to be a normal part of a negotiation process between 2 big
companies with equal bargaining power. Rather, this conduct reflects failure of the negotiation process,
as parties have no viable mechanism to resolve their dispute. In the absence of an agreed negotiating
framework and with parties being unable to agree on discrete issues that need to be resolved,
independent mediators or arbitrators are limited in what they can achieve.
There are very few viable options available to airlines in these circumstances. Airlines cannot do
anything to rectify airport’s non-compliance with the APPs. Airlines cannot compel airports to use
a BBM, or any other financial model, in negotiations nor can they compel airports to provide the
information they need for the purpose of negotiations.
For many years, some airports have asserted that airlines have countervailing power due to airports’
legal obligations. Some airports have stated that the terms of their leases with the Commonwealth
stipulate, among other things, that:
airports must always provide access to airlines, but

airports can refuse to provide access where an airline has failed to pay to the airport ‘any
amount due’.
Some airports asserted that it would likely be very difficult for them to prove that a particular amount is
legally due if:
there is no contract between the parties while they are negotiating a new ASA (because the
previous ASA has expired)
an airline expressly rejects the terms of the airport’s CoU.
Some airports have argued that in these circumstances, airlines can continue to use the airport and to
unilaterally pay the airport only an amount that the airline considers to be fair and reasonable (which
may not allow the airport to recover its costs) without facing a risk that an airport would refuse access
to the airline. Some airports have argued that this creates an incentive for the airport to reach an
agreement with an airline as soon as possible.
These precise circumstances arose in the dispute between Perth Airport and Qantas. After expiry of
the old ASA, Perth Airport invoiced Qantas an amount calculated using its CoU prices. Qantas did not
accept CoU prices and chose to pay a lower amount. While Perth Airport did not refuse Qantas access,
it took Qantas to court, and the outcome of the case provides important insights in relation to airports’
arguments about countervailing power.
First, the case has demonstrated that an airport can compel an airline to pay a fair and reasonable
amount to it, based on recovery of efficient costs, for use of the airport even where there is no contract
between the parties and where the airline has expressly refused to comply with the terms of the CoU.
In addition, the court ordered Qantas to pay interest on the outstanding amount, compensating Perth
Airport for delay in receiving this amount. This means that an airline does not gain any leverage in
negotiations by continuing to use the airport during negotiations but not paying the airport an amount
that it invoices the airline under its CoU terms.
Second, the case has demonstrated that an airline faces a substantial risk should it choose not to pay
in full the amount invoiced by an airport during negotiations. As mentioned earlier, the Supreme Court
of Western Australia ordered Qantas to pay the bulk of Perth Airport’s litigation costs. Qantas informed
the ACCC that the total amount of the costs that Qantas incurred during the litigation and that it had to
pay to Perth Airport were quite substantial and far exceeded the amount that the court ordered Qantas
to pay to Perth Airport to make up for the shortfall.
In addition, the court awarded the costs of issues (with exceptions to 4 specific issues) to Perth Airport
notwithstanding that it found that:
Perth Airport required Qantas to pay prices under its CoU which it imposed unilaterally and which it
set arbitrarily at 10% above the highest prices that Perth Airport negotiated with other airlines
Perth Airport possesses, and has likely exercised, substantial market power.
This appears to suggest that, regardless of how excessive and unreasonable an airline considers
an airport’s CoU prices may be, the airline runs the risk of losing the court case and having to pay
substantial litigation costs should it choose not to pay an airport in full and determine a different figure
for a fair and reasonable amount to pay.
Therefore, the ACCC considers that conditions in airports’ Commonwealth leases do not provide
material protection to airlines from airports using their market power during negotiations.
2.4 Impact of the COVID-19 pandemic on negotiation of

ASAs
As part of the consultation, the ACCC asked airports and airlines to set out the pandemic specific
challenges that they have encountered in negotiating ASAs in the past few years. This section sets out
the key challenges identified by respondents.

2.4.1 Uncertain passenger forecasts
As discussed in chapter 3, the COVID-19 pandemic resulted in a significant fall in passenger numbers.
However, negotiation of long-term ASAs is dependent on the parties being able to agree on, and have
confidence in, future demand projections. Some airports have informed the ACCC that over the past
2 years, projecting recovery paths from the pandemic have been challenging due to uncertainties about
new COVID-19 variants, government policies to deal with those variants and the timing of return of
consumer confidence.
Some airports commented that they found it more challenging to negotiate longer-term agreements
in such circumstances. They stated that longer-term agreements are best suited when airports and
airlines have firm expectations of future demand, service requirements and agreed expenditure plans to
support service outcomes.
Airports have adopted varying approaches to dealing with this uncertainty. Some airports have
managed to successfully re-negotiate long-term ASAs with airlines despite the uncertainty.
In contrast, other airports have extended or rolled over existing ASAs for 12–24 months with no
changes to terms and conditions. These airports stated that this provides price certainty to airlines and
gives parties more time to negotiate the terms of the next ASA. This additional time should put the
parties into a better position to forecast future passenger demand.
2.4.2 Recovery of lost profits or unrecovered costs

As the ACCC commented in its September 2021 report on Airline competition in Australia, some airlines
have raised concerns that some airports in Australia are seeking, or may seek, to significantly increase
aeronautical charges to recover lost profits or unrecovered costs.79
On 29 September 2021, Qantas Group publicly stated that it has ‘seen some airports acting
aggressively to try to recover their losses from the pandemic’.80 Qantas further stated that a large
regional airport sought to ‘more than double passenger fees, increasing from $25 per passenger to
$55’.81 Airlines expressed concerns to the ACCC that such actions may undermine the recovery of the
aviation sector from the COVID-19 pandemic.
As part of its consultation, the ACCC asked both monitored and non-monitored airports to comment on
this issue. All consulted airports stated that they have not sought, and do not intend to seek, to recover
lost profits from airlines through aeronautical charges in new ASAs.
Most consulted airports also stated that their aeronautical charges are reflective of the costs the
airport expects to incur in providing services to airlines over the term of the new ASA and do not take
into account prior pricing periods. However, one airport stated that ‘costs reasonably incurred by an
airport but not yet recovered due to the pandemic may in appropriate circumstances be recoverable
and be an input in a BBM (for example, inclusion in opening asset base) as part of an aeronautical
agreement negotiation’.
Application of APPs
The ACCC interprets the APPs by reference to the Part IIIA Pricing Principles, given the pricing
expectations in the APPs are closely based on those principles (as discussed in section 2.2.2). Applying
the Part IIIA Pricing Principles, an airport must set its prices to recover the efficient long-run costs of
providing access to the service, including a risk-commensurate return on investment in providing the
service. Further, applying section 44X(1)(d) of Part IIIA, airports must take into account only ‘the direct
costs of providing access to the service’.
The ACCC considers that the APPs preclude an airport from increasing aeronautical prices to make up
for lost profits or previously unrecovered costs. This also means that, contrary to the comment made
79 ‘Unrecovered costs’ are costs that the airport incurred under a previous ASA but which it was unable to recover due to the
COVID-19 pandemic.
80 Lucas Baird, ‘Airlines revive airport log of claims to keep costs low’, AFR, 3 October 2021, accessed 15 March 2022.
81 ibid.

by one airport, the APPs do not allow an airport to include unrecovered costs into its asset base for
negotiation of prices in future ASAs.
The ACCC is likely to have serious concerns if any airports engage in ‘catch-up pricing’ and would likely
consider such actions as evidence of exercise of market power.
2.5 Security charges

The Australian Government requires both monitored and non-monitored airports to comply with its
mandated security screening measures. Airports incur costs relating to these measures. During the
COVID-19 pandemic, the Australian Government introduced additional measures, which will require
airports to incur additional operating expenses and to invest in substantial capital upgrades over the
coming years.
When the Australian Government first introduced these measures, it communicated its expectations
that airports would recover all costs associated with these measures on a pass-through basis. The
Australian Government has also provided funding, primarily to airlines, to assist them with the payment
of security charges.
Prior to the pandemic, security charges were a relatively small proportion of overall airline costs.
However, due to low passenger numbers, some airports have increased their security charges and have
indicated to the ACCC that they intend to fully recover all security costs.
While airlines do not appear to have concerns about airports recovering all their security costs on a
pass-through basis, some airlines have raised concerns about:
lack of common definition of security costs, with there being no consensus between the parties as to
what costs should be classified as security costs
lack of transparency, with airports not providing sufficient information to explain what categories
of costs they have included, how much those costs are or the basis on which those costs were
calculated
lack of reconciliation, with some airports not providing annual updates to airlines about the extent to
which they are recovering their security costs.
Specifically, some airlines are concerned that in setting security charges, some airports may be
charging for services not related to the provision of mandated security services or extracting a margin.
The ACCC will continue to monitor this issue.

3. Total airport operational and financial
performance
The monitored airports are vital pieces of infrastructure for Australia as they enable the travel that
enriches people’s lives and drives economic growth. They provide an important transport link for
millions of Australians and international visitors every year and facilitate airborne freight services.
This chapter covers:

trends in passenger numbers82
the impact of the COVID-19 pandemic on airports and airlines
the long-term trends in the monitored airports’ overall financial performance prior to the
COVID-19 pandemic.
This chapter is based on operational and financial information the ACCC has obtained from the
monitored airports as well as consultation and broader research the ACCC has undertaken in
preparation for this year’s report.
The financial figures in this chapter are presented in real terms with values in 2020–21 dollars.83
3.1 Trends in passenger numbers at the monitored

airports
3.1.1 Total number of passengers
Figure 3.1 shows the trend in the total number of passengers at each of the monitored airports since
2007–08.
Figure 3.1: Total number of passengers, by airport: 2007–08 to 2020–21

50
40
Passengers (millions)
30
20
10
0
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
82 The ACCC also collects data on aircraft movements and tonnes landed. This data is closely correlated with passenger
numbers. Detailed data on airports’ aircraft movements and tonnes landed can be found on the ACCC website.
83 Deflator series derived from the Australian Bureau of Statistics (2022) Consumer Price Index, Australia (cat. no. 6401.0,
tables 1 and 2, Index Numbers; All Groups CPI; Australia), accessed 30 September 2021. Base year for the ACCC deflator
series is 2020–21.

The aggregate number of passengers travelling through all of the monitored airports was increasing
by between 2.2% and 4.3% annually up until 2018–19, prior to the start of the COVID-19 pandemic.
The 4 monitored airports had a total of almost 122 million passengers passing through their terminals
in 2018–19. The next section will provide a breakdown of the trend in domestic and international
passenger numbers.
Figure 3.1 also shows the impact that the COVID-19 pandemic had on overall passenger numbers.
During the COVID-19 pandemic, total passenger numbers fell at all of the monitored airports. In
2020–21, Melbourne and Sydney airports, among the monitored airports, reported the largest
decreases in passenger numbers, with passenger numbers in 2020–21 decreasing by 83% from 2018–19
levels. In comparison, Perth Airport reported the lowest decrease of 60% compared with 2018–19 level.
This has led to a situation where, in 2020–21, Brisbane Airport reported a greater number of passengers
passing through their terminals compared to Sydney Airport.
3.1.2 Domestic and international passenger numbers

Figure 3.2 shows the movement in domestic and international passenger numbers at the monitored
airports since 2007–08.
Figure 3.2: Domestic and international passenger numbers, by airport: 2007–08 to 2020–21
Domestic passengers
30
25
Domestic passengers (millions)
20
15
10
International passengers
20
International passengers (millions)
16
12
0
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21

Figure 3.2 shows the increase in domestic and international passenger numbers varied for each
monitored airport, with international passenger numbers increasing at a higher rate, though
international passenger numbers did start at a lower base.
At Brisbane Airport, the number of domestic passengers increased steadily until 2012–13. The
annualised increase in the number of domestic passengers visiting Brisbane Airport between 2007–08
and 2018–19 was 1.8%, the lowest among the monitored airports. Similarly, Brisbane Airport’s
international passenger numbers have increased by the lowest rate among the monitored airports, by
3.6% per year on average between 2007–08 and 2018–19.
Starting in 2007–08, Perth Airport’s domestic passenger numbers increased at 3.9% annually. However,
the majority of this increase occurred between 2007–08 and 2012–1384, with domestic passenger
numbers remaining relatively steady thereafter. The reduced rate of growth in domestic passenger
numbers since 2013–14 is likely due to the slowdown in the Western Australian economy and reduced
activity servicing the resources sector.85 Perth Airport’s international passenger numbers have been
relatively flat since 2013–14.
Melbourne and Sydney airports’ growth was predominately driven by increases in international
passengers, with annualised increases of 8.1% and 4.7% respectively between 2007–08 and 2018–19.
For both Melbourne and Sydney airports, domestic passenger numbers continued to increase but
at a lower average annual growth rate of 2.7% and 2.0%, respectively. Domestic passenger numbers
decreased at Melbourne and Sydney airport in 2011–12, due to the partial cessation of activity by Tiger
Airways and industrial action taken against Qantas.
Prior to the pandemic, monitored airports differed in their distribution of international and domestic
travellers. In 2018–19, Sydney Airport had the highest proportion of international passengers among the
monitored airports (40%), with Brisbane Airport having the lowest (27%).
Figure 3.2 also shows that the impact of the COVID-19 pandemic on the number of domestic
passengers varied across the 4 monitored airports. In 2020–21, Sydney and Melbourne airports were
more heavily impacted with falls of 74% and 77% respectively compared to 2018–19. In 2020–21, the
number of domestic passengers travelling through Brisbane Airport fell by 57% while Perth Airport
reported a 43% fall compared with 2018–19.
The impact of the COVID-19 pandemic on international passengers was even more pronounced. In
2020–21, the number of international passengers that visited the monitored airports was more than
95% lower compared with 2018–19.
This is significant for the monitored airports, because both airports and the commercial operators at
the airports (for example, retail) typically generate more revenue from each international passenger
than each domestic passenger. The monitored airports charge airlines higher aeronautical charges (per
passenger) for international passengers compared with domestic and therefore earn more aeronautical
revenue. In addition, international passengers tend to spend more money at retail outlets while at
the airport, compared with domestic passengers, which is important for the profitability of those
retail outlets.
3.2 Impact of the COVID-19 pandemic on airports

and airlines
3.2.1 Impact of the COVID-19 pandemic on the monitored airports
The reduction in passenger numbers due to the COVID-19 pandemic has severely affected all aspects
of airports’ business, including aeronautical, car-parking, landside and retail activities (discussed in
more detail in subsequent chapters). In turn, this significantly impacted on the monitored airports’
financial performance.
84 Perth Airport have stated that this is attributable to growth in fly-in-fly-out traffic and the advent of low-cost
international airlines.
85 Perth Airport, Perth Airport Annual Report 2014, Perth Airport, 2014, p 7–8, accessed 8 April 2022.

The ACCC has been using several measures to monitor airports’ profitability – operating profit margin
and return on average tangible assets. Both metrics show a similar trend during the COVID-19
pandemic, so for the purpose of this section, the ACCC will focus on changes in operating profit
margin.86
Table 3.1 shows the change in total airport operating profit (Earnings before interest, taxes and
amortisation – EBITA) and margin (EBITA as a percentage of total airport revenue) over the past
3 years.
Table 3.1: Total operating profit and margin in real terms, by airport: 2018–19 to 2020–21
Airport profit ($millions) Airport profit margin (%)

2018–19 2019–20 2020–21 2018–19 2019–20 2020–21
Brisbane Airport 511.88 329.04 48.14 59.14 43.69 10.76
Perth Airport 244.49 128.43 26.89 48.08 32.71 10.35
Sydney Airport 987.08 631.37 148.46 59.49 45.89 18.78
Table 3.1 shows that total airport profit and airport profit margins decreased for all monitored airports
in 2019–20 and then fell even more significantly in 2020–21 (the first financial year fully affected by
COVID-19). Melbourne Airport performed the worst of the monitored airports in 2020–21, as it was the
most affected by lockdowns and other measures used by the state governments to suppress the spread
of COVID-19.
Despite COVID-19 causing the biggest disruption to the aviation sector in history, Brisbane, Sydney and
Perth airports reported a profit in 2020–21. Brisbane Airport have attributed this to resilient investment
property revenue and operating cost reductions. Sydney Airport stated that its profit was affected
by inclusion of a one-off gain for an easement over the Sydney Airport site granted to the NSW
Government for the Sydney Gateway project. Sydney Airport noted that its profit would be lower if this
transaction was excluded (although still positive).
The decrease in profit is primarily due to fall in revenue. The monitored airports largely charge
airlines (for aeronautical services) and motorists (for car parking and landside access services) on
a per passenger or per motorist basis. As a result, the significant fall in the number of passengers
(and thereby motorists) directly affected the monitored airports’ revenue in the provision of each of
these services.
In response to the fall in revenue, the monitored airports took measures to reduce costs by:
reducing staffing levels
closing some car parks
renegotiating cleaning and security contracts
terminating kerbside management agreements
reducing expenditure on non-essential services such as landscaping.
Perth Airport also temporarily closed Terminal 1 Domestic and restricted operating hours in 2 other
terminals to meet reduced traffic levels and to mitigate operational costs.
Although monitored airports took various measures to reduce costs, the monitored airports only
managed to reduce their total airport expenses in 2020–21 by between 6% and 14% compared with
2019–20. This was due to the fact that all the monitored airports were required to continue to operate
throughout the pandemic and a substantial portion of their costs are fixed.
86 Return on average tangible assets is another profitability measure that indicates airports’ operating profits relative to the
value of their deployed tangible assets. For details, please refer to Appendix C.

In addition, the monitored airports reported that they incurred additional costs relating to airport
cleaning and occupational health and safety protocols, stemming from:
higher heating, ventilation and air conditioning costs due to COVID-19 requirements for higher
specification air filters and the circulation of outdoor air
the provision of face masks and additional signage
additional staffing and security required to enforce COVID-19 safety rules and comply with
government mandates
installation of contactless technologies.
During the consultation for this monitoring report, monitored airports informed the ACCC that they
expected at least some of these COVID-19 related costs to continue into the future. This is because
there are now higher expectations among the public with respect to cleaning and the provision of
contactless technologies.
3.2.2 Impact of the COVID-19 pandemic on airlines

The significant falls in passenger numbers affected all domestic and international airlines. For example,
Qantas reported that in 2020–21, its total revenue loss from the COVID-19 pandemic reached
$16 billion, with Qantas posting a $2.35 billion loss for the financial year87, following a loss of $2.7 billion
for the financial year before.88
Airlines made several changes to their operations in response to the pandemic. During the industry
consultation for this monitoring report, several airlines informed the ACCC that they stood down staff
and reduced the number of flights that they operated.
In order to mitigate the effect of the COVID-19 pandemic, the Federal Government has
provided support to both airlines and airports. Airlines have received the following support from
Federal Government:
Australian Airline Financial Relief Package
Regional Airlines Funding Assistance
JobKeeper
Aviation Services Accreditation Support
Regional Airline Network Support
Domestic Aviation Network Support
Tourism Aviation Network Support
Retaining Domestic Airline Capability
International Aviation Support package.
Although this support has been primarily targeted at domestic airlines, some international airlines
benefitted from the government’s International Freight Assistance Mechanism.
The monitored airports have also provided assistance to airlines, which included:
free aircraft parking to domestic and international airlines
rent relief to airlines for services such as lounges, aeronautical services and facilities
the use of aeronautical facilities and services on similar terms to previous agreements
reduced fees and charges to domestic airlines seeking to establish new services.
87 Qantas, Qantas Group posts significant loss from full year of COVID [media release], Qantas, 26 August 2021,
88 Qantas, Qantas Group FY20 financial results – Navigating exceptional conditions [media release], Qantas, 20 August 2020,

Some airlines have acknowledged that they have received support from airports. However, airlines have
also informed the ACCC that the level of support declined after the first 6 months of the pandemic.
With all Australian borders finally open and no significant new COVID-19 variants impacting consumer
confidence, the domestic aviation industry is approaching full recovery in recent months. 4.5 million
passengers travelled in April 2022, representing 89% of pre-COVID-19 levels. Qantas and Jetstar
announced that they flew 110% of pre-COVID capacity over the 2022 Easter holidays and expect 103%
of pre-Covid capacity sustained over July and August 2022. 89 Virgin announced that it expects to
recover to 100% of pre-COVID domestic capacity by June 2022, noting high demand for resources and
contract flying.90
Recovery of international travel is also underway, but at a slower pace. Qantas and Jetstar announced
that they expect international capacity to be just under 50% by the end of FY22, rising to around 70% for
the first quarter of FY23.91
3.3 Long-term trends in the overall financial

performance of the monitored airports before the
COVID-19 pandemic
This section examines the trends in profitability among the 4 monitored airports since 2007–08,
focusing on the period prior to the COVID-19 pandemic (the impact of the pandemic was discussed in
section 3.2). The ACCC has chosen 2007–08 as a starting point for the analysis because this is the first
year that the ACCC has collected financial data under the line-in-the-sand approach.
3.3.1 Total airport profit margin

Figure 3.3 shows the total airport profit margin (EBITA as a percentage of total airport revenue) of each
of the monitored airports between 2007–08 and 2020–21.
Figure 3.3: Total airport profit margin, by airport: 2007–08 to 2020–21

100
80
60
Profit margin (%)
40
20
-20
-40
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Figure 3.3 shows that in the period between 2007–08 and 2018–19, the monitored airports’ total profit
margins have consistently ranged between approximately 45 and 70%. As discussed in section 3.2, total
airport profit margins decreased as a result of the COVID-19 pandemic.
89 Qantas, ‘Qantas group industry update’, 26 May 2022, accessed 26 May 2022.
90 Virgin, ‘Fleet growth positions Virgin Australia for higher capacity, lower emissions’, 29 April 2022, accessed 10 May 2022.
91 Qantas, ‘Qantas group industry update’, 26 May 2022, accessed 26 May 2022.

For Brisbane Airport, after the initial dip in 2008–09, total airport profit margin has remained at
approximately 59% for the 10 years prior to the COVID-19 pandemic.
Melbourne Airport’s profit margin has gradually declined in the last 12 years prior to COVID‑19
pandemic, dropping by 9.4 percentage points by 2018–19 to 56.5%.
For Perth Airport, a change in accounting treatment led to a significant increase in revenue in 2011–12
and 2012–13.92 Since 2013–14, Perth Airport’s profitability remained relatively steady, ranging between
48% and 53%.
Sydney Airport’s profit margin fell in 2009–10 due to an accounting treatment which resulted in a
reduction in revenue.93 Between 2009–10 and 2018–19, Sydney Airport maintained relatively steady
profit margins between 57% and 64%.
A key limitation of the existing monitoring regime is that the profit margins shown in figure 3.4 are
based on historical accounting data. Given accounting rates of return do not necessarily correspond
to economic rates of return, the ACCC cannot conclusively assess whether airports’ profit margins are
excessive. To effectively make this assessment, the ACCC would need information about the monitored’
airports efficient long-run costs, among other things (refer to section 1.5.3).
The ACCC’s ability to undertake long-term trend analysis is further hindered by the monitored airports
applying various accounting treatments or changing their accounting methods in relation to revenue,
expenses and/or asset values.94
3.3.2 Rate of return on total airport tangible non-current assets

Airports are capital intensive businesses with large-scale and on-going investment to meet increases
in passenger numbers. This includes infrastructure like terminals, runways, safety systems and
providing buildings for handling services and commercial activities such as car parking and retails. As
part of monitoring airports’ financial performance, the ACCC calculates the rate of return on tangible
non-current assets.
Figure 3.4 shows how the total airport return on total airport tangible non-current assets (EBITA as
percentage of average tangible non-current assets) has changed since 2007–08.
92 This resulted in an asset revaluation gain of its non-aeronautical investment property.

93 Sydney Airport’s total airport revenue in 2008–09 declined due to the removal of intercompany dividends received in
preparation of the accounts on a consolidated basis.
94 The ACCC does not have a role in assessing revaluations in non-aeronautical assets or cost allocation methodologies.

Figure 3.4: Return on total airport tangible non-current assets, by airport: 2007–08 to 2020–21
60
50
Return on assets (%)
40
30
20
10
-10
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Note: The asset values used to calculate these results are the ones reported under the line-in-the-sand approach.
Figure 3.4 shows that Sydney Airport typically earned the highest return on tangible non-current assets
of the 4 monitored airports (Perth Airport’s returns in 2011–12 was affected by factors mentioned
previously). Apart from the change in accounting practices affecting Sydney Airport’s returns up until
and including 2008–09, Sydney Airport’s return on tangible non-current assets was typically between
13% and 18%.
As noted previously, in 2011–12 and 2012–13 Perth Airport’s EBITA was impacted because of an
accounting treatment. Since 2013–14, Perth Airport had the lowest (pre-COVID-19 pandemic) return on
tangible non-current assets among the 4 monitored airports in the range of 8–10%. Similarly, Brisbane
Airport’s return on tangible non-current assets had typically been ranging between 9% and 12%.
Melbourne Airport’s return on tangible non-current assets had been trending downward since 2007–08,
dropping from 16.6% in 2007–08 to as low as 11.2% in 2015–16.
As mentioned in section 3.2, the return on total airport tangible non-current assets decreased as a result
of the COVID-19 pandemic.
As mentioned earlier, the ACCC relies solely on accounting-based asset values to calculate the return on
total airport tangible non-current assets. This could lead to misleading results for several reasons. Since
2007–08, the ACCC required airport operators to provide information regarding the aeronautical asset
base under the line-in-the-sand (LIS) approach. This is in accordance with the recommendation from
the 2007 PC inquiry95 to stop the monitored airports from raising charges on the basis of periodically
revaluing their aeronautical assets. However, the LIS approach does not extend to non-aeronautical
assets, so the monitored airports may revalue these assets for monitoring purposes. This would affect
the return on tangible non-current assets shown in figure 3.5.
Further, the LIS approach incorporates new investments valued at actual cost. Without an efficiency
assessment, the actual cost incurred and the assets in place may not necessarily be efficient. The return
on tangible non-current assets measured can reflect a degree of inefficient investment decision.
The ACCC cannot conclusively determine whether the monitored airports’ rates of return are consistent
with the degree of risks they face.
95 Productivity Commission, Inquiry into Price Regulation of Airport Services (2007), Productivity Commission website,
April 2007, accessed 18 April 2022.

4. Aeronautical services
The primary function of an airport is to provide aeronautical services to airlines and by extension,
members of the public. Aeronautical operations are those that directly relate to the provision of aviation
services including runways, aprons, aerobridges, departure lounges, check-in facilities and baggage
handling facilities.
This chapter presents the key operating and financial results in relation to the aeronautical operations of
the monitored airports. Specifically, this chapter covers:
the impact of the COVID-19 pandemic on monitored airports’ aeronautical financial results
long-term trends in the provision of aeronautical services prior to the COVID-19 pandemic.
This chapter is based on financial and operational information the ACCC has obtained from the
monitored airports as well as consultation and broader research the ACCC has undertaken in
preparation for this year’s report.
The financial figures in this chapter are presented in real terms with values in 2020–21 dollars.96 All
references in this chapter to ‘profit’ or ‘operating profit’ refer to earnings before interest, tax and
amortisation (EBITA).
4.1 The impact of the COVID-19 pandemic on

monitored airports’ aeronautical financial results
As described in chapter 3, the COVID-19 pandemic has adversely affected airports due to the
border closures and the associated lack of passengers, as well as other restrictions that impacted
their operations.
Table 4.1 shows how these factors affected aeronautical profit (or loss) and margins for each of the
monitored airports over the course of the COVID-19 pandemic.
Table 4.1: Aeronautical profit and margins, by airport: 2018–19 to 2020–21
Aeronautical profit ($m) Aeronautical profit margin (%)

2018–19 2019–20 2020–21 2018–19 2019–20 2020–21
Brisbane Airport 194.5 95.7 -84.6 46.9 27.3 -59.9
Perth Airport 78.0 41.0 -35.2 34.2 21.5 -37.8
Sydney Airport 416.5 183.7 -153.1 45.0 25.3 -56.5
As shown in table 4.1, in 2019–20 all monitored airports reported large reductions in profit, driven by
the reduction in passenger numbers. In 2020–21, all 4 monitored airports incurred significant losses in
their aeronautical operation.
This drop in profit was largely due to significant decrease in aeronautical revenue. The fall in
aeronautical revenue for monitored airports between 2018–19 and 2020–21 ranged from 59.1% for Perth
Airport to 74.5% for Melbourne Airport.
Airports also incurred additional aeronautical expenses due to the COVID‑safe and Occupational Health
and Safety protocols, including extra cleaning services, air filtration requirements, additional protective
equipment for staff and passengers, security to enforce social distancing rules and extra signage.

The monitored airports took steps to reduce their aeronautical expenses during the pandemic by
reducing staff, reducing operating hours, closing terminals, and renegotiating security and cleaning
contracts. However, as airports remained open throughout the pandemic, their overall aeronautical
expenses either remained unchanged or decreased slightly between 2018–19 and 2020–21.
4.2 Long-term trends in provision of aeronautical

services before the COVID-19 pandemic
This section examines the long-term trends in the provision of aeronautical services by the 4 monitored
airports, focusing on the period prior to the COVID-19 pandemic (the impact of the pandemic was
discussed in section 4.1). The ACCC has chosen 2007–08 as a starting point for the analysis because this
is the first year that the ACCC has collected financial data under the line-in-the-sand approach.
Further details on activity levels (for example, tonnes landed and aircraft movements) and financial
results can also be found in the supplementary database that accompanies this report.
The historical financial results in this section are affected by how the monitored airports have operated
their terminals over time. Some of airports’ terminals were operated by the airport and some directly
by airlines under a domestic terminal lease. These arrangements have changed over time, as some
domestic terminal leases expired, and airports have taken over operation of those terminals. Box 4.1
explains how the reporting of aeronautical data relating to domestic terminal leases by the monitored
airports and the changing of the arrangements over time has affected the ACCC’s reporting of
aeronautical data.

Box 4.1: How changes in reporting of, and arrangements for, domestic
terminal leases impacted on aeronautical data reported by the ACCC
The ACCC reports aeronautical revenue, expenses and operating profits based on data reported by
the monitored airports relating to provision of aeronautical services.
In 2007–08, each monitored airport operated some of the airport’s terminals itself and had at least
one terminal that was operated by airlines under a domestic terminal lease. This affected the way
that the monitored airports reported their aeronautical expenses and revenues.
The monitored airports did not report any expenses that they incurred from the terminals operated
by airlines under domestic terminal leases as aeronautical expenses. This is because the expenses
that they incur from these terminals are not classified as aeronautical expenses.
The monitored airports’ reporting of aeronautical revenue relating to the domestic terminal leases
depended on the structure of pricing by the relevant airport. It was common for monitored airports
to levy separate airfield and terminal charges. The monitored airports did not levy terminal charges
in relation to domestic terminal leases, as they did not operate those terminals and the lease
payments that they received were not counted as aeronautical revenue.
However, the monitored airports levied airfield charges on airlines irrespective of which terminal
they used. Therefore, the monitored airports collected some revenue from airlines that were using
domestic lease terminals. The monitored airports included this revenue as part of their overall
aeronautical revenue that they reported to the ACCC.
This means that the aeronautical data reported by the monitored airports was slightly skewed,
as the monitored airports reported some revenue relating to domestic terminal leases but did
not report any associated aeronautical expenses. Each monitored airport recovered a different
proportion of its total aeronautical revenue through airfield charges (versus terminal charges).
Therefore, the extent to which this reporting discrepancy affected the aeronautical results of each
airport varied across the monitored airports.
In the past 7 years, all domestic terminal leases have expired, and the monitored airports have
resumed operating them. Qantas handed back domestic terminal T3 to Sydney Airport in late 2015.
The remaining domestic terminal leases expired during 2018–19: the Virgin and Qantas parts of the
domestic terminal in Brisbane (December 2018), the Qantas terminal (T4) in Perth (January 2019)
and the Qantas terminal (T1) in Melbourne (June 2019).
This means that the monitored airports are now reporting all revenues and costs associated with
all the terminals at their airports as aeronautical related. This means that the aeronautical data
reported by the monitored airports is no longer skewed. However, this also means that the change
in ownership of the domestic terminal leases needs to be taken into account when examining and
comparing aeronautical results for each airport over time.
4.2.1 Aeronautical revenue per passenger

Airlines pay aeronautical charges to airports to access the aeronautical facilities. Those charges are
typically negotiated confidentially by airports and airlines. The ACCC does not obtain the prices that
are negotiated between airports and airlines.97 To analyse the trends in monitored airports’ prices, the
ACCC uses aeronautical revenue per passenger as a proxy for the average price that the monitored
airports charge airlines.
Figure 4.1 shows the trend in aeronautical revenue per passenger at the monitored airports between
2007–08 and 2020–21.
97 The ACCC does collect the list prices which can be found in Appendix B. However, these prices are only used in
limited situations.

Figure 4.1: Aeronautical revenue per passenger in real terms, by airport: 2007–08 to 2020–21
40
Aeronautical revenue per passenger (%)
35
30
25
20
15
10
0
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Note: Values in 2020–21 dollars. The dashed lines in the chart represents the period following the expiry of the relevant
domestic terminal leases.
Figure 4.1 shows that in the period between 2007–08 and 2018–19, aeronautical revenue per passenger
has trended upward for each monitored airport. The aeronautical revenue per passenger in the last
2 financial years has been affected by the COVID-19 pandemic.
Melbourne Airport’s aeronautical revenue per passenger increased by 32% in the period between
2007–08 and 2018–19. Aeronautical revenue per passenger was largely unchanged between 2007–08
and 2010–11. Melbourne Airport then signed new aeronautical service agreements (ASA) with airlines
commencing in 2012 and expiring in 2017. Aeronautical revenue per passenger gradually increased
over the period of this ASA, indicating that aeronautical prices under this ASA increased in real terms.
Melbourne Airport then signed the current ASA with airlines, commencing in 2017 and expiring in 2022.
Aeronautical revenue per passenger was largely unchanged in the first few years of this ASA.
Brisbane Airport’s aeronautical revenue per passenger increased by 57% between 2007–08 and
2017–18. Brisbane Airport signed a new ASA with airlines to recover the capital costs associated with
the construction of a new runway, commencing on 1 September 2012 and expiring on 30 June 2023.
Aeronautical revenue per passenger has been increasing in the period between 2012–13 and 2018–19,
in part, due to the charges that airlines were paying under this ASA. Increase in aeronautical revenue
per passenger between 2017–18 and 2018–19 is, at least in part, due to expansion of Brisbane Airport’s
aeronautical revenue base following expiry of domestic terminal lease held by Qantas and Virgin (as per
box 4.1).
Perth Airport’s aeronautical revenue per passenger increased by 59.4% between 2007–08 and 2017–18.
Aeronautical revenue per passenger was relatively constant in the period between 2007–08 and
2011–12. Perth Airport then signed new ASAs with the domestic airlines for aircraft-related services
and facilities commencing between 1 July 2011 and 1 July 2012, expiring on 30 June 2018. In addition,
Perth Airport entered new ASAs with international airlines between 1 July 2011 and 20 December 2013,
expiring on 30 June 2019. Aeronautical revenue per passenger (from landing and terminal charges from
both international and domestic passengers) gradually increased over the period between 2011–12 and
2017–18, indicating that aeronautical prices under the ASAs on foot during this period increased in real
terms. Perth Airport stated that they increased charges to recover the costs of investments designed to
increase capacity.
Sydney Airport’s aeronautical revenue per passenger was relatively constant in the period between
2007–08 and 2014–15, increasing by 3.6%. Aeronautical revenue per passenger has gradually increased
since 2015–16. At least in part, this is due to expiry of Qantas’ domestic terminal lease in late 2015 (as
discussed in box 4.1). Sydney Airport entered new ASAs with most international airlines and some large

domestic airlines in 2015. Therefore, increase in revenue per passenger may also reflect higher prices
under those ASAs.
Change in aeronautical prices is not the sole driver behind the change in aeronautical revenue per
passenger across the monitored airports over time. Since 2007–08, the proportion of international
passengers has increased at each monitored airport (the number of international passengers visiting
each airport increased at a faster rate than the number of domestic passengers). This increase in
proportion of international passengers visiting the monitored airports somewhat contributed to
an increase in overall aeronautical revenue per passenger prior to the COVID-19 pandemic as the
monitored airports charge higher prices for international passengers than domestic passengers.
However, the ACCC considers that increases in aeronautical revenue per passenger in the period
between 2007–08 and 2018–19 were, at least for some monitored airports, primarily due to higher
aeronautical prices (in real terms). This is not a cause for concern in itself, as higher prices could be
driven by increasing operating expenses or capital costs, or higher quality of services. The relevant
question is whether the monitored airports have exercised their market power to consistently achieve
prices well above levels that would otherwise be attained in a competitive market. This involves further
assessment of whether the pricing reflects efficient costs.
Airlines have regularly raised concerns about increases in aeronautical charges over the years.
During the 2019 Productivity Commission (PC) inquiry, Qantas submitted that Australian airports are
significantly more expensive than their counterparts in most other regions, and airport-related expenses
contribute a greater portion of overall airline costs for Australian carriers than for foreign carriers.98
International Air Transport Association (IATA) presented findings showing that the Australian monitored
airports have higher charges than most other airports globally.99 Virgin Australia submitted that higher
airport charges are being passed through to airlines’ customers, resulting in charges for air travel that
are higher than would be the case if there was effective (or workable) competition.100
Figure 4.1 also shows that aeronautical revenue per passenger have increased for all 4 of the monitored
airports over the course of the COVID-19 pandemic. Between 2018–19 and 2020–21, the increases
ranged from 0.9% for Perth Airport to 70.4% for Sydney Airport.
4.2.2 Quality of aeronautical service

The quality of aeronautical service analysis in this section draws on information from several different
sources. These sources include airport operators’ surveys of passengers and ACCC surveys of airlines.
Box 4.2 outlines how the aeronautical quality of service measure is calculated.
98 Qantas Group, Submission No. 48 to the Productivity Commission, Inquiry into Economic Regulation of Airports (2019),
Productivity Commission website, 2018, p 14, accessed 8 April 2022.
99 International Air Transport Association (IATA), Submission No. 27 to the Productivity Commission, Inquiry into Economic
Regulation of Airports (2019), Productivity Commission website, 2018, p 8, accessed 8 April 2022.
100 Virgin Australia, Submission No. 54 to the Productivity Commission, Inquiry into Economic Regulation of Airports (2019),

Box 4.2: How aeronautical quality of service ratings are calculated by
the ACCC
The passenger perception surveys are arranged by each airport and may differ in their coverage
and detail. However, these surveys provide information consistent with that specified in the Airports
Regulations and quality of service guidelines. The areas covered include passenger check-in,
security clearance, government inspection, gate lounges, washrooms, baggage processing and
trolleys, signage and wayfinding, and airport access for arriving and departing passengers.
The ACCC conducts an annual survey of airlines about their perception of the quality of facilities
they used at the monitored airports. Questions relate to both terminal facilities (aerobridges,
check-in and baggage processing) and airside facilities (runways, taxiways, aprons, aircraft gates
and ground equipment sites). Airlines are asked to rate 2 aspects of these facilities:
availability – that is, the availability of infrastructure and equipment and the occurrence of delays
in gaining access to those facilities
standard – that is, the ability of equipment to perform the function intended, the reliability of the
equipment and the probability of it breaking down.
Airlines are also asked to rate the airport operator’s responsiveness or approach to addressing
problems and concerns with the above facilities.
In addition, airport operators provide the ACCC with a range of objective data related to the
number or size of various facilities and throughput at those facilities. These include the number
of passengers at peak hours, the number of aerobridges and the size of gate lounges. The ACCC
has converted these numbers and sizes to indicators of quality of service, such as the number of
passengers per square metre of lounge area during peak hour. These are then converted into a
score.101
The ACCC calculates the rating for aeronautical services by combining scores that the airport
achieved against each of the specific quality of service measures from airline surveys, passenger
surveys and objective indicators.
The ACCC has temporarily paused collecting quality of service data since 2018–19 due to the COVID-19
pandemic. The ACCC intends to resume collecting quality of service data as soon as possible, subject to
consultation with the monitored airports.
Figure 4.2 shows the changes in quality of aeronautical services between 1997–98 and 2018–19.
101 This process consists of producing a set of benchmarks for each measure based on how the 4 airports performed against
that measure. If an airport’s performance against that measure is equal to the average performance across the 4 airports in
that year, it will receive a score of 3 out of 5. If an airport performs better than the benchmark average, it will receive score
of 4 or 5 depending how close its performance is compared to the benchmark. Similarly, if its performance is below the
benchmark, it will be rated 1 or 2.

Figure 4.2: Ratings of quality of aeronautical services, by airport: 1997–98 to 2018–19
Excellent
Good
Average rating
Satisfactory
Poor
Very poor
1997–98
1998–99
1999–00
2000–01
2001–02
2002–03
2003–04
2004–05
2005–06
2006–07
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
Figure 4.2 shows that the ratings of quality of aeronautical services across all monitored airports have
either decreased slightly or remained relatively unchanged in the period between 1997–98 and 2018–19.
Focusing on the period between 2007–08 and 2018–19 (the same period as in figure 4.1):
Brisbane and Melbourne airports’ ratings of quality of aeronautical services are about the same in
2018–19 as they were in 2007–08
Perth and Sydney airports’ ratings of quality of aeronautical services increased in the period between
2007–08 and 2018–19. However, their ratings declined leading up to 2007–08, so their ratings in
2018–19 are on par with the ratings each of the airports achieved prior to 2007–08.
Collectively, the 4 monitored airports invested $11.5 billion in tangible non-current aeronautical assets
in real terms between 2007–08 to 2020–21. Figure 4.2 suggests that, at least from the point of view
of airlines and passengers, this investment has merely maintained the quality of service rather than
improved it.
Overall, to the extent that increases in aeronautical revenue per passenger discussed in the previous
section reflect increases in aeronautical prices, they do not appear to be explained by increases in the
quality of aeronautical services.
4.2.3 Aeronautical expenses per passenger

Figure 4.3 shows how aeronautical expenses per passenger of the monitored airports have changed
between 2007–08 and 2020–21.

Figure 4.3: Aeronautical expenses per passenger in real terms, by airport: 2007–08 to 2020–21
60
Aeronautical expenses per passenger ($)
50
40
30
20
10
0
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Figure 4.3 shows that aeronautical expenses per passenger have increased at all 4 monitored airports
since 2007–08.
In the period between 2007–08 and 2018–19, Melbourne Airport’s expenses per passenger increased by
4.1% per year on average.
In the period between 2007–08 and 2017–18, Perth Airport’s expenses per passenger increased by
6.5% per year on average. Perth Airport stated that the increase in expenses per passenger from
2014–15 to 2015–16 was mainly as a result of increased depreciation expenses associated with the
construction of the T1 domestic terminal.
Brisbane Airport’s expenses per passenger increased by 3.2% per year on average between 2007–08
and 2017–18. Increases in the aeronautical expenses per passenger of these 2 airports between 2017–18
and 2018–19 were, at least in part, due to expiry of domestic terminal leases.
Aeronautical expenses per passenger were broadly consistent at Sydney Airport in the period
between 2007–08 and 2014–15. Aeronautical expenses per passenger have increased since 2015–16 by
4.6% per year, at least in part, due to expiry of the domestic terminal lease.
This suggests that, for at least some of the monitored airports, increases in aeronautical prices
in the period between 2007–08 and 2018–19 may have been, at least in part, driven by higher
aeronautical expenses.
However, the Australian Government’s Aeronautical Pricing Principles state that airports should set
their prices to recover efficient (rather than actual) costs of providing a service (discussed further
in chapter 2). With the information collected at present, the ACCC cannot assess the efficiency of
expenses of the monitored airports.
Some airlines have raised concerns that expenses incurred by at least some monitored airports are not
efficient. For example, during the 2019 PC inquiry, Qantas submitted that airports have not generated
operational efficiencies and productivity gains despite rising passenger volumes and improving
technology.102
Figure 4.3 also shows that aeronautical expenses per passenger have increased for all 4 of the
monitored airports over the course of the COVID-19 pandemic. This is because aeronautical expenses
are largely fixed so expenses don’t fall as fast as passenger numbers.
102 Qantas, Submission No. 48 to the Productivity Commission, Inquiry into Economic Regulation of Airports (2019), p 20.

4.2.4 Aeronautical operating profit per passenger
Figure 4.4 shows how aeronautical operating profit (EBITA from aeronautical activity) per passenger of
the monitored airports changed between 2007–08 and 2020–21.
Figure 4.4: Aeronautical operating profit per passenger, by airport: 2007–08 to 2020–21
12
Aeronautical operating profit per passenger ($)
-6
-12
-18
-24
-30
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Figure 4.4 shows that aeronautical operating profit per passenger increased for all the monitored
airports between 2007–08 and 2020–21.
In the period between 2007–08 and 2018–19, Melbourne Airport’s aeronautical operating profit per
passenger increased at 0.6% per year.
In the period between 2007–08 and 2017–18, Perth Airport’s aeronautical operating profit per
passenger increased by 2.7% per year on average, while Brisbane Airport’s aeronautical operating profit
per passenger increased by 6.4% per year on average. Increases in the aeronautical operating profit
per passenger of these 2 airports between 2017–18 and 2018–19 were, at least in part, due to expiry of
In the period between 2007–08 and 2014–15, Sydney Airport’s aeronautical operating profit per
passenger increased by 1.4% per year on average. Sydney Airport’s operating profit per passenger
results from 2015–16 have been affected by expiry of the domestic terminal lease.
A higher aeronautical operating profit per passenger means that revenue per passenger, and therefore
aeronautical prices, have increased at a faster rate than expenses per passenger.
Figure 4.4 also shows that the COVID-19 pandemic has caused the operating profit per passenger
to decrease.
4.2.5 Aeronautical profit margin

This section examines how profitability of monitored airports’ aeronautical operations has changed
over time. Figure 4.5 shows the trend in aeronautical operating profit (EBITA) as a percentage of
aeronautical revenue (aeronautical profit margin) of the 4 monitored airports between 2007–08 and
2020–21.

Figure 4.5: Aeronautical profit margin, by airport: 2007–08 to 2020–21
100
50
Profit margin (%)
-50
-100
-150
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Figure 4.5 shows that aeronautical profit margins fluctuated in the period between 2007–08 and
2018–19, but generally stayed between 33% and 53%. In addition, figure 4.5 also shows aeronautical
profit margins decreased for all 4 of the monitored airports over the course of the COVID-19 pandemic.
Melbourne and Perth airports’ aeronautical profit margins trended downward between 2007–08 and
2018–19. In part, this was due to an increase in depreciation costs associated with the new T4 terminal
at Melbourne Airport and the new T2 domestic and T1 domestic terminals at Perth Airport.
Sydney’s aeronautical profit margins trended downward starting in 2013–14. a significant part of this
decrease occurred since 2015–16 and this was mainly due to the inclusion of revenue and expenses
related to the Qantas domestic terminal which was purchased by Sydney Airport in August 2015.103
Profitability was also affected because of increases in expenses associated with a new international
airline agreement which included commitments to deliver improved standards throughout the airport.
Brisbane Airport was the only monitored airport that has increased its profit margins over time. By
2018–19, its aeronautical profit margin was 5 percentage points higher than it was in 2007–08.
As discussed in chapter 3, the ACCC’s calculations of operating profit are based on accounting data.
This means that the ACCC cannot be conclusive as to whether the observed operating profits are
excessive. However, various studies have found that the monitored airports’ profit margins are high by
international standards:
Frontier Economics found that the average profit margins of the 4 Australian monitored airports
were much higher than of non-Australian airports.104
IATA also found that Australian monitored airports’ profit margins were much higher than
comparable airports worldwide.105
4.2.6 Return on tangible non-current aeronautical assets

The ACCC also monitors the return on tangible non-current aeronautical assets (defined as EBITA from
aeronautical activity as a percentage of average total tangible non-current aeronautical assets).
Figure 4.6 shows the trend in returns on tangible non-current aeronautical assets between 2007–08 and
2020–21.
103 See box 4.1 for more detail on how the expiry of domestic terminal leases affect aeronautical revenue and expenses.
104 Airlines for Australia and New Zealand (A4ANZ), The performance & impact of Australia’s Airports since privatisation: A
preliminary report prepared by Airlines for Australia & New Zealand, A4ANZ, May 2018, pp 9–10, accessed 13 April 2022.
105 IATA, Submission No. 27 to the Productivity Commission, Inquiry into Economic Regulation of Airports (2019), pp 13–14.

Figure 4.6: Return on tangible non-current aeronautical assets, by airport: 2007–08 to 2020–21
20
15
Return on assets (%)
10
-5
-10
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Figure 4.6 shows that Melbourne and Perth airports’ return on tangible non-current aeronautical
assets trended downward from 16.1% and 18.2% to 8.5% and 7.6% respectively by 2018–19. This was
mainly due to expansion in aeronautical asset bases (refer to chapter 8 for more details). In addition, all
4 monitored airports’ return on tangible non-current aeronautical assets decreased over the course of
In the period between 2007–08 and 2018–19, Brisbane Airport’s return on tangible non-current
aeronautical assets has remained broadly the same, as both its operating profit and aeronautical asset
base increased significantly during this period.
Sydney Airport’s returns on tangible non-current aeronautical assets increased from 8.6% in 2007–08 to
12.1% in 2013–14. Between 2012–13 and 2018–19, returns on tangible non-current aeronautical assets
remained around 11% or 12%, well above the other monitored airports. This reflects minimal expansion
of its tangible non-current aeronautical asset base, in part due to Sydney Airport’s limited capacity
for expansion.
A study completed by the Grattan Institute in 2017, showed that on average, nearly half of returns of
equity earned by airport operators in Australia were ‘super-normal’ profits.106 The Grattan Institute
found that Australian airports had the third highest returns of the 9 industries categorised as natural
monopolies (behind wired telecom and electricity distribution).107
106 J Minifie, C Chisholm, and L Percival, Competition in Australia: Too little of a good thing? [Grattan Institute
Report No. 2017–12], Grattan Institute, 12 December 2017, pp 32–33, accessed 13 April 2022.
107 ibid., p 39.

5. Car parking
Airports provide short-term and long-term car parking services to travellers, which compete (to some
extent) with independent car parking operators and other landside transport modes.
This chapter presents an overview of the car parking services across the monitored airports, including
car parking activities, prices and financial results.
Specifically, this chapter will discuss:

how the ACCC monitors airport car park pricing
the impact of the COVID-19 pandemic on car parking activity, pricing and financials
long-term trends with respect to the monitored airports’ car parking services.
The analysis in this chapter is based on information the ACCC has received from the monitored airports
as part of the monitoring regime. The ACCC did not collect quality of service data in relation to airports’
parking services in 2020–21, to reduce the reporting burden on airports following the onset of the
pandemic. Subject to consultation with the monitored airports, the ACCC intends to resume collecting
quality of service data as soon as possible.
All dollar figures presented in this chapter are expressed in 2020–21 dollars. All references in this
chapter to ‘profit’ or ‘operating profit’ refer to earnings before interest, tax and amortisation (EBITA).
5.1 Monitoring airports’ car parking prices

Car parking prices at the monitored airports are determined by a number of factors including the length
of stay, the proximity of the car park to the terminal, whether the car park is covered or open, whether it
is booked in advance and customer demand.
There are 2 types of economic rents that airport operators can incorporate when setting prices for car
parking: locational rents and monopoly rents. Airports charge customers different rates to account for
factors such as length of stay and the type of car parking used. To some degree, these prices reflect
value of the land; that is, the convenience of parking within a short walk from airport terminals and
the willingness to pay for that convenience. Another reason for the different prices between different
carparks is the need for airports to manage growing demand for space near the terminal entrances.
These are referred to as locational factors. It is efficient for prices to be set with consideration
of locational factors. At the margin, the prices paid reflects the opportunity cost of the land in
that location.
However, airports still have the ability to raise prices above efficient levels (that is, collect revenue in
excess of locational rents, referred to as monopoly rents) by constraining its provision, particularly for
services where they possess significant market power. The extent of the market power that monitored
airports have in relation to car parking depends on a number of factors, including the degree to which
consumers’ needs (for example, convenience, cost) can be met by alternative transport modes or an
independent car park operator located in close proximity to the airport. The objective of the ACCC’s
monitoring is to assess whether monitored airports are extracting monopoly rents, which results in a
loss of economic welfare.
All airports offer short-term at-terminal and long-term at-distance parking, as well as a range of
products and services in between. The ACCC focuses its analysis on 2 common types of parking
in particular:
short-term parking (parking for a period of up to a day) at a car park located at the terminal, with the
motorist paying drive-up rates
long-term parking (parking for a period of one or more days) at a car park located at a distance from
the terminal, where motorists may pay drive-up rates or book online in advance.

The ACCC’s monitoring has some limitations. In particular, the ACCC considers that changes in
individual price points are not reliable indicators of changes in overall price levels. For example, an
airport may reduce the majority of price points but increase a strategic price point such as a heavily
used 2-hour drive-up rate. This may give the impression that prices have gone down or not changed
when in fact overall price (that is, average price weighted by revenue share) may have increased.
5.2 Impact of the COVID-19 pandemic on car parking

services
In 2020–21, airports were significantly affected by the continuing closure of Australia’s international
borders, along with domestic travel restrictions. Airports saw substantial falls in both domestic and
international passenger numbers (as discussed in chapter 3).
This section will discuss the impact of the COVID-19 pandemic on monitored airports’ parking services.
It covers the impact on vehicle throughput, and the financial impact on the airports. It also covers some
of the measures each airport took to mitigate the impact of the pandemic on its car parking operations.
5.2.1 Car parking activity

Table 5.1 shows average daily vehicle throughput across the monitored airports for 2018–19 (the year
immediately preceding the pandemic) and the 2 following years.
Table 5.1: Daily average vehicle throughput by airport: 2018–19 to 2020–21
Daily average Daily average Daily average

throughput in throughput in throughput in Change 2018–19 Change 2019–20
2018–19 2019–20 2020–21 to 2019–20 (%) to 2020–21 (%)
Brisbane 7 483 5 895 2 812 -21.2 -52.3
Melbourne 8 723 6 651 1 516 -23.8 -77.2
Perth 4 766 3 527 1 601 -26.0 -54.6
Sydney 11 190 7 964 1 374 -28.8 -82.7
In 2019–20, the impact of COVID-19 was largely restricted to the fourth quarter of that year, and the
fall in throughput was more limited across all airports. By contrast, the impact of COVID-19 was felt
throughout all of 2020–21, with average daily throughput declining significantly from pre-pandemic
levels. Falls in throughput from 2019–20 to 2020–21 were much more pronounced at Melbourne Airport
(77.2%) and Sydney Airport (82.7%), where the decrease in passenger numbers from pre-pandemic
levels was most substantial.
5.2.2 Car parking revenue, costs and profits

Table 5.2 shows the car parking revenue across the monitored airports in the period between 2018–19
and 2020–21.
Table 5.2: Car parking revenue in real terms by airport: 2018–19 to 2020–21
Revenue Revenue Revenue

in 2018–19 in 2019–20 in 2020–21 Change 2018–19 Change 2019–20
($millions) ($millions) ($millions) to 2019–20 (%) to 2020–21 (%)
Brisbane 110.3 84.6 44.4 -23.3 -47.5
Melbourne 149.8 110.7 37.1 -26.1 -66.5
Perth 63.6 50.5 34.7 -20.5 -31.4
Sydney 137.6 103.0 33.5 -25.2 -67.5

As table 5.2 shows, revenue decreased significantly from pre-pandemic levels across all the monitored
airports, reflecting the substantial decrease in demand for airports’ parking services. Again, Melbourne
and Sydney Airports’ revenue decreased to the largest extent (by 66.5% and 67.5% respectively),
reflecting the fact that the fall in throughput was greatest at these airports.
Table 5.3 shows the operating profits of each monitored airport in the period between 2018–19 and
2020–21.
Table 5.3: Car parking operating profit in real terms by airport: 2018–19 to 2020–21
Operating profit Operating profit Operating profit

in 2018–19 in 2019–20 in 2020–21 Change 2018–19 Change 2019–20
($millions) ($millions) ($millions) to 2019–20 (%) to 2020–21 (%)
Brisbane Airport 74.1 51.2 25.5 -31.0 -50.3
Melbourne Airport 79.9 53.7 -8.7 -32.8 -116.3
Perth Airport 36.6 26.8 15.2 -26.8 -43.2
Sydney Airport 93.7 61.5 4.8 -34.4 -92.1
Table 5.3 shows that car parking operating profits significantly decreased across all 4 monitored
airports during the pandemic. In 2020–21, Melbourne Airport reported an operating loss from its car
parking services. Sydney Airport’s operating profit decreased by 92.1% from the previous year, although
it still managed to return a small operating profit ($4.8 million).
Table 5.4 shows car parking operating profit margins for each of the monitored airports in the period
between 2018–19 and 2020–21.
Table 5.4: Car parking operating profit margins in real terms by airport: 2018–19 to 2020–21
Change 2018–19 Change 2019–20

Profit margin in Profit margin in Profit margin in to 2019–20 to 2020–21
2018–19 (%) 2019–20 (%) 2020–21 (%) (%-points) (%-points)
Brisbane 67.2 60.5 57.3 -6.7 -3.2
Melbourne 53.3 48.5 -23.5 -4.8 -72.1
Perth 57.6 53.1 43.9 -4.6 -9.2
Sydney 68.1 59.7 14.5 -8.4 -45.2
Table 5.4 shows that car parking operating profit margins across all monitored airports decreased
during the pandemic. Melbourne and Sydney Airports’ operating profit margins fell the most, with
Melbourne Airport reporting a negative car parking operating profit margin for 2020–21.
5.2.3 Response to the COVID-19 pandemic

Table 5.5 shows car parking operating expenses across the monitored airports in the period between
2018–19 and 2020–21.
Table 5.5: Car parking operating expenses in real terms by airport: 2018–19 to 2020–21
Operating expenses Operating expenses Operating expenses Change Change

in 2018–19 in 2019–20 in 2020–21 2018–19 to 2019–20 to
($millions) ($millions) ($millions) 2019–20 (%) 2020–21 (%)
Brisbane 36.1 33.4 19.0 -7.6 -43.2
Melbourne 70.0 57.0 45.9 -18.5 -19.6
Perth 26.9 23.7 19.5 -11.9 -18.0
Sydney 43.9 41.5 28.6 -5.5 -31.0

Table 5.5 shows that car parking operating expenses decreased across all monitored airports in the last
2 years. This is because each of the monitored airports implemented measures to cut costs in response
to the lower demand for car parking services and falling revenue.
Brisbane Airport temporarily stopped providing valet parking services, due to the lack of demand and
risk of contact between staff and customers. It also closed off certain levels of its public car parking to
reduce staffing, maintenance and utilities costs.
Melbourne Airport closed some of its car parks. It also reduced operational expenditure by reducing
carpark and forecourt security labour and car park bussing expenses to/from the staff and long-term
car parks.
Perth Airport temporarily closed some long-term car parks and reduced bussing and cash collection
services. Perth Airport also reduced staffing costs by standing down employees, reducing
pay for senior management, asking staff to take leave or work reduced hours, and by reducing
contractor levels.
Sydney Airport closed its domestic long-term car park for a period of almost 9 months and its P3
domestic multi-level parking facilities from 1 July 2020 until 22 November 2020. These closures allowed
it to save on operating expenses at those car parks, including cleaning, operating of lifts, travelators and
lighting, as well as to save on car parking management fees.108
Despite achieving cost reductions on account of these measures, airports did not reduce
expenses to the same extent as revenue had decreased. As a result, operating profits fell across all
monitored airports.
One reason for this is that a large proportion of airports’ car parking costs are fixed costs. As airports
had to remain open throughout the pandemic, they were limited in the extent to which they were able
to reduce expenditure. Airports also incurred further costs in implementing additional facility cleaning
and occupational health and safety measures in response to the pandemic (in line with requirements
from state and federal governments). Perth Airport also stated that it incurred additional costs in
implementing contactless technologies in its parking facilities in response to the pandemic.
5.2.4 Car parking prices

This section examines changes in short-term and long-term parking prices since the onset of
the pandemic.
Short-term prices
Table 5.6 shows short-term at-terminal drive-up parking prices for selected durations for each of the
monitored airports in the year preceding the pandemic (2018–19) and the 2 following years.109
108 Sydney Airport, Sydney Airport Annual Report 2020, Sydney Airport website, 2020, p 28, accessed 22 April 2022.
109 Drive-up prices are given for a particular point in time during the year, usually (but not always) the final day of the
financial year.

Table 5.6: Short-term at-terminal drive-up car parking prices in real terms by airport: 2018–19 to 2020–21
30-Jun-19 28-Mar-20 30-Jun-21 Change 30-June-19 to Change 28-Mar-20 to

28-Mar-20 (%) 30-Jun-21 (%)
Brisbane
30–60 minutes $18.54 $19.31 $19.00 4.2 -1.6
1 to 2 hours $22.66 $23.37 $23.00 3.2 -1.6
2 to 3 hours $27.80 $28.45 $28.00 2.3 -1.6
3 to 4 hours $28.83 $29.47 $29.00 2.2 -1.6
up to 24 hours $57.67 $57.92 $57.00 0.4 -1.6
Melbourne
30–60 minutes $12.36 $15.24 $15.00 23.4 -1.6
1 to 2 hours $24.72 $29.47 $30.00 19.2 1.8
2 to 3 hours $24.72 $29.47 $45.00 19.2 52.7
3 to 4 hours $35.01 $39.63 $49.00 13.2 23.6
up to 24 hours $52.52 $51.83 $49.00 -1.3 -5.5
Perth
30–60 minutes $13.80 $14.02 $15.00 1.6 7.0
1 to 2 hours $20.39 $20.93 $22.20 2.7 6.0
2 to 3 hours $23.69 $23.78 $24.00 0.4 0.9
3 to 4 hours $25.74 $25.81 $25.60 0.3 -0.8
up to 24 hours $50.46 $51.83 $54.40 2.7 5.0
Sydney
30–60 minutes $19.98 $20.22 $19.90 1.2 -1.6
1 to 2 hours $28.32 $28.35 $27.90 0.1 -1.6
2 to 3 hours $38.10 $38.51 $37.90 1.1 -1.6
3 to 4 hours $63.85 $64.94 $63.90 1.7 -1.6
up to 24 hours $63.85 $64.94 $63.90 1.7 -1.6
Note: Values in 2020–21 dollars. As some airports offered free parking from late-March 2020 in response to the COVID-19
pandemic, the ACCC asked all 4 monitored airports to report car parking prices as at 28 March 2020, rather than
30 June 2020.
Table 5.6 shows that since 2018–19, Brisbane and Perth airports have slightly increased their short-term
parking prices, while Sydney Airport has left them largely unchanged.
Melbourne Airport made substantial changes to its pricing schemes in both 2019–20 and 2020–21,
which accounts for the large variations in pricing with the preceding years. For example, Melbourne
Airport restructured its parking offerings at its multi-level T123 car park in 2020–21, which led to
significant price rises in the 2 to 3 and 3 to 4-hour price points (52.7% and 23.6% respectively). The ACCC
understands that while the pandemic prompted Melbourne’s decision to implement a new pricing
scheme, Melbourne Airport has implemented this scheme on an ongoing basis.110
Long-term parking prices

Table 5.7 shows long-term at-distance drive-up parking rates (for stays of 1 day or more) for selected
durations at the monitored airports during each year from 2018–19 to 2020–21.
110 See for example, Australia Pacific Airports Corporation Limited (APAC), APAC FY21 Annual Report, Melbourne Airport
website, 2021, p 32, accessed 7 April 2022.

Table 5.7: Long-term at-distance drive-up parking prices in real terms by airport: 2018–19 to 2020–21
30-Jun-19 28-Mar-20 30-Jun-21 Change 30-June-19 to Change 28-Mar-20 to

28-Mar-20 (%) 30-Jun-21 (%)
Brisbane
1 to 2 days $41.19 $42.68 $42.00 3.6 -1.6
2 to 3 days $60.76 $61.99 $61.00 2.0 -1.6
4 to 5 days $87.53 $88.41 $87.00 1.0 -1.6
6 to 7 days $101.95 $102.64 $101.00 0.7 -1.6
Melbourne
1 to 2 days $50.46 $49.79 $24.00 -1.3 -51.8
2 to 3 days $71.06 $70.12 $36.00 -1.3 -48.7
4 to 5 days $81.35 $80.28 $60.00 -1.3 -25.3
6 to 7 days $101.95 $100.61 $84.00 -1.3 -16.5
Perth
1 to 2 days $55.61 $56.91 $59.60 2.3 4.7
2 to 3 days $82.90 $84.35 $88.40 1.7 4.8
4 to 5 days $107.10 $108.73 $113.00 1.5 3.9
6 to 7 days $131.81 $132.11 $137.60 0.2 4.2
Sydney
1 to 2 days $66.94 $66.05 $65.00 -1.3 -1.6
2 to 3 days $80.32 $91.46 $90.00 13.9 -1.6
4 to 5 days $112.25 $120.93 $119.00 7.7 -1.6
6 to 7 days $145.20 $161.58 $159.00 11.3 -1.6
Note: Values in 2020–21 dollars. As some airports offered free parking from late-March 2020 in response to the COVID-19
pandemic, the ACCC asked all 4 monitored airports to report car parking prices as at 28 March 2020, rather than
30 June 2020.
Table 5.7 shows that since 2018–19, Perth and Sydney airports slightly increased their long-term prices
across most price points, while Brisbane’s prices are largely unchanged.
Although Perth Airport increased its drive-up prices for long-term parking, it decreased its drive-up
rates in its long-term car parks (T1/T2 and T3/T4) for durations less than 4 hours in 2020–21, capping
this at $10.111 Additionally, its special online offer of ’99 days for $99’ which commenced in April 2020
remained available throughout 2020–21 (see below).
Melbourne Airport reduced its long-term parking prices substantially in 2020–21 as part of its
pricing restructure (discussed further below). It also offered free car parking from 30 March 2020 to
31 October 2020 in response to the COVID-19 pandemic, as well as discounted parking to customers
who were forced to overstay or extend their parking due to outbreaks of COVID-19 throughout the
year.112
The impact of Melbourne and Perth airports’ pricing schedules and special offers on providers of
off-airport parking are discussed in the following section.
Impact of airports’ reductions in pricing on off-airport parking operators

Heavily discounted prices benefit motorists, allowing them to achieve substantial savings. However,
some off-airport parking operators consulted by the ACCC raised concerns that airports’ aggressive
pricing decisions have negatively impacted on their businesses at a time when they were already
struggling due to pandemic.
111 Perth Airport, Perth Airport Annual Report 2020/21, Perth Airport website, 2021, p 22, accessed 7 April 2022.
112 APAC, APAC FY21 Annual Report, p 32.

Melbourne Airport reduced its long-term parking rates substantially in 2020–21 (reflected in table 5.7),
which occurred as part of its decision to restructure its car park prices. It substantially reduced the
price of long-term parking with the introduction of a flat daily rate of $12 at its Value Long Stay and
long-term uncovered carparks. The ACCC understands that Melbourne Airport has implemented this
pricing schedule on an ongoing basis (rather than as a short-term response to the pandemic).
One off-airport parking operator informed the ACCC that it had been negatively impacted by
Melbourne Airport’s decision to reduce the price of its long-term parking. It stated that this move
has allowed Melbourne Airport to increase its market share at the expense of off-airport parking
operators. It also told the ACCC that Melbourne Airport’s decision to introduce free parking in 2020
would contribute to the expected closure of some 9 of Melbourne’s 17 off-airport parking providers by
early 2022.
Perth Airport has offered a special deal of ’99 days for $99’ for its long-term car parks since April 2020.
It has stated that this offer is designed to support the fly-in fly-out (FIFO) workforce during the
pandemic and will continue throughout 2022.113 This offer is only available to book online and is
substantially cheaper than its normal drive-up or online price.114 By way of comparison, the average
saving from booking long-term parking online at Perth Airport for a period of 6–7 days in 2018–19 was
19.2% (see box 5.1), while in 2020–21 it had increased to 28.6%. Further savings would be achieved on
stays of longer duration, up to 99 days.
Off-airport parking operators around Perth Airport expressed concerns about their ability to compete
with the ’99 days for $99’ offer over a sustained period.
The ACCC will continue to monitor pricing and market developments in relation to airport car parking.
5.3 Long-term performance of airport car parking

services before the COVID-19 pandemic
This section examines the long-term trends in the car parking prices, quality of service, operational and
financial performance of the monitored airports, up until the onset of the COVID-19 pandemic.
In preparing this report, the ACCC analysed data from all years available to it. The ACCC has obtained
from all monitored airports consistent and comparable car parking:
operational (throughput and capacity) and financial data (revenue, costs and profits) starting from
2004–05
short-term and long-term pricing data starting from 2007–08
quality of service data from 2008–09 until 2018–19 (the ACCC has virtually a full set of data for
2007–08, although some quality of services ratings for Sydney Airport are unavailable).
For this report, the ACCC has chosen to present data comparing changes across all reporting metrics
over time. Given the availability of data, the ACCC has chosen to focus its analysis on the period starting
from 2007–08 until 2018–19. For completeness, the ACCC has also presented changes across metrics
starting from 2004–05 until 2018–19, where applicable.
The ACCC has separately presented the available data for 2019–20 and 2020–21 in section 5.2. The
ACCC has included this data in presenting car parking operating profit and profit margins but excluded
it from the rest of the analysis for several reasons. First, as mentioned at the beginning of this chapter,
to reduce the reporting burden on airports, the ACCC did not collect quality of service data in 2019–20
and 2020–21. Second, if the ACCC were to use 2020–21 as the end point of its analysis, this would paint
a misleading picture of monitored airports’ performance. For example, it would give the impression that
monitored airports have significant overcapacity with respect to their car parking facilities (given car
113 Perth Airport, Perth Airport Annual Report 2020/21, p 22.The ACCC understands this offer will continue until the end of
December 2022 at the minimum.
114 Perth Ariport, ‘99 days for $99 – Special deal to help FIFO workers’, Perth Airport website, 8 April 2022, accessed
13 April 2022.

parking throughput significantly declined in 2019–20 and 2020–21 due to the pandemic, but car parking
capacity has remained largely the same).
5.3.1 Car parking prices

This section examines short-term and long-term prices at the monitored airports’ car park facilities over
the period from 30 Jun 2008 to 30 June 2019.
Short-term parking prices

Table 5.8 presents a selection of drive-up prices for various short-term durations at the monitored
airports on 30 June 2019 in real terms, and the change in prices in the 12-year period.
Table 5.8: Short-term drive-up prices and percentage change in real terms by airport: 30 Jun 2008 to
30 June 2019
30–60 minutes 1 to 2 hours 2 to 3 hours 3 to 4 hours up to 24 hours

Brisbane
Price $18.54 $22.66 $27.80 $28.83 $57.67
Change 2007–08 to 2018–19 (%) 41.7 44.3 51.8 37.7 76.3
Melbourne
Price $12.36 $24.72 $24.72 $35.01 $52.52
Change 2007–08 to 2018–19 (%) -21.3 4.9 -5.6 -10.8 -10.8
Perth
Price $13.80 $20.39 $23.69 $25.74 $50.46
Change 2007–08 to 2018–19 (%) 102.8 122.6 101.1 78.9 54.3
Sydney
Price $9.99 $19.98 $28.32 $38.10 $63.85
Change 2007–08 to 2018–19 (%) 12.5 9.1 8.2 21.3 19.0
Table 5.8 shows that short-term parking prices generally increased in real terms for the monitored
airports across most price points over the 12 years to 2018–19, substantially in some cases. Price rises
were relatively large in the case of Perth Airport, with prices more than doubling across most short-term
price points (although starting from a lower base compared to other airports). Brisbane Airport also
increased prices substantially over this 12-year period, with prices across the selected categories rising
by an average of around 50%.
In contrast to the other airports, Melbourne Airport generally reduced its short-term prices over the
12 years to 2018–19.
The ACCC previously observed that, on average, short-term parking prices at airports in Australia are
higher at every duration compared to the average parking prices at airports in the Asia Pacific region
and other parts of the world.115
Long-term parking prices

Table 5.9 shows percentage change in the long-term parking prices across the monitored airports
between 30 June 2008 and 30 June 2019.
The table includes changes in the long-term prices at Brisbane Airport’s remote long-term Airpark
as well as its domestic long-term parking facilities, to enable price comparisons over the longer term.
The ACCC began referring to the Airpark’s prices in its monitoring reports when comparing long-term
prices following its opening in 2015–16. Prior to 2015–16, the ACCC referred to prices at the domestic
long-term car park.116
115 ACCC, Submission No. 59 to the Productivity Commission, Inquiry into Economic Regulation of Airports (2019), Productivity
Commission website, 2018, p 48, accessed 13 April 2022.
116 See ACCC, Airports Monitoring Report 2015–16, ACCC website, 6 March 2017, p 36.

Table 5.9: Long-term drive-up prices and percentage change in real terms by airport: 30 Jun 2008 to
30 June 2019
1 to 2 days 2 to 3 days 4 to 5 days 6 to 7 days

Brisbane
Price (Domestic long-term) $78.26 $98.86 $139.02 $159.62
Change 2007–08 to 2018–19 (%) 32.9 16.2 11.8 16.2
Price (Airpark) $41.19 $60.76 $87.53 $101.95
Change 2015–16 to 2018–19 (%) -11.7 -11.1 -21.7 -23.6
Melbourne
Price $50.46 $71.06 $81.35 $101.95
Change 2007–08 to 2018–19 (%) -3.6 8.6 3.6 12.9
Perth
Price $55.61 $82.90 $107.10 $131.81
Change 2007–08 to 2018–19 (%) 25.0 24.2 34.2 41.9
Sydney
Price $66.94 $80.32 $112.25 $145.20
Change 2007–08 to 2018–19 (%) 46.2 25.3 8.6 1.8
Table 5.9 shows that long-term parking prices increased at Melbourne, Perth and Sydney airports
between 30 Jun 2008 and 30 June 2019, although the extent of the price changes differs substantially
across the selected price points. Prices also increased at Brisbane Airport’s domestic long-term car
park, although prices at its remote long-term Airpark have decreased since it opened in 2015–16.
The drive-up prices in table 5.9 may not reflect the prices that many motorists actually pay. Motorists
looking for long-term parking at the monitored airports can save significantly on their costs by booking
online in advance (box 5.1).
By contrast, very few motorists choose to book online for short-term car parking. One reason may
be that motorists parking to pick-up or drop-off friends and relatives are less sure about the length of
time they will be parked. Another reason is likely to be because any discounted rate for shorter parking
durations (such as 30 minutes) is likely to result in a smaller saving in dollar terms than for those parking
over multiple days.

Box 5.1: Online booking
In recent years there has been a growing trend towards customers pre-booking their parking
online to access cheaper rates. The discounts available for online booking can vary greatly,
depending on airport, type of parking, how far in advance the booking was made, and demand
for carparks at that time of year.
In 2018–19, a high percentage of motorists using monitored airports’ long-term at-distance

parking offerings booked online – over 90% of motorists using Brisbane’s Airpark, around 60% of
motorists using Melbourne and Sydney airports’ at-distance parking and around 35% of motorists
using Perth Airport’s at-distance parking.
The ACCC has compared the average amounts paid for at-distance parking by motorists that
booked their parking online compared to those that paid drive-up prices in 2018–19.
Table 5.10: Savings from booking at-distance car parking online (2018–19) by airport, 2–3 days and
6–7 days
2–3 days (%) 6–7 days (%)

Brisbane (Airpark uncovered) 37.2 20.8
Melbourne (Value Car Park) 19.1 13.4
Perth (T1/T2 long-term) 15.5 19.2
Sydney (Blu Emu uncovered) 9.9 21.2
Table 5.10 shows that motorists saved between 9.9% at Sydney Airport and 37.2% at Brisbane
Airport by booking their long-term parking online for durations of 2–3 days. For stays of 6–7 days,
average online savings varied from 13.4% at Melbourne Airport to 21.2% at Sydney Airport.
The magnitude of increases in short-term prices was generally larger than that of long-term prices
over the period from 2007–08 to 2018–19. For example, although Perth Airport increased its long-term
prices by between 24.2% and 41.9% over this period (table 5.9), some of its short-term parking prices
more than doubled (table 5.8).
There are likely to be a number of reasons for the differences in magnitude of price increases. One
reason is that the cost of providing short-term car parking services can differ from long-term car
parking services. For example, providing short-term parking may require the construction of multi-level
parking facilities close to terminals, which may be more capital intensive.
Another reason is the availability of close substitutes that can constrain airports. All 4 monitored
airports are serviced by independent car parking operators, which provide long-term parking services
that are relatively close substitutes to monitored airports’ long-term parking services. This places some
competitive pressure on airports’ long-term parking prices.
By contrast, the short-term parking services offered by independent car parking operators are
generally less effective substitutes to monitored airports’ short-term parking services. This is because
the convenience of location is more important for short-term parking customers, who are less willing
or able to consider offsite parking which requires a shuttle bus to reach the terminal. We consider that
there are some other substitutes for short-term parking services, including free kerbside drop-off and
pick up, as well as free waiting areas.
Overall, the monitored airports have increased parking prices in the 12 years prior to the COVID-19
pandemic across both short-term and long-term offerings.

5.3.2 Quality of car parking services
The ACCC collects quality of service data on the monitored airports’ car parking services. This can help
indicate whether airports are continuing to invest in capacity to meet demand and improvements to
their facilities.
Airports survey passengers to gauge the quality of service provided by each airport in relation to car
parking services. Airports ask the respondents of these surveys to rate their level of satisfaction with
airport services and facilities on a scale of 1 to 5. The average scores are then converted into 5 ratings
ranging from ‘very poor’ to ‘excellent’.
Further information on quality of service monitoring may be found in Appendix C.
With the exception of Melbourne Airport, each airport collects separate survey ratings from
international and domestic passengers.
Table 5.11 shows the ratings each airport obtained from the international and domestic passengers it
surveyed (where applicable) in 2004–05, 2007–08 and 2018–19.
For Sydney Airport, the ACCC does not have data prior to 2008–09 for ‘availability’ and ‘time taken to
enter’ criteria (both international and domestic). To allow for more wholistic comparison across airports,
the ACCC has calculated changes for quality of service ratings for Sydney from 2008–09 to 2018–19.
Table 5.11: Quality of service ratings by airport, 2004–05, 2007–08 and 2018–19
2004–05 2007–08 2018–19 Change 2007–08 to 2018–19

Brisbane – International passengers
Availability Good (4.29) Good (3.94) Good (3.51)  (-0.43)
Standard Good (4.00) Good (4.19) Good (4.09)  (-0.10)
Time taken to enter Excellent (4.50) Good (4.07) Good (4.37)  (0.30)
Brisbane – Domestic passengers
Availability Good (4.25) Poor (2.43) Good (4.02)  (1.59)
Standard Good (3.92) Satisfactory (2.87) Good (4.40)  (1.53)
Time taken to enter Excellent (4.50) Good (3.79) Excellent (4.59)  (0.80)
Melbourne
Availability Satisfactory (3.47) Good (3.73) Good (3.65)  (-0.08)
Standard Good (3.95) Good (4.02) Good (4.17)  (0.15)
Time taken to enter Good (4.10) Good (4.13) Good (4.21)  (0.08)
Perth – T1/T2 precinct
Availability Good (4.32) Good (3.50) Good (4.00)  (0.50)
Time taken to enter Excellent (4.50) Good (4.19) Good (4.17)  (0.03)
Perth – T3/T4 precinct
Availability Good (3.97) Satisfactory (3.44) Good (4.12)  (0.68)
Time taken to enter Good (4.50) Good (4.13) Good (4.26)  (0.13)
Sydney – International passengers
Availability n/a Satisfactory (3.33) Good (3.94)  (0.61)
(2008–09)
Standard Satisfactory (3.30) Satisfactory (3.27) Good (4.15)  (0.88)
Time taken to enter n/a Good (3.62) Good (4.00)  (0.38)
(2008–09)
Sydney – Domestic passengers
Availability n/a Satisfactory (3.32) Good (3.85)  (0.53)
(2008–09)
Standard Satisfactory (3.06) Satisfactory (3.36) Good (4.04)  (0.68)
Good (3.74)
Time taken to enter n/a (2008–09) Good (4.14)  (0.40)
Note: For Sydney Airport, the ACCC has included 2008–09 ratings for ‘availability’ and ‘time taken to enter’ under the
2007–08 column and calculated changes for quality of service ratings from 2008–09 to 2018–19.

Airports generally improved or maintained their quality of service ratings for car parking services
between 2007–08 and 2018–19. All airports achieved a rating of at least ‘good’ across all categories in
2018–19. Where ratings decreased, these tended to be marginal.
However, for Brisbane and Perth airports, domestic passenger ratings fell between 2004–05 and
2007–08 in some categories. Brisbane Airport reduced the number of available short-term parking
spaces in 2007–08 due to ongoing construction works, coinciding with lower ratings that year. Likewise,
Perth Airport converted a significant number of short-term parking spaces to long-term in 2005–06
and 2007–08 (possibly to accommodate demand from FIFO workers), which was likely to have
contributed to the lower ratings. Therefore, when viewing over a longer period to account for these
short-term factors, there has not been material improvement in quality of service ratings at Brisbane
and Perth airports.
Overall, while motorists at the monitored airports were paying higher car parking prices in real terms
in 2018–19 than a decade earlier, in their view they were not receiving a materially improved quality
of service.
5.3.3 Car parking activity

This section examines airport car parking activity at the monitored airports over the 15-year period up
to 2018–19.
Table 5.12 presents the average daily vehicle throughput at each of the monitored airports in 2004–05,
2007–08 and 2018–19 as well as the change in passenger numbers between 2007–08 and 2018–19
for comparison.
Table 5.12: Average daily vehicle throughput by airport, 2004–05, 2007–08 and 2018–19
Change in
Daily average Daily average Daily average Change Change passenger
throughput in throughput in throughput in 2004–05 to 2007–08 to numbers 2007–08
2004–05 2007–08 2018–19 2018–19 (%) 2018–19 (%) to 2018–19 (%)
Brisbane 5869.8 5447.8 7483.5 27.5 37.4 27.7
Melbourne 8592.3 9144.5 8722.3 1.5 -4.6 54.3
Perth 4464.5 4702.2 4766.3 6.8 1.4 58.4
Sydney 8201.2 8428.8 11189.9 36.4 32.8 37.5
Table 5.12 shows that the growth in average daily throughput at Melbourne and Perth airports over the
period from 2007–08 to 2018–19 was significantly lower than the growth in total passenger numbers
over the same period. Some of the drivers are unique to each airport. For example, as the mining boom
cooled off in Western Australia, this reduced demand for parking at Perth Airport from FIFO workers
in the sector. Airports have also been affected by passengers increasingly using alternative modes of
transport, particularly rideshare, as well as passengers turning to independent providers of parking
services, particularly for long-term parking (see section 6.2).
By contrast, the growth in average daily throughput at Brisbane and Sydney airports has been largely
on par with the growth in the number of passengers visiting those airports. At Brisbane Airport this
was in part because of increased throughput at its long-term parking facilities (including the remote
long-term Airpark, which opened in 2015–16).
Table 5.13 lists the overall change in the number of parking spaces for each monitored airport in
the years 2004–05, 2007–08 and 2018–19. These measures indicate whether the monitored airports
invested to expand capacity of car parking spaces.

Table 5.13: Number of car parking spaces by airport: 2004–05, 2007–08 and 2018–19
Number Number Number

of parking of parking of parking
spaces spaces spaces Change 2004–05 Change 2007–08
2004–05 2007–08 2018–19 to 2018–19 (%) to 2018–19 (%)
Brisbane
Total spaces 7837 10321 16955 116.3 64.3
International car park spaces 950 1740 2141 125.4 23.0
Domestic short-term car park 938 858 973 3.7 13.4
spaces (P1)
Domestic long-term car park 3600 4148 7539 109.4 81.8
spaces (P2)
Remote long-term car park n/a n/a 2500 n/a n/a
spaces (Airpark)
Melbourne
Total spaces 11712 19895 26654 127.6 34.0
Short-term car park spaces 3553 3244 9866 177.7 204.1
Long-term car park spaces 6859 14592 13948 103.4 -4.4
Perth
Total spaces 4267 8806 22081 417.5 150.7
Long-term car park spaces 614 5775 18077 2844.1 213.0
Sydney
Total spaces 10168 10851 18178 78.8 67.5
Long-term car park spaces 4361 4577 5781 32.6 26.3
Note: The total spaces listed for each airport includes staff parking spaces.
Table 5.13 shows that all monitored airports increased the total number of parking spaces significantly
over the 15-year period. This suggests that at least some of the short-term and long-term price
increases shown in tables 5.8 and 5.9 were due to these investments.
This appears particularly evident for Brisbane and Perth airports. Both Brisbane and Perth function as
hubs for FIFO workers in the resources sector, who tend to drive demand for long-term parking at these
airports. Both airports significantly expanded their long-term parking capacity over the period, in part
to accommodate increased demand from FIFO workers.
Both Brisbane Airport and Perth Airport also significantly expanded their short-term parking offerings
in the early part of the 15-year period but reduced some of those spaces in the latter part. Brisbane
Airport reduced the number of domestic short-term parking spaces from a peak of 1,690 spaces
in 2011–12 to 973 in 2018–19 and Perth Airport from a peak of 3,628 spaces in 2015–16 to 3,062 in
2018–19.
As tables 5.8 and 5.9 show, Perth Airport significantly increased both its short-term car parking prices
(54–123%) and long-term car parking prices (24–42%) over the period from 2007–08 to 2018–19.
Likewise, Brisbane Airport also significantly increased both its short-term car parking prices (38–76%)
and long-term car parking prices (12–33%) over the same period. The largest proportional increase
in Brisbane Airport’s short-term parking prices occurred between 2008–09 and 2009–10. This
approximately coincided with the construction of a multi-level parking lot, which was completed in
2011–12 and which added significantly to Brisbane Airport’s car parking capacity.117
5.3.4 Car parking financials

This section examines how changes in car parking prices and investments made by the monitored
airports to expand capacity have affected their financial performance.
117 See for example, ACCC. Airports Monitoring Report 2012–13, ACCC website, April 2014, p 90, accessed 7 April 2022.

Figure 5.1 presents car parking operating profit across the monitored airports over the period from
2004–05 to 2018–19.
Figure 5.1: Car parking operating profits (EBITA) in real terms by airport: 2004–05 to 2020–21
120
100
Operating profits ($millions)
80
60
40
20
-20
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Figure 5.1 shows that total operating profits across all monitored airports were higher in 2018–19 than
they were in 2004–05.
Total operating profits of Melbourne, Perth and Sydney airports declined in the last few years of
this period. In part, this is due to the impact of ride share on car parking throughput (discussed
in chapter 6). In part, this is also due to airport specific factors. For example, Melbourne Airport’s
pronounced decrease in its operating profit in 2015–16 was largely due to the airport revising its cost
allocation methodology.
Table 5.14 shows the average annual change in each of the monitored airports’ car parking revenue and
operating expenses over the period from 2004–05 to 2018–19.
Table 5.14: Average annual change in car parking revenue and operating expenses in real terms by airport:
2004–05 to 2018–19
Average annual change in Average annual change in Average annual change in

revenue (%) operating expenses (%) average daily throughput (%)
Brisbane 7.1 9.3 1.8
Melbourne 5.5 11.5 0.1
Perth 9.2 12.0 0.5
Sydney 2.7 5.4 2.2
While all monitored airports reported increasing revenue over the period from 2004–05 to 2018–19,
the general trend has been for expenses to increase at a higher rate. As was shown earlier, airports
significantly expanded their parking capacity, which would have contributed to higher operating
expenses. At the same time, car throughput had not increased significantly, so the bulk of the increase
in revenue is due to monitored airports increasing car parking prices (as was shown in sections 5.3.1 and
5.3.3).
Figure 5.2 shows car parking profit margins for each of the monitored airports (operating profit as a
proportion of car parking revenue).

Figure 5.2: Car parking operating profit margin as a percentage of car parking revenue in real terms by
airport: 2004–05 to 2020–21
100
80
60
Profit margin (%)
40
20
-20
-40
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Figure 5.2 shows that car parking operating profit margins have somewhat decreased across all
monitored airports over the period from 2004–05 to 2018–19. Nonetheless, in 2018–19, the operating
profit margins of the 4 monitored airports ranged between 53% and 68%. As discussed in section 5.2,
the operating profits margins of Sydney and Melbourne airports have been significantly impacted by
The ACCC does not have sufficient information to assess whether the profits margins in the period from
2004–05 to 2018–19 are excessive. However, these margins appear to be quite high compared to similar
businesses. For example, in February 2020, IBISWorld reported that the broader car parking services
industry earned a profit margin of 16.9%.118 Even when accounting for the differences in operating profit
measures (IBISWorld uses earnings before interest and taxes – EBIT – as an indicator of a company’s
profitability rather than EBITA), this still appears to be a significant difference.
118 IBISWorld, Parking Services in Australia S9533, IBISWorld website, February 2020, p 7, accessed 7 April 2022.

6. Landside access
Passengers travelling to, and from, airports have many options in the transport modes available to
them. Aside from driving and parking on airport land as discussed in the previous chapter, the public
can choose to access airports via different alternative ground transport options. This includes taxis,
rideshare services, off-airport car parking, terminal pick-up and drop-off, private cars (for example,
limousines), public and private buses, and (at some airports) trains.119 As each mode of transport differs
in terms of price, speed and convenience, individual passengers or groups of passengers have their own
preference and circumstance in choosing which mode to travel to, and from, the airport.
Airports provide third-party transport providers with landside access (for example, forecourt and
transport hubs), waiting areas and roads to facilitate movements around the airport. Without sufficient
landside vehicle access area and facilities, it would be very difficult for third-party transport providers
to operate effectively. While airports are responsible for the provision of landside access, the alternative
ground transport modes are a substitute to at-airport parking, thereby directly impacting on one of
airports’ revenue streams. With monitored airports having substantial market power, they may set
higher charges or limit access for third-party transport operators to shift demand towards on-airport
car parking. The ACCC considers that these dynamics create a need for the ACCC to monitor airports’
terms and conditions of landside access.
The ACCC also notes that airports have some power to influence passenger preferences between
different landside access modes through the airports’ allocation of pick-up zones. Airports may be
incentivised to reallocate pick-up zones to receive higher revenues from particular transport modes,
or in response to changing consumer demand. Where consumers retain choices of transport options
within the relatively close proximity of an airport forecourt with comparable facilities, the ACCC
considers that zone allocation is unlikely to substantially impact competition between landside
access providers.
This chapter will explore:

the impact of the COVID-19 pandemic on landside access activity
the long-term trends in landside access activity (including access fees, behaviour of monitored
airports and quality of landside service).
This chapter is based on information voluntarily provided by the monitored airports as well as the
information the ACCC collected through consultations with some landside access seekers and
broader research.
The financial information in this chapter only relates to landside operations. The financial figures
throughout this chapter are presented in real terms with values in 2020–21 dollars.120
6.1 The impact of the COVID-19 pandemic on landside

access activity
As described in the earlier chapters, the COVID-19 pandemic has had an unprecedented impact on air
travel. This section examines how this affected the provision of landside access services.
6.1.1 Number of vehicles accessing landside dropped significantly due

to the COVID-19 pandemic
Figure 6.1 shows the number of times a group of transport service providers accessed a particular
airport’s landside facilities. Reporting of the number of vehicles accessing landside varies across the
119 Data for car rental has been excluded from this chapter. See section 6.2.1 for more details.

monitored airports. For example, some airports report an aggregate figure for the number of private
buses together with off-airport parking shuttle buses.
Figure 6.1: Number of vehicles accessing landside by transport mode, by airport, 2018–19 to 2020–21121
6
Number of vehicles accessing landside
5
facilities (millions)
0
2018–19
2019–20
2020–21
2018–19
2019–20
2020–21
2018–19
2019–20
2020–21
2018–19
2019–20
2020–21
Taxi Rideshare Private car Off-airport parking Public bus Private bus and private car (Brisbane only)
Private bus and off-airport parking (Melbourne and Sydney)
Source: ACCC analysis of information voluntarily submitted by the monitored airports.

Notes: For Perth Airport, the number of buses (including public, private and off-airport parking shuttle) accessing landside
are not available, because Perth Airport does not charge an access fee for these transport modes.
Figure 6.1 shows that the COVID-19 pandemic has led to the number of vehicles accessing landside
falling significantly across all 4 monitored airports.
Melbourne and Sydney airports reported larger reductions in landside access volume in 2020–21
than the other monitored airports of 75% and 81% respectively compared to 2018–19 levels. This is
predominately due to prolonged periods of lockdowns and related travel restrictions in New South
Wales and Victoria.122 Perth Airport in 2020–21 reported a smaller reduction of landside access volume
of 53% compared to 2018–19 level. This smaller decline is largely due to Fly-In-Fly-Out workers in the
resource sector continuing to travel to their workplace during 2020–21.123
All groups of landside access seekers were adversely impacted by the COVID-19 pandemic, with
the number of taxis accessing the monitored airports decreasing the most. However, this could also
reflect a shift in consumer preference toward rideshare services. During the 2 years of the COVID-19
pandemic, landside access by rideshare at Perth Airport has out-stripped taxis. Similarly, in 2020–21,
access by rideshare vehicles at Melbourne Airport were 31% higher than taxis. Further discussion
regarding the emergence of rideshare services and its impact on taxis is presented in section 6.2.4.
Landside access from private cars has dropped significantly with very limited numbers of private cars
(like limousines) accessing landside areas. By 2020–21, the number of private cars accessing landside
areas has dropped by 86% for Melbourne and Sydney airports and by 97% at Perth Airport compared to
2018–19 levels.
Landside access from off-airport parking operators reduced slightly during the COVID-19 pandemic.
At Melbourne Airport, access by off-airport parking shuttle buses only dropped by 11% in 2020–21
when compared to 2018–19 levels. Over half of the vehicles accessing Melbourne Airport’s landside area
during 2020–21 were from off-airport parking shuttle buses. One explanation could be travellers during
121 Data on the individual breakdown of the number of vehicles accessing landside facilities can be found in the
supplementary database.
122 J Pearlman, ‘Almost half of Aussie Population under lockdown’, The Straits Times, 30 June 2021, accessed 1 March 2022;
P Mercer, ‘Covid: Melbourne’s hard-won success after a marathon lockdown’, BBC News, 26 October 2020, accessed
1 March 2022; NSW Government, NSW and Victorian border closure, NSW Government website, 7 July 2020, accessed
1 March 2022.
123 Perth Airport, Perth Airport Annual Report 2020/21, Perth Airport website, 2021, p 9, accessed 9 March 2021.

the pandemic were more inclined to avoid people or crowds and instead used their own car to travel to,
and from, the airport.124 Further discussion regarding off-airport parking is available in section 6.2.5.
The following chart shows the revenue earned by each airport from the group of transport
service providers.
Figure 6.2: Landside access revenue in real terms by transport mode, by airport, 2018–19 to 2020–21125
30
Landside access revenue ($millions)
25
20
15
10
0
2018–19
2019–20
2020–21
2018–19
2019–20
2020–21
2018–19
2019–20
2020–21
2018–19
2019–20
2020–21
Public bus Private bus and private car (Brisbane only) Off-airport car parking Taxi Train
Ride-share services Private car Private bus

Notes: Real values in 2020–21 dollars. Although Melbourne Airport aggregated the number of private buses and off-airport
parking shuttle buses together, yet it has continued to provide revenue earned from these 2 modes separately.
Figure 6.2 shows that for 2019–20, landside access revenue across the monitored airports dropped
approximately by a quarter, which is reflective of when the COVID-19 pandemic started (that is, the last
quarter of 2019–20).
In 2020–21, with a full year impact of the COVID-19 pandemic, the drop was more significant. The
magnitude of the landside revenue decline mimics the reduction in the number of vehicles accessing
landside facilities. That is, because the pricing of access fees predominately remained the same,
revenue reduction was largely due to less vehicles accessing landside.
Recovery from the COVID-19 pandemic

In preparing this year’s report, the ACCC consulted with some landside access seekers about the
challenges they expect to face as the industry recovers from the COVID-19 pandemic.
Many off-airport parking operators indicated that they had to reduce their staffing level during the
pandemic. Hence, they are concerned about difficulties with re-hiring suitable staff when travel
resumes. Many off-airport parking shuttle buses operate whenever the customer is ready (that is,
on-demand). In the event of driver shortages, then such on-demand service may be restricted.
Some landside access seekers expressed concerns that monitored airports may increase landside
access fees in the future to recover their unrecovered landside infrastructure costs.
As discussed in chapter 5, some off-airport parking operators expressed concerns that aggressive
pricing from at-airport parking will impede their recovery from the COVID-19 pandemic. Off-airport
parking operators submitted that some at-airport parking prices are currently 30% to 50% lower than
pre-pandemic levels.
124 It is noted that travellers will need to travel in shuttle buses to, and from, off-airport parking to the airport, but the ACCC
understands some shuttle buses are operated on-demand when the customer is ready.
125 Data on the individual breakdown of the landside revenue by transport mode can be found in the supplementary
spreadsheet available on our website.

6.2 Long-term trends in landside access at the
monitored airports
This section covers trends in landside access at the monitored airports since 2009–10, when the ACCC
began requesting the fees, revenues, costs and asset values relating to landside access services and
facilities from the monitored airports.
6.2.1 Limitations of the ACCC’s monitoring

As explained in section 1.5.3, there is currently no requirement on the monitored airports to provide
information about landside access to the ACCC, so the monitored airports provide landside information
to the ACCC voluntarily. As a result, the monitored airports provide incomplete and inconsistent
information to the ACCC about prices, revenues, expenses and the number of vehicles accessing
landside. A summary of the differences in landside access information provided by airports to the ACCC
is provided in Appendix table A.2. For example:
Some monitored airports provide total landside expenses amount, but one monitored airport does
not provide any information on landside expenses. Monitored airports have previously advised that
there are difficulties in allocating expenses for landside access services.126
Some monitored airports aggregate the number of vehicles accessing landside for a couple of
transport modes. For example, Melbourne and Sydney airports aggregate access by private
buses together with access by off-airport parking shuttle buses. Sydney Airport does not report
disaggregated revenue from private buses and off-airport parking operators.
Monitored airports do not provide comparable data for private buses. For example, Melbourne
Airport provides the number of passengers using private buses like Skybus (Melbourne central
business district to airport) and Gull (Geelong to airport) but not the number of buses accessing
landside facilities.
Some monitored airports are unable to provide data for certain alternative transport modes. This
is because some monitored airports provide these transport modes with free access to landside
facilities. Passengers travelling to, and from, all monitored airports have the option of terminal
pick-up and drop-off which are provided free of charge. Therefore, no data is collected. For Perth
Airport, the number of buses (including public, private and off-airport parking shuttle) accessing
landside is not available, because Perth Airport does not charge an access fee to bus operators.
Sydney Airport also does not charge public buses to access its landside facilities, hence the number
of public buses is not available.
Monitored airports do not provide comparable data regarding the number of taxis accessing
landside. There are 2 types of taxis services available at airports: on-demand taxis (those available
at the taxi rank outside the terminal) or pre-booked taxis. Pre-booked taxis typically pay different
access fee to on-demand taxis as they have separate pick-up areas. Some monitored airports
aggregate the number of pre-booked taxis with private cars (for example, limousines).
Monitored airports do not provide consistent and comparable data regarding car rental. Hence
the number of rental cars accessing landside and revenue from car rental that monitored airports
received have been excluded from the analysis of landside access and this chapter.
126 ACCC, Submission No. 59 to the Productivity Commission, Inquiry into Economic Regulation of Airports (2019), Productivity
Commission website, September 2018, accessed 22 February 2022, p 54.

Given the nature of the information the ACCC currently obtains in relation to landside access, the ACCC
is unable to:
report on cost and profitability due to incompatibility of data
determine in-depth whether airports have undertaken adequate investment to ease congestion at
landside facilities
determine whether changes in prices, terms and conditions of landside access are reasonable.
The following sections cover some observations and discussions on likely factors attributing to changes
in prices that the ACCC can make using the data that it collects.
6.2.2 Dynamics of landside access before the COVID-19 pandemic

Landside access revenue
This section examines the changes in revenue collected by each monitored airport from landside access
charges since 2009–10, focusing on the period prior to the pandemic.
Figure 6.3 shows the total landside access revenue across the monitored airports since 2009–10.
Figure 6.3: Total landside access revenue in real terms by airport: 2009–10 to 2020–21
30
25
Revenue ($millions)
20
15
10
0
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21

Notes: Real values in 2020–21 dollars.
Figure 6.3 shows that all monitored airports reported large growth in landside access revenue prior to
the pandemic. Between 2009–10 and 2018–19, Melbourne Airport’s landside access revenue increased
by 2.5 times while Sydney and Perth airports more than doubled their landside access revenue. During
the same period, Brisbane Airport nearly doubled their landside access revenue. Landside access
revenue was affected in the past 2 years by the COVID-19 pandemic.
Increase in the monitored airports’ landside access revenue is primarily due to increase in demand for
and supply of alternative ground transport modes (taxis, rideshare and others) and services provided
by off-airport car parking operators. However, as these services directly compete with airports’ parking
services, the higher use of these services, the lower the demand for airports’ car parking services (all
else being equal). This negatively impacts the monitored airports’ car parking revenue.
Concerns raised by landside access seekers

In previous editions of this report, the ACCC has expressed concerns that airports can impede
competition between alternative ground transport modes and at-airport car parking. That is, to increase

demand for at-airport car parking, there is an incentive for airports to limit competition from landside
access seekers. This can be characterised in the following ways:
lack of engagement and consultation
setting high landside access fees
underinvesting in landside access infrastructure resulting in poor quality of service.
During the ACCC’s consultation in preparing this monitoring report, landside access seekers stated that
some monitored airports:
have been increasing access fees annually on a take-it-or-leave-it basis
cancelled some committee meetings and provided relatively limited opportunity for communication.
These concerns are not new. During the 2019 Productivity Commission inquiry, landside access seekers
submitted to the PC that some airports were increasing access fees, while withholding or delaying
information, and with disappointing levels of consultation. For example, Jetport Airport Parking stated
that Melbourne Airport had not explained the framework for its access fees and had not provided
adequate reasons for increases in those access fees.127
The PC acknowledged that ground transport operators have little bargaining power. Therefore, an
airport can make take-it-or-leave-it offers to this group of airport users.128
Given these ongoing concerns, the following sections examine:

the competitive dynamics between landside access seekers and airports’ car parking services
access fees levied by the monitored airports on taxis and rideshare, as well as the impact of airports’
terms of access on competitive dynamics between them
monitored airports’ access arrangements for off-airport car park operators and the competitive
dynamics between on-airport and off-airport car parking operations.
6.2.3 Impact of alternative transport modes on monitored airports’

at-airport parking services
As discussed in chapter 3, total passengers travelling through the monitored airports had been
increasing prior to the pandemic. This means the demand for ground transport should increase as well.
However, as discussed in chapter 5, there was negligible increase in at-airport car parking throughput
for some monitored airports before the pandemic, despite the airports investing in additional at-airport
car park spaces. One of the drivers of this decline was the shift in behaviour towards alternative ground
transport modes.
In analysing the competition between alternative ground transport with at-airport parking, there are
difficulties directly comparing the at-airport car park throughput with the number of vehicles accessing
landside. This is because a bus (public or private) may carry many passengers, but still count as one
vehicle seeking landside access.
To provide a high-level indication of competition between the 2 options, figure 6.4 compares the trends
of total at-airport car parking throughput to the number of vehicles accessing a particular airport’s
landside facilities across the monitored airports between 2009–10 and 2020–21. More detailed analysis
of the competitive dynamic between at-airport car parking with specific ground transport modes (for
example, taxis, rideshare and off-airport parking) is presented in box 6.1 and section 6.2.5.
127 Andrew’s Airport Parking, Submission No. 30 to the Productivity Commission, Inquiry into Economic Regulation of
Airports (2019), Productivity Commission website, September 2018, accessed 22 February 2022; Jetport Airport Parking,
Submission No. DR165 to the Productivity Commission, Inquiry into Economic Regulation of Airports (2019), Productivity
Commission website, March 2019, accessed 22 February 2022.
128 Productivity Commission, Economic Regulation of Airport Services (2019), Inquiry report, Productivity Commission
website, 2019, p 218, accessed 22 February 2022.

Figure 6.4: At-airport car parking throughput and the number of vehicles accessing landside, by airport:
2009–10 to 2020–21
On-airport car parking throughput
5
Total on-airport parking throughput (millions)
Number of vehicles accessing landside facilities

6
4
0
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Source: ACCC analysis of information submitted as part of the monitoring regime and voluntarily submitted by the
monitored airports.
Notes: Melbourne Airport Skybus data between 2009–10 and 2013–14 has been excluded due to Melbourne Airport having
not reported this data from 2014–15 onwards. For Perth Airport, the figure does not include the number of buses
(including public, private and off-airport parking shuttle) accessing landside (as this data is not available).
Figure 6.4 shows that in the period between 2009–10 and 2018–19, the number of vehicles accessing
landside facilities at all monitored airports trended upward. In contrast, the number of vehicles parking
at at-airport car parks throughout this period did not increase consistently, and remained largely
stagnant or declined at some airports.
Box 6.1 illustrates the impact of alternative ground transport modes on at-airport parking services using
Perth Airport as an example.

Box 6.1: Competition between at-airport parking and alternative ground
transport modes at Perth Airport
Figure 6.5 shows the number of vehicles seeking landside access at Perth Airport, broken down by
alternative transport modes.129
Figure 6.5: Number of vehicles accessing Perth Airport by transport mode: 2009–10 to 2020–21
Number of vehicles accessing landside facilities
0.1
0.1
0.1 0.1
0.1 0.1 0.1 0.1
0.1 0.8
0.0 0.1 0.1 0.5
0.1 0.2
(millions)
1
0.8
0.0
1.3 1.31.3 1.3
1.3 1.3
1.1 1.1 0.5
1.0 1.0
0.9 0.9 0.8
0.6
0.3
0
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Taxi Ride share Private car
Figure 6.5 shows that landside access by taxis has generally grown between 2009–10 and 2014–15,
while that by private car has been relatively stable.
Figure 6.5 shows that the rapid growth in rideshare vehicles seeking Perth Airport’s landside access
between 2016–17 and 2018–19 has outstripped the reduction in taxis. This led to an overall increase
in the number of vehicles seeking landside access at Perth Airport.
Figure 6.6 shows how the Perth Airport’s carpark throughput, with a breakdown into short-term
and long-term car parks, and passenger numbers have changed between 2009–10 and 2020–21.
129 Passengers travelling to, and from, Perth Airport also have the option of terminal pick-up and drop-off, public and private
buses. However, as Perth Airport does not charge an access fee for these transport modes, the number of vehicles
accessing landside via these modes are not available.

Figure 6.6: Average daily carpark throughput and passenger numbers at Perth Airport: 2009–10 to
2020–21
8 16
Average daily carpark throughput ('000)
Number of passengers (millions)

7 14
6 12
5 10
4 8
3 6
2 4
1 2
0 0
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Average daily throughput of long-term car park (cars per day) in the year (LHS)
Average daily throughput of short-term car park (cars per day) in the year (LHS)
Passengers (RHS)
Figure 6.6 shows that between 2016–17 and 2018–19, the total number of car park users decreased
while the total number of passengers visiting the airport remained relatively unchanged. This
demonstrates that the emergence of rideshare as a new (and popular option) has led to some
passengers who previously drove to the Perth Airport (and used airport’s car parks) switching to
rideshare service.
Perth Airport can respond to this by lowering at-airport parking prices or improving quality of its car
parking services. However, as a provider of access to rideshare, airports also have an incentive to
improve its competitive advantage by increasing access fees for rideshare or reducing the quality of
amenities offered to rideshare. The ACCC will be monitoring this.
6.2.4 Monitored airports’ access arrangements for taxis and rideshare

This section examines landside access arrangements for taxis and rideshare. The ACCC has not
included analysis of access arrangements for private cars (for example, limousines) as it comprises a
very small group of users. The ACCC also has not included analysis of access arrangements for public
or private buses and trains as the ACCC does not have comparable data across all monitored airports.
Access fees for alternative transport modes are available in Appendix B.
Taxi and rideshare access fees

Traditionally, passengers travelling to, and from, airports have primarily used taxis. Passengers can
usually obtain a taxi from taxi ranks, street, and phone or digital bookings.130 Taxi services are heavily
regulated in Australia and a taxi must be licensed under a State or Territory licensing scheme.131 Taxi
license or plate owners can then subcontract taxi operations to a driver, either directly or through an
intermediary that operates many taxis. The taxi driver usually pays the taxi plate owner a share of their
takings, while the owner pays for the vehicle and maintenance.132
Rideshare operators, like taxis, also provide point to point transport. Rideshare is a service that links
passengers with private drivers using their own car in the area via the rideshare operator’s website or
mobile app.133 Unlike taxis, rideshare is typically not hailed from the street. Rideshare service typically
130 Deloitte Access Economics, Economic effects of ridesharing in Australia, Deloitte website, 2016, p 13, accessed
1 March 2022.
131 ibid.
132 IBISWorld, Taxi and Limousine Transport in Australia I4626, IBISWorld website, April 2021, p 12, accessed 1 March 2022.
133 P Zaluzny, A guide to rideshare and taxi apps: Uber, Ola, Ingogo and more, Choice website, n. d., accessed 12 March 2022.

offers lower prices per ride compared with taxis because rideshare drivers are not required to pay a
traditional taxi licence fee.134 Rideshare services first began in Australia in 2014, but only became legal
in all Australian states and territories as of 2019.135 Since 2016–17, rideshare has emerged as a popular
alternative transport mode competing with taxis for similar types of travellers going to, and from,
the airport.
Airports provide waiting areas for on-demand taxis136 and rideshare. Airports charge on-demand taxis
and rideshare operators an access fee for pick-ups. The fee is included as a surcharge in the passenger’s
total fare. There is no charge for a drop off. Figure 6.7 shows how the landside access fees for
on-demand taxis have changed between 2009–10 and 2020–21. Monitored airports levy similar access
fees to rideshare operators as they do to taxis (refer to figure 6.9).
Figure 6.7: Landside access fees in real terms for on-demand taxis, by airport: 2009–10 to 2020–21
6
5
Landside access fee ($)
0
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21

Notes: Real values in 2020–21 dollars. Access fees at Sydney Airport was not available for 2009–10 and 2010–11.
Figure 6.7 shows that since 2009–10, Brisbane Airport’s access fees for taxis increased by 8% while
Sydney Airport’s access fees increased by 15% since 2011–12. In comparison, since 2009–10 Melbourne
and Perth airports’ taxi access fees increased by 175% and 61% respectively. Perth Airport has stated
that the increased charges are due to the airport’s increased operating costs for additional workers to
direct forecourt traffic and capital costs of additional infrastructure.
The ACCC has considered whether increases in access fees can be explained by investments to improve
quality of landside access services. Over the past decade, the monitored airports made a range of
investments to improve or expand landside facilities (although not just for taxis or rideshare operators),
including (but not limited to):
Brisbane Airport completed major changes to the road network in 2012 which has alleviated daily
peak pressures in the domestic terminal precinct.137 In 2015–16, it created dedicated zones for
ridesharing drivers at both international and domestic terminals.
Melbourne Airport renovated the main forecourt precinct between 2011 and 2013 adding drop-off
and pick-up lanes in front of the terminals and streamlining the use of the area for the taxis, bus
services and general private vehicles.138 In 2017–18, Melbourne created dedicated wait zones for
rideshare vehicles at both terminal precincts for passengers travelling to, and from, the airport.
134 IBISWorld, Taxi and Limousine Transport in Australia I4626, pp 12–3.

135 P Zaluzny, A guide to rideshare and taxi apps: Uber, Ola, Ingogo and more.
136 Pre-booked taxis typically are charged under a different structure as they have separate pick-up areas than on-demand
taxis. The ACCC does not have comprehensive data for pre-book taxis over time.
137 Brisbane Airport, Brisbane Airport 2014 Master Plan [PDF], Brisbane Airport website, 2014, p 211, accessed 1 March 2022.
138 Melbourne Airport, Melbourne Master Plan 2013 [PDF], Melbourne Airport website, 2013, p 126, accessed 1 March 2022.

In 2012–13 and 2013–14, Perth Airport provided a range of new taxi and bus facilities.
Sydney Airport opened a new ‘shared priority pickup zone’ in 2016 near the domestic terminal,
which is available for ridesharing drivers and other pre-booked services.
The ACCC has been collecting passenger ratings on the quality of landside access services since
2013–14 to measure how investments by monitored airports have affected the quality of the landside
access services. The ACCC collected passenger ratings about:
kerbside pick-up and drop-off facilities
waiting time for taxis
kerbside congestion.
Passengers were asked to rate the quality of landside services across 5 ratings (that is, very poor, poor,
satisfactory, good and excellent).
The following table shows how the passenger ratings of the quality of landside service have changed
between 2013–14 and 2018–19.139
Table 6.1: Passenger ratings of the quality of landside access services and facilities, by airport; between
2013–14 and 2018–19.
Terminal Indicator Rating category Rating category

2013–14 2018–19
Brisbane International Kerbside pick-up and drop-off facilities Good Excellent
Taxi facilities waiting time Good Excellent
Kerbside space congestion Good Good
Brisbane Domestic Kerbside pick-up and drop-off facilities Good Good
Taxi facilities waiting time Good Excellent
Kerbside space congestion Good Excellent
Melbourne International and Kerbside pick-up and drop-off facilities Satisfactory Good
Domestic Taxi facilities waiting time Satisfactory Good
Kerbside space congestion Satisfactory Good
Perth International & Domestic Kerbside pick-up and drop-off facilities Satisfactory Good
D(T1/T2) Taxi facilities waiting time Satisfactory Good
Perth Domestic (T3/T4) Kerbside pick-up and drop-off facilities Good Good
Taxi facilities waiting time Satisfactory Good
Sydney International and Kerbside pick-up and drop-off facilities Satisfactory Good
Domestic Taxi facilities waiting time Satisfactory Good
Kerbside space congestion Poor Satisfactory
Table 6.1 shows that passenger ratings of the quality of landside access services have generally
improved since 2013–14 across all monitored airports. By 2018–19, just prior to the COVID-19
pandemic, passengers have rated mostly ‘good’ or ‘excellent’ across all measures for all
monitored airports.
While these passenger ratings do not capture all the elements of the quality of service, they appear to
indicate that higher landside access fees can, at least partly, be attributed to investments made by the
monitored airports to improve the quality of landside access services.
Competition between rideshare and taxis

Figure 6.8 shows how the number of taxis and rideshare vehicles accessing monitored airports’ landside
facilities have changed between 2016–17 and 2020–21.
139 Collection of quality of service survey data has been paused due to the impact of the COVID-19 pandemic.

Figure 6.8: Number of vehicles accessing landside, on-demand taxis vs rideshare services, by airport:
2016–17 to 2020–21
4
3
0
2016–17
2017–18
2018–19
2019–20
2020–21
2016–17
2017–18
2018–19
2019–20
2020–21
2016–17
2017–18
2018–19
2019–20
2020–21
2016–17
2017–18
2018–19
2019–20
2020–21
Taxi Rideshare

Note: Real values in 2020–21 dollars. In 2016–17, Brisbane Airport aggregated the number of rideshare vehicles accessing
landside with the total for the number of private buses and private cars. Melbourne Airport did not submit the
number of rideshare vehicles accessing landside for 2016–17.
Figure 6.8 shows that the number of rideshare vehicles seeking landside access has increased rapidly
over the 3 years preceding the pandemic. This has resulted in rideshare taking market share from
taxis. By 2020–21, the gap between the number of rideshare vehicles and taxis accessing landside has
narrowed significantly, with rideshare vehicles overtaking taxis in Melbourne and Perth airports.
Figure 6.8 also shows that by 2018–19, the number of rideshare vehicles accessing landside was greater
than the reduction reported by taxis for all monitored airports. This implies that the rise in the popularity
of rideshare services has led to some passengers who previously used airport’s car parks switching to
rideshare service (as was illustrated for Perth Airport at box 6.1).
This growth in the take-up of rideshare is in line with consumers increasingly accepting rideshare as a
mode of transport around Australia, especially in the inner-city areas. This increase in popularity can
be attributed to rising acceptance and usage of technology as rideshare can be booked and paid for
through smartphone apps, as well as a lower fare compared to taxis in general.140
With both rideshare and taxis relying on access to airports’ landside facilities, the terms of access
provided by airports to these operators can potentially influence the competitive dynamic between
them. Specifically, if an airport provides materially different price or non-price terms of access, this
could provide a competitive advantage to one category of transport operators over the other in
competing for customers travelling to, and from, the airport.
The monitored airports offer the following access to facilities to taxis and rideshare operators:
At Brisbane Airport, taxis are available from ranks at both the domestic and international terminals.
Brisbane Airport has dedicated pick-up zones for pre-booked rideshare at both domestic and
international terminals.141
At Melbourne Airport, taxi ranks are located across from terminals T1, T2 and T4, and a pre-booked
pick-up zone is available in the outdoor section of the at-terminal T1, T2 and T3 car park.142
Melbourne Airport has 2 pick-up zones available for rideshare services being lane 3 of the forecourt
in front of T1/T2/T3 and level 2 inside the T4 Ground Transport Hub.143
140 IBISWorld, Ridesharing Services in Australia OD5540, IBISWorld website, October 2021, p 11, accessed 1 March 2022.
141 Brisbane Airport, Ground transport options, Brisbane Airport website, n.d., accessed 13 March 2022.
142 Melbourne Airport, Taxis, Melbourne Airport website, n.d., accessed 13 March 2022.
143 Melbourne Airport, Rideshare, Melbourne Airport website, n.d., accessed 13 March 2022.

At Perth Airport, taxi ranks are located at the front of all terminals, as well as on Valentine Road
within the General Aviation area.144 The airport provides 8 dedicated pick-up bays for rideshare
services being 5 in the T1/T2 precinct and 3 in the T3/T4 precinct.145
At Sydney Airport, each terminal has its own sheltered taxi rank. Pre-booked rideshare uses the
priority pick-up zone at both the domestic and international terminals, which are further from the
terminals than the taxi rank.146
The monitored airports provide slightly different terms of access to taxis and rideshare operators. For
example, across the monitored airports, kerbside taxi ranks are available for passengers seeking to use
a taxi. However, passengers who have prebooked a rideshare vehicle typically have to walk a relatively
short distance to find their rideshare vehicle, which may influence the users to opt for taxis over
rideshare. The difference in convenience does not appear to be material and can largely be explained
by the fact that rideshare is still a relatively new service.
As demand for rideshare increases, some monitored airports have adapted access to their facilities
to improve convenience of access to rideshare passengers. For example, at Melbourne Airport,
all rideshare users previously had to walk to lane 3 of the forecourt to find their rideshare vehicles,
whereas taxis were available at lane 1 (that is, the lane closest to the terminal – kerbside).147 On
14 December 2021, Melbourne Airport introduced a new rideshare pickup zone directly outside T2,
although it is currently only available for Uber passengers.148
Figure 6.9 compares the access fees paid by taxis and rideshare operators between 2016–17 and
2020–21.
Figure 6.9: Landside access fees, taxis vs rideshare by airport: 2016–17 to 2020–21
6
5
0
2016–17
2017–18
2018–19
2019–20
2020–21
2016–17
2017–18
2018–19
2019–20
2020–21
2016–17
2017–18
2018–19
2019–20
2020–21
2016–17
2017–18
2018–19
2019–20
2020–21

Taxi Rideshare

Note: Real values in 2020–21 dollars.
Figure 6.9 shows that initially monitored airports charged different access fees to taxi and rideshare
operators. However, in 2020–21, most monitored airports charge nearly the same access fees to taxis
and rideshare operators.
At Sydney Airport, taxi’s landside access fees have been approximately 6% to 12% higher than
rideshare’s access fees over the past 5 years. This could be due to taxis ranks being located closer to
144 Perth Airport, Taxis, Perth Airport website, n.d., accessed 13 March 2022.
145 Perth Airport, Rideshare, Perth Airport website, n.d., accessed 13 March 2022.
146 Sydney Airport, Transport options, Sydney Airport website, n.d., accessed 13 March 2022.
147 See maps, Melbourne Airport, Rideshare, and Melbourne Airport, Taxis.
148 Melbourne Airport, Australian-first Uber upgrade means a smoother ride from Melbourne Airport [media release],
Melbourne Airport website, 9 December 2021, accessed 13 March 2022.

the terminals and being sheltered. However, in 2020–21 the difference in their access fees was only
$0.40 per vehicle. That a higher charge is accepted by taxis for the more convenient pick-up zone
indicates a degree of power that Sydney Airport has to influence consumer preferences between
transport modes.
Overall, it appears that monitored airports are moving towards providing both taxis and rideshare
vehicles with similar terms of access.
6.2.5 Monitored airports’ access arrangements for off-airport parking

This section examines landside access arrangements for off-airport parking operators and competition
of off-airport parking with at-airport parking.
Off-airport parking landside access fees

Providers of off-airport parking compete directly with long-term airport parking services. Off-airport
parking operators tend to have a locational disadvantage, as their location and distance of the
pick-up/drop-off points for their customers can be significantly less convenient compared to the
airport’s own car parks.
Given airports act as both access providers and competitors to off-airport parking operators, they also
have the incentive and the means to increase their competitive advantage by:
providing only limited drop-off points for off-airport car parking operators (for example, some
airports provide only one drop-off point for all the terminals in the airport, compared to drop-off
points at each terminal for the airport’s own car parks)
imposing high access fees, including charging off-parking operators more than once for accessing
more than one drop-off point
providing poor amenity of facilities for off-airport parking customers (for example, lack of shelter
and signage).
The ACCC has obtained information about access fees levied by Brisbane and Melbourne airports
for each off-parking shuttle bus that accesses their terminals. Off-airport parking operators at these
airports have informed the ACCC that typically the access fees enable their shuttle buses to stay at their
designated zone for a short period (usually between 10 to 15 minutes). Both Brisbane and Melbourne
airports then charge a higher fee when the off-airport parking shuttle bus stays longer than the initial
designated duration. However, not all airports have provided the ACCC with comparable fee data
over time.
Sydney Airport has not submitted off-airport access charge to the ACCC but has informed the ACCC
that various access fees apply. Perth Airport does not charge off-airport car park operators for
landside access.
Figure 6.10 shows Brisbane and Melbourne airports’ access fees for each off-airport parking shuttle bus
between 2014–15 and 2020–21. Both Brisbane and Melbourne airports began submitting off-airport
parking access charge prices to the ACCC in 2014–15.

Figure 6.10: Landside access fees in real terms, off-airport parking operator by airport: 2014–15 to 2020–21
6
5
0
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Brisbane Airport Melbourne Airport

Notes: Real values in 2020–21 dollars. Sydney Airport has various access fees while Perth does not charge off-airport car
park operators for landside access.
Figure 6.10 shows that Brisbane Airport’s access fees for each off-airport parking shuttle bus have been
stable for the past 7 years. Melbourne Airport’s access fees for off-airport parking shuttle buses have
increased in 2015–16 and 2016–17, but have remained relatively unchanged since 2016–17.
In 2020–21, Brisbane Airport’s off-airport parking landside access fees was 19% higher than taxis and
rideshare’s access fees (or $0.75 per vehicle). By 2020–21, the difference in Melbourne Airport’s access
fees for taxis, rideshare and off-airport parking is minimal (that is, $0.10 or less). This price difference
may be due to off-airport parking shuttle buses requiring more landside space than cars.
Competition between off-airport and at-airport parking at Brisbane Airport

For this report, the ACCC has chosen Brisbane Airport to illustrate competition dynamics between
off-airport and on-airport car parking operations.
Motorists have the following choices when driving their vehicles to the Brisbane Airport:
Motorists can park on Levels 5–9 of P1 and Levels 1–6 of P2 at the Domestic Terminal, and on
Levels 2–4 and the outdoor area at the International Terminal car park. Motorists can also park
at Airpark, an open-air car park located on airport land and close to the terminals with 24-hour
surveillance. There is a free shuttle bus (a trip of around 10 minutes) that takes motorists to, and
from, the terminals.
There are 5 off-airport parking facilities located near Brisbane Airport. The shuttle buses from
these operators have a typical travel time ranging between 10 and 18 minutes from the park to the
terminal. Some off-airport parking operators may provide these shuttle buses on-demand.
Motorists will often choose where to park their cars based on their preference in terms of price
and convenience.
In 2018, Houston Kemp prepared a report for Brisbane Airport on car parking and ground access.
Houston Kemp found that Brisbane Airport’s rates for long-term parking and Airpark were higher
than those offered by competing independent off-airport car parks.149 However, there are some of the
disadvantages for motorists parking at any off-airport car parks near Brisbane Airport:
having to take a short shuttle bus ride
149 Houston Kemp, Submission No. 38 (appendix B) to the Productivity Commission, Inquiry into Economic Regulation of
Airports (2019), Productivity Commission website, September 2018, pp 25–8, accessed 1 March 2022.

possibility of taking a shuttle bus ride with other motorists
having to leave car keys with the off-airport operators.150
The ACCC has obtained information from Brisbane Airport about the number of vehicles accessing
at-airport (long-term) parking and the number of off-airport parking shuttle buses accessing the
Brisbane Airport between 2014–15 and 2020–21 (shown in figure 6.11).
The ACCC has selected to compare at-airport (long-term) parking with off-airport parking because
passengers typically park their vehicles at an off-airport parking sites for long term travel. Off-airport
parking operators mostly charge their customers with pricing starting at one day and beyond. Similarly,
travellers who would park their vehicles at an at-airport (short-term) parking would typically not
consider off-airport parking as a viable substitute.
The ACCC notes that this data is not directly comparable, as the number of off-airport shuttle buses
accessing the Brisbane Airport does not equate to the number of vehicles that park at the off-airport
car parks (as motorists from multiple vehicles may share the same shuttle bus). Nonetheless, the
comparison gives an indication of the trends in the use of off-airport parking vis-à-vis airports own
long-term parking offerings.
Brisbane Airport has stated that it sets pricing to meet demand and fill available capacity, with some
airpark pricing at pre-covid levels and some below. Brisbane airport has suggested some contributing
factors to the reduction in off-airport buses from FY16 are the change from a monthly charge to a
pay-per-entry fee mechanism, and that one of the off-airport operators terminated their business.
Figure 6.11: Brisbane Airport: At-airport car park (long-term) throughput and number of off-airport parking
shuttle buses accessing landside, between 2014–15 and 2020–21
1,000 200
Average long-termcarpark throughput
900 180
Number of off-airport buses (’000)

800 160
700 140
600 120
('000)
500 100
400 80
300 60
200 40
100 20
0 0
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Off-airport volume Long-term volume
Source: ACCC analysis of information obtained by the ACCC as part of the monitoring regime.
Figure 6.11 shows that in the period between 2015–16 and 2018–19 the number of off-airport shuttle
buses accessing Brisbane Airport decreased.
At the same time, number of cars using Brisbane Airport’s long-term parking generally increased. This
increase in carpark throughput can be attributed to the opening of Brisbane Airport’s long-term parking
Airpark. When Airpark opened in 2015–16, it provided an additional 2,500 parking spaces. Another
factor attributing to the rise in long-term at-airport car parking could be that Airpark reduced its prices
by approximately 21% for parking 5 days or more in 2017–18. These 2 factors could have attributed to
the decline in the use of off-airport car parking as seen in figure 6.11 from 2016–17 onward.
During the industry consultation for this monitoring report, one off-airport parking operator has
indicated to the ACCC that Brisbane Airport has recently reduced its Airpark’s pricing to be at least
150 ibid, p 29.

30% cheaper than pre-COVID level.151 It appears that these cheaper Airpark prices are only available
when motorists pre-book online. Airpark’s drive-up prices (in real terms) have remained unchanged
since 2017–18. Similarly, Brisbane Airport’s long-term undercover parking (drive-up) prices in real terms
have remained relatively unchanged for the past 7 years. Motorists can save money on parking by
booking ahead.
151 Airpark was closed for a period of time in 2020 and early 2021.

7. Commercial
The monitored airports have multiple revenue sources in addition to aeronautical revenue and
car parking. This includes revenues from commercial activities such as car rental, retail leases and
commercial property.
Commercial activities at the monitored airports are generally beyond the scope of the ACCC’s
monitoring role. However, for the purpose of this report, the ACCC has consulted with commercial
operators at the monitored airports, including retailers and car rental operators. The ACCC sought
retailers and car rental operators’ views on the impact of the COVID-19 pandemic on their operations
and what they see as the major challenges in recovering from the pandemic. The ACCC did not
consult with commercial property tenants as these operations typically are not heavily reliant on
passenger movements.
This chapter is based on the information the ACCC obtained through consultation with retailers and car
rental operators, the monitored airports and through broader research. This chapter covers:
the impact of the COVID-19 pandemic on commercial activities at the monitored airports
assistance provided by airports to commercial operators in response to the COVID‑19 pandemic
the challenges to the recovery from the COVID-19 pandemic.
The financial figures throughout this chapter are expressed in real terms with values in 2020–21
dollars.152
7.1 The impact of the COVID-19 pandemic on

commercial activities at the monitored airports
This section covers the impact of the COVID-19 pandemic provided by retailers and car rental operators
at the monitored airports and the flow-on effects on the revenues of the monitored airports.
7.1.1 Retail tenants

The bulk of retail customers at the monitored airports are arriving or departing passengers. The
significant fall in the number of passengers flying during the pandemic has materially impacted the
retail operators at the monitored airports. Retail chains operating at the 4 monitored airports have
indicated that their sales turnover decreased by 95% compared to pre-COVID levels.
Despite the lack of passengers, retailers indicated that they had to incur additional costs in cleaning
their facilities/premises in line with COVID-related health and safety requirements. Retailers took a
range of measures to manage their costs and generate sufficient cashflow to survive, including:
selling stock at a discounted price
closing some shops or reducing opening hours
reducing staff in both head office and at stores across multiple airports via redundancies.
Despite these measures, many retailers at the monitored airports have struggled to survive and had to
close their operations. One retail tenant indicated that it stayed afloat mainly because the Australian
Government and airports at which it operates provided support in the early stage of the pandemic.
Another retailer stated that, despite this assistance, it had to rely on funding from its parent company to
continue to operate.

7.1.2 Car rental operators
Car rental operators located at various monitored airports also reported a significant reduction in
revenue due to the lack of passengers. During the consultation, multiple car rental operators indicated
to the ACCC that their revenue had fallen between 50% and 90% compared to pre-pandemic level.
At the same time, car rental operators incurred additional costs in meeting COVID related health and
safety requirements.
Car rental operators sought to reduce costs by decreasing their staff numbers and closing car hire
booths at many locations. Some car rental operators also sold off parts of their fleets to generate
sufficient cashflow to maintain their operations.
As air travel resumed following lockdowns, passengers tended to avoid using public transport. This
increased the demand for car rentals. However, car rental operators stated that they could not replenish
their inventory fast enough, given the shortage of new vehicles caused by global supply chain issues.
Car rental operators stated that this led to higher car rental prices.
Car rental operators indicated that in the initial stages of the pandemic, they received financial support
from airports. However, some stated that this was not sufficient to offset the reduction in revenue.
Car rental operators indicated that the level of relief varied between the monitored airports and some
airports were no longer offering rent relief in 2021 despite passenger numbers remaining low.
7.1.3 Impact of the COVID-19 pandemic on monitored airports’

revenue
The significant impact of the COVID-19 pandemic on retailers had a flow on effect on the monitored
airports’ retail revenue.
Around 95% of Melbourne Airport’s retailers had to close in early 2020–21.153 Also some retail stores
opened and closed according to various travel restrictions. As a result, Melbourne Airport’s retail
revenue decreased from $189.0 million in real terms in 2018–19154 to $14.8 million in 2020–21.155
Perth Airport closed Terminal 1 Domestic for several months during 2020–21, resulting in all outlets
being closed during that period. Overall, 52 outlets at Perth Airport closed at various stages during the
pandemic, while many of the remaining stores operated on significantly reduced hours.156 As a result,
Perth Airport’s retail revenue decreased from $54 million in real terms in 2018–19157 to $7.7 million in
2020–21.158
Brisbane Airport’s retail revenue almost halved compared to pre-pandemic level as some terminal areas
closed.159
Sydney Airport’s retail revenue decreased by around one third compared to the pre-pandemic level.160
This was due to the retail restrictions being imposed by the Australian Government at T1 international
terminal leading to store closures.161
In contrast, the pandemic had a much more limited impact on monitored airports’ revenue from
commercial property (that is, buildings and other space on the airport’s land like business parks
and offices), as this segment is less directly linked to passenger movements. In 2020–21, Brisbane,
153 Melbourne Airport, 2020–21 Annual Report, 2021, accessed 22 February 2022, p 36.
155 Melbourne Airport, 2020–21 Annual Report, 2021, accessed 22 February 2022 p 68.
156 Perth Airport, 2020–21 Annual Report, 2021, accessed 22 February 2022, p 12.
157 Perth Airport, 2019–20 Annual Report, 2020, accessed 22 February 2022, p 71.
158 Perth Airport, 2020–21 Annual Report, 2021, accessed 22 February 2022 p 63.
159 Brisbane Airport, 2019–20 Annual Report, 2021, accessed 22 February 2022, p 34; Brisbane Airport, 2020–21 Annual
Report, 2021, accessed 22 February 2022, p 36. Brisbane Airport have stated that the revenue loss for retail was greater
than reported, as the audit figure includes $25 million of ‘expected credit loss’.
160 Sydney Airport, 2019 Annual Report, 2021, accessed 22 February 2022, p 88; Sydney Airport, 2020 Annual Report, 2021,
accessed 22 February 2022, p 89.
161 Sydney Airport, 2020 Annual Report, 2021, accessed 22 February 2022, p 26.

Melbourne, and Perth airports’ revenue from property remained similar to pre-pandemic level.162 While
Sydney Airport reported a 20% decline in combined revenue from property and car rental compared to
2019 level163, it secured new leases for freight facilities on improved terms.164
7.2 Relief provided by monitored airports to

commercial operators
Monitored airports provided financial support to commercial operators by offering rent relief, rent
deferral and waiving fixed payments.
7.2.1 Rent relief or deferral

Monitored airports informed the ACCC that they provided various rent relief measures to
commercial operators:
Brisbane Airport provided approximately $57.5 million in the form of rent relief and deferral to
commercial and property tenants.165
Melbourne Airport provided support to car rental operators in the form of relief for fixed rents on
parking bays, office space and supporting back up facilities.166
Perth Airport informed the ACCC that it provided rent relief to retail operators in 2020.
Sydney Airport offered both rent relief and rent deferral. In deciding what type of relief to offer,
Sydney Airport assessed each tenant on a case-by-case basis. Sydney Airport did not make
structural changes to existing contracts.167
One monitored airport indicated that it would continue to provide rent relief until passenger throughput
is above 80% of 2018–19 levels.
The ACCC notes that there is a material difference between rent relief (where there is no obligation
to pay) and rent deferral (a payment holiday, followed by incremental rent payments to repay the
amount owed). One airport informed the ACCC that it only provided deferrals after it identified that the
particular tenants were in an appropriate financial position to repay.
Waiving fixed payments for car rental operators

Car rental operators have an obligation to pay minimum annual guarantees (MAG) under rental
agreements with the monitored airports. MAG is typically calculated as a percentage of tenant’s
revenue from the previous year and is paid by car rental operators on top of their fixed rent payments.
Some monitored airports have waived MAG obligations for car rental operators for the 2020 and 2021
calendar years. For example, Melbourne Airport indicated that it waived MAG payment in addition to
providing rent relief.168
Some car rental operators have indicated that some monitored airports recently began charging MAG
again despite sales turnover remaining low.
162 Brisbane Airport, 2020–21 Annual Report, 2021, accessed 22 February 2022, p 36; Melbourne Airport, 2020–21 Annual
Report, 2021, accessed 22 February 2022 p 68; Perth Airport, 2020–21 Annual Report, 2021, accessed 22 February 2022,
p 63.
163 Sydney Airport, 2019 Annual Report, 2021, accessed 22 February 2022, p 88; Sydney Airport, 2020 Annual Report, 2021,
accessed 22 February 2022, p 89. Revenue from car rental was reported in Sydney Airport 2020 Annual Report together
with revenue from property as ‘Property and car rental revenue’.
165 Brisbane Airport, 2020–21 Annual Report, 2021, accessed 22 February 2022, p 24.

7.3 Challenges to recovery from the
COVID-19 pandemic
Commercial operators expressed concerns that low passenger numbers, the unpredictable nature of
the COVID-19 pandemic and low traveller confidence may lead to commercial airport activities being
severely affected for several years. Commercial operators identified several challenges in recovering
from the COVID-19 pandemic.
Some commercial operators stated that because they had to lay off large numbers of staff during the
pandemic, they were now experiencing difficulties in rehiring suitable employees. One commercial
operator stated that this would affect its ability to operate if staff shortages continue.
Some retailers have stated that the return of international passengers is crucial to recovery, as those
passengers historically spend more money at airports than domestic passengers. Some commercial
operators have also stated that the recovery of corporate travel is also important, as corporate travel
provided a regular stream of passengers in the past. With many organisations adopting digital tools (for
example, virtual meetings) during the pandemic, it is uncertain how much corporate travel will return
once the pandemic subsides.
Multiple commercial operators expressed concerns that airports may attempt to recover their operating
losses from tenants in the future and/or return to a ‘take-it-or-exit’ negotiating position. These
commercial operators indicated that such actions would increase their costs and would ultimately flow
through to end-consumers through higher prices.

8. Investments by monitored airports
Provision of aviation services is capital-intensive. Airports require a range of tangible non-current
aeronautical and non-aeronautical assets to service the current and future needs of airport users.
Each year, the ACCC reports information from the 4 monitored airports about their investments in:
tangible non-current aeronautical assets that are directly used for the supply of aeronautical services
(including runways, taxiways, parking bays, aprons and terminal facilities)
tangible non-current non-aeronautical assets relating to car parking and landside access.
The ACCC does not report on airports’ investments in property, commercial/retail facilities, or
intangible assets such as goodwill, costs incurred in the development of the Airport Master Plan or
software licenses.
In addition to information collected from the monitoring regime, this chapter is also based on the
information the ACCC collected through consultations with airport users and through broader research.
This chapter examines investments in tangible assets reported by the 4 monitored airports, namely:
the long-term trends in tangible non-current aeronautical and non-aeronautical investments
impact of the COVID-19 pandemic on current investments
planned future investments.
The ACCC reports aeronautical asset values in this chapter using the line-in-the-sand approach (see
Appendix C for more details).
The financial figures in this chapter are presented in real terms with values in 2020–21 dollars.169
8.1 Monitoring airports’ investments

In a competitive market, infrastructure operators compete on price and quality of service. Competitive
operators do this by investing sufficiently in fit-for-purpose infrastructure that meets the needs of
users in a timely manner at the lowest cost they can achieve. Some operators may provide high-quality
services for a higher price, which is an efficient form of product differentiation if the demand exists.
As noted in chapter 1, monitored airports are natural monopolies with substantial market power.
Therefore, they may have incentives to invest at an inefficient level to extract monopoly rents. This
section discusses these incentives, the concerns raised by airport users and the focus of the ACCC’s
monitoring of investments.
8.1.1 Monitored airports’ investment incentives

Monitored airports may have an incentive to exercise their market power by underinvesting or deferring
investment in their facilities’ capacity or quality. This can lead to:
an airport restricting supply, and pricing services at unduly high levels, to create scarcity rents with
capacity constraints, or
an airport allowing service quality to fall below airport users’ reasonable expectations at a given
price, which may result in other costs to airport users such as additional wait times, flight delays or
safety risks.

However, monitored airports’ incentive to underinvest in their infrastructure is somewhat limited by the
following factors:
Conditions in their long-term leases with the Commonwealth that require the monitored airports to
invest in airport infrastructure to meet current and anticipated demand.
Airports’ incentive for price discrimination among users based on willingness to pay, leading to
increased output from under-provision of services under uniform average cost pricing.
Airports’ incentives to attract more passengers due to complementary demands for
non-aeronautical services such as car parking and commercial services.
Alternatively, airports with market power may have an incentive to overinvest in their facilities in ways
the airport users do not need (referred to as ‘gold plating’) or by investing too far ahead of expected
demand, and seek to recover the costs from airlines and other down-stream users.
8.1.2 Concerns raised by airlines

During the 2019 Productivity Commission inquiry, airlines raised concerns about inefficient investment
at monitored and non-monitored airports around Australia:
Qantas submitted that Australian airports frequently prioritise investments in retail, car parking and
other revenue-raising facilities over aviation infrastructure and expect passengers to pay for these
through higher airport charges.170
Virgin Australia submitted that airport’s opening asset base is often revalued upwards (in some
cases considerably so) to justify higher charges for aeronautical services.171
Airlines have re-iterated these concerns to the ACCC during consultation for the purpose of this report.
Airlines have also commented that airports regularly undertake capital projects and include the cost of
these projects in their capital base for recovery from airlines without adequate consultation and with
limited transparency on costs.
8.1.3 The focus of the ACCC’s monitoring

The ACCC is monitoring whether monitored airports’ investments are:
sufficiently meeting the needs of airport users in a timely manner
efficiently delivered (that is, by minimising expense passed onto airport users where possible).
The following section examines airports’ major investments over the 12 years preceding the
COVID-19 pandemic.
8.2 Long-term trends in investment by

monitored airports
Asset investment cycles vary significantly between each of the monitored airports, subject to the needs
of each airport. Investments toward tangible non-current aeronautical, carparking and landside assets
can be used for upgrading or replacing existing assets, or constructing new assets.
Whilst charts presented in this section cover a time period from 2007–08 to 2020–21, the impact of
the COVID-19 pandemic on investments during 2019–20 and 2020–21 are discussed separately in
section 8.3.172
170 Qantas Group, Submission No. 48 to the Productivity Commission, Inquiry into Economic Regulation of Airports (2019),
171 Virgin Australia, Submission No. 54 to the Productivity Commission, Inquiry into Economic Regulation of Airports (2019),
Productivity Commission website, 2018, p 6–7, accessed 8 April 2022.
172 Trends are observable from 2007–08 as that was the first reporting year that asset values were consistently applied using
the Line in the Sand (LIS) approach.

8.2.1 Gross investments in tangible non-current aeronautical assets
The data shown in this section are the gross investments or ‘additions’ in tangible non-current
aeronautical assets, excluding disposals and depreciation which reduce net investment.
Figure 8.1 shows annual gross investments in tangible non-current aeronautical assets that the
monitored airports have reported to the ACCC over the past 14 years.
Figure 8.1: Gross investments in tangible non-current aeronautical assets in real terms, by airport: 2007–08
to 2020–21
900
800
Gross investments in aeronautical
700
assets ($millions)
600
500
400
300
200
100
0
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Source: ACCC analysis of information received from airports as part of the monitoring regime.
Note: Real values in 2020–21 dollars.
The chart demonstrates the lumpy and cyclical nature of capital investments, and how each monitored
airport invested differently. Some key tangible aeronautical investments are listed below, as reported in
previous ACCC Airport Monitoring Reports.
Brisbane Airport made the following key tangible aeronautical investments:

In 2007–08, it invested in new buildings, plant and machinery.
Since 2012, a nearly half of the investment has contributed to the development and construction
stages of the new parallel runway and associated supporting infrastructure which was completed on
12 July 2020. The runway is expected to effectively double the capacity of Brisbane Airport, allowing
a maximum of 110 flights per hour.173
In 2014–15, it expanded the Domestic Southern Apron, which provided a new dual-apron taxi lane
and relocated landside infrastructure.
In 2017–18, it invested in the International Terminal concourse and apron bays.
In 2018–19, it invested in new roads and an underpass. However, the bulk of the expenditure was
due to the expiry of the domestic terminal lease and the transfer of the domestic terminal operations
from Qantas to the airport, rather than new investment (refer to box 4.1). Brisbane Airport also
invested in upgrades to the domestic terminal following the lease expiry.
Melbourne Airport made the following key tangible aeronautical investments:

During 2014–15, it invested in the international terminal bussing and the premium lounge and
transfer screening facilities projects, and the construction of the new T4, which was designed to
accommodate 10 million passengers per year.174
173 Brisbane Airport, Brisbane’s New Runway, Brisbane Airport website, n.d., accessed 23 March 2022.
174 Melbourne Airport, New Terminal 4 officially unveiled, Melbourne Airport website, 9 December 2015, accessed
29 April 2022.

During 2018–19, it replaced aerobridges in T2 and T3, completed expansion works on the existing
security area in T2 and commenced construction of the new ‘Taxiway Zulu’ project. A large
proportion of the 2018–19 expenditure was associated with a payment to Qantas for facilities
contained within the domestic terminal following the expiry of the domestic terminal lease (refer to
box 4.1).
Perth Airport made the following key tangible aeronautical investments:

In 2011–12, it completed a T3 expansion and refurbishment and expansion of inbound processing
facilities. This investment shortly preceded the peak of the resource boom in Western Australia.175
In 2012–13, it completed the construction of T2 and associated infrastructure, and the realignment
of a taxiway. Ongoing investment included construction of a domestic pier on the western end of T1
with a direct connection to T2.
In 2013–14, it completed a runway overlay, T3 apron reconfiguration and a co-generation plant for
T1 and T2.
In 2014–15, it completed the expansion and refurbishment of T3, additional stand-off bays and the
‘Taxiway Charlie’ extension.
In 2015–16, it expanded and upgraded T1, including international arrival and departure areas, and
improved security screening and customs processing areas.
In 2016–17, it completed a number of upgrades at T1, including a new forecourt and roads, as well as
check-in area expansion.
Sydney Airport made the following key tangible aeronautical investments:

In 2008–09, it invested in land improvements, buildings and plant and machinery.
In 2015–16, it invested in additional aprons and security fence upgrades. However, a large proportion
of the expenditure related to the purchase of the Qantas domestic terminal following the end of the
Qantas domestic terminal lease as opposed to investment in new infrastructure (refer to box 4.1).
During 2018–19, it completed T1 international gate lounge redevelopment works and continued
works on redeveloping the T1 international departures entry point, and began work on apron
expansion and completed the first phase of works on T2 domestic pier B.
8.2.2 Gross investments in tangible non-current car parking and

landside access assets
The monitored airports have made significant gross investment in tangible non-current on-airport car
parking and landside access areas over the past 14 years.
Brisbane Airport made the following key car parking and landside access investments:
In 2012, it completed major changes to the road network, stating that this has alleviated pressure
during the daily peak period in the domestic terminal precinct.176
During 2013–14, it completed a number of car parking and landside access projects, such as the taxi
short-fare system, international terminal valet facility, and a 2-lane off-ramp from the airport’s main
arterial road.
Since 2015–16, it has provided dedicated zones for ridesharing drivers at both international and
domestic terminals.
Melbourne Airport made the following key car parking and landside access investments:
In 2014–15, it completed the 3.3 kilometre, 4-lane ‘Airport Drive & Steel Creek North’ road project
which connects to the M80 Western Ring Road. Also ongoing in 2014–15 was the car parking
multi-level ground transport hub and carpark project to support the new T4.
175 S Letts, ‘Mining industry to lose 50,000 more jobs as boom comes to an end: NAB’, ABC News, 10 June 2016, accessed
23 March 2022.
176 Brisbane Airport, Ground Transport Plan [PDF], Brisbane Airport website, 2014, p 211.

Since 2017–18, it has provided dedicated wait zones for rideshare vehicles such as Uber, Didi,
GoCatch and Ola at both terminal precincts for passengers travelling to and from the airport.
Perth Airport made the following key car parking and landside access investments:
In 2011–12, it expanded the T1 park and ride facility.
In 2012–13, it completed new taxi and car rental facilities at the T1/T2 precinct and a new ‘Park and
Wait’ area with 70 spaces was completed to service T1 and T2.
Over 2013–14, it completed a new bus, taxi and short-term car park facility at T2.
Between 2014 and 2016, it undertook the Gateway WA project which included major interchanges
and road upgrades to allow greater passenger and freight access to Perth Airport.
In 2015–16 has introduced ‘remote holding areas’ for pre-booked ridesharing drivers.
Sydney Airport made the following key car parking and landside access investments:
Since 2013, it made road improvements at the international terminal precinct.177 Sydney Airport has
also re-configured its road network, which improved traffic flow and reduced congestion.178
In 2015–16, it completed a new 5 lane road exiting the domestic precinct. Sydney Airport also
opened a new ‘shared priority pickup zone’ in 2015–16 near the domestic terminal, which is available
for ridesharing drivers and other pre-booked services.
During 2017–18, it completed improvements to the T2/T3 ground access, parking facilities at T1, and
the T1 priority pick-up area for ride-share services.
8.2.3 Impact of investments on airports’ asset base

Overall, the 4 monitored airports invested $11.5 billion in tangible non-current aeronautical and
$5.7 billion in tangible non-current non-aeronautical assets in real terms between 2007–08 to 2020–21.
Each year, the monitored airports’ tangible non-current aeronautical and non-aeronautical asset bases
are adjusted by adding the cost of new investments and subtracting any disposals or depreciation
(noting that the cost of new investment included in the asset base is not subject to an efficiency review).
Therefore, if new or additions to investment is less than disposals and depreciation in a given year, the
asset base will decline. This section shows how gross investments in the period between 2007–08 and
2020–21 have affected the monitored airports’ asset bases.
Aeronautical asset bases

Figure 8.2 shows how each of the monitored airports’ tangible aeronautical asset bases have changed
since 2007–08.179
177 Sydney Airport, T1 International precinct, Sydney Airport website, n.d., accessed 8 April 2022.
178 Sydney Airport, T2/T3 Domestic precinct, Sydney Airport website, n.d., accessed 8 April 2022.
179 2007–08 was the first reporting year for which asset values were reported using the line-in-the-sand approach.

Figure 8.2: Tangible non-current aeronautical asset bases in real terms, by airport: 2007–08 to 2020–21
4.0
3. 5
Aeronautical asset base ($billions)
3. 0
2.5
2.0
1.5
1.0
0.5
0.0
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Note: Real values in 2020–21 dollars. The asset values used to calculate these results are the ones reported under the
line-in-the-sand approach.
Figure 8.2 shows that from 2007–08, Perth and Melbourne airports’ tangible non-current aeronautical
asset bases more than tripled, but have slightly declined since 2016–17 and 2018–19 respectively.
Brisbane Airport’s tangible non-current aeronautical asset base more than doubled between 2007–08
and 2019–20. Brisbane Airport have stated that the 2020–21 decrease of tangible non-current assets
was driven by depreciation of assets.
The tangible non-current aeronautical asset base at Sydney Airport only increased by 10% in real terms
during the period between 2007–08 and 2018–19. Sydney Airport has limited opportunities for tangible
aeronautical expansion given operational constraints such as the curfew, aircraft movement quota and
limited land. Therefore, the bulk of gross investment made during the period was to upgrade or replace
existing assets. However, Sydney Airport’s tangible aeronautical asset base remained the highest
among the monitored airports for all years except 2019–20, when it was temporarily overtaken by
Brisbane Airport.
Non-aeronautical asset bases

Figure 8.3 shows how each of airports’ tangible non-current non-aeronautical asset bases have changed
since 2007–08. The trend in non-aeronautical asset base discussed below includes car parking and
landside as well as other non-aeronautical activities such as property and commercial/retail facilities. As
mentioned in chapter 3, the line-in-the-sand approach does not extend to non-aeronautical assets, so
the monitored airports may revalue these assets for monitoring purposes. This would affect the tangible
non-current non-aeronautical asset base shown in figure 8.3.

Figure 8.3: Tangible non-current non-aeronautical asset bases in real terms, by airport: 2007–08 to 2020–21
14
Non-aeronautical asset base ($billions)
12
10
0
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Note: Real values in 2020–21 dollars. The asset values used to calculate these results are the ones reported under the
line-in-the-sand approach.
Figure 8.3 shows that all 4 of the monitored airports’ tangible non-current non-aeronautical asset bases
have changed at different rates since 2007–08.
Perth and Brisbane airports’ non-aeronautical asset bases increased prior to 2014–15 and 2015–16
respectively but have stayed steady since.180 Melbourne Airport’s non-aeronautical asset base was
steady at the start of the period but increased after 2013–14.
Sydney Airport’s non-aeronautical asset base is higher than the other monitored airports, largely due
to Sydney Airport’s high value of receivables. The large decrease in non-aeronautical assets in 2009–10
is mostly attributable to the removal of investments in subsidiaries. The non-aeronautical assets for the
airport increased significantly in 2013–14, driven mostly by growth in non-current receivables.
8.2.4 Impact of asset bases on prices

As discussed in chapter 2, the monitored airports use a building block model (BBM) to inform their
pricing negotiations with airlines. The ACCC understand that these airports use their estimates of
aeronautical asset base as an input into the BBM calculation, multiplying the value of the asset base by
the weighted average cost of capital and then adding other components of the building blocks (such
as depreciation and opex) to estimate their required revenue. The ACCC understands that airports then
divide their estimate of the required revenue by forecast demand to arrive at aeronautical prices.
The monitored airports use their estimates of non-aeronautical asset bases in a similar manner to
set prices for car parking, landside access and other non-aeronautical services in their negotiation
with airlines.
Therefore, with all else being equal, the higher the aeronautical and non-aeronautical asset bases are,
the higher the revenue required is for provision of aeronautical and non-aeronautical services. It is likely
to drive up the prices that airports will charge their users. Whether this is a concern depends at least in
part on whether the investment is timely, efficient and meets the needs of end users.
8.2.5 Timeliness and efficiency of monitored airports’ investments

The ACCC uses passenger and/or airline ratings on the overall quality of total airport services to assess
how they have changed over time. This overall rating covers aeronautical, car parking and landside
180 Perth Airport has stated that the increase in tangible non-current non-aeronautical asset base prior to 2014–15 was due
mainly to the $731m impact of accounting treatment changes.

operations. As mentioned earlier, the ACCC has not collected quality of service data from passengers or
airlines in the past 2 years.
As the ACCC discussed in its 2018–19 Airport Monitoring Report, the ratings for overall airport services
remained within the ‘Satisfactory’ to ‘Good’ ratings for each of the monitored airports over the 12 years
before the COVID-19 pandemic. Ratings by passengers tend to be higher than ratings by airlines, which
reflects the different infrastructure they use, their perspectives and potentially their incentives.
As shown in this chapter, monitored airports have made large investments in new and existing
infrastructure in the period between 2007–08 and 2018–19. The finding that the quality-of-service
ratings have not declined and remained satisfactory during this period indicates that the monitored
airports are not under-investing in airport infrastructure.
The ACCC currently does not have adequate data to conclusively assess whether the concerns raised
by airlines that some monitored airports are investing too early or over-investing in their infrastructure
are justified.
As shown in figure 3.1, passenger numbers at each of the monitored airports have increased between
28% and 58% over the 12 years preceding the COVID-19 pandemic. The monitored airports have
invested to increase capacity and upgrade existing infrastructure to meet increasing demand and adapt
to changing requirements. The ACCC would need to examine asset utilisation, among other things, to
determine whether the timing of those investments has been reasonable. The ACCC currently collects
very limited data on monitored airports’ asset utilisation.
However, the ACCC can make some observations based on the data available. Box 8.1 discusses car
parking investment at the Perth Airport.

Box 8.1: Car parking investment at Perth Airport
As discussed in chapter 5, in the period between 2007–08 and 2018–19:
Perth Airport significantly increased its short-term car parking capacity (50%) and long-term car
parking capacity (213%)
Perth Airport significantly increased its short-term car parking prices (54–123%) and long-term
parking prices (24–42%), at least in part, to recoup those capital investments
average daily car throughput at Perth Airport increased by 1.4%.
Airports, just as all other infrastructure operators, aim to have sufficient capacity to ensure that they
can cater for throughput at peak periods. Table 8.1, shows the average peak period occupancy
rates at Perth Airport in 2018–19.
Table 8.1: Average peak period occupancy rates for car parks at Perth Airport, 2018–19
Car park Average peak period occupancy (%)

T1/T2 short-term 72.4
T1/T2 long-term 40.2
T3/T4 short-term 59.5
T3/T4 long-term 29.7
T3/T4 fast-track parking 67.4
General Aviation 34.2
The ACCC acknowledges that table 8.1 shows only average peak period occupancy, meaning that
the occupancy on some days in 2018–19 was higher than shown in the table. Nonetheless, table 8.1
appears to indicate that Perth Airport had significant excess car parking capacity in 2018–19 across
several of its offerings, particularly T1/T2 and T3/T4 long-term car parking, and General Aviation.
This raises the question as to whether Perth Airport may have invested to expand its car parking
capacity too early. To make this assessment, the ACCC would need, among other things, the
information that Perth Airport had at the time it made its investment decisions, particularly about
expected future demand. Without this information, the ACCC cannot conclusively comment on the
efficiency of its investment.
Businesses typically invest in additional capacity based on forecast future demand for their services.
It appears that at the time Perth Airport decided to invest in additional car parking capacity, it
expected the demand for parking to increase substantially over the subsequent period. It is possible
that this demand has not materialised due to reasons Perth Airport could not foresee at the time.
For example, passenger numbers at Perth Airport increased gradually up to 2012–13, but flattened
out afterwards as the mining boom cooled off. In addition, the emergence of rideshare in 2015–16
had caused many passengers to switch from parking at the airport to using rideshare (refer to
chapter 6).
Perth Airport is making further investments in T1 & 2 Multi Storey Car Park Pod 1 and the Airport
Link rail project, which may further reduce demand for the existing car parks. Perth Airport
stated that carparks are built to accommodate peak occupancy to provide high quality of service
to customers.

8.3 Impact of the COVID-19 pandemic on investment
As the ACCC discussed in chapter 3, the COVID-19 pandemic has led to a significant fall in number
of passengers flying. This section discusses the flow on effects of this on gross investment by
monitored airports.
8.3.1 Aeronautical investments

The monitored airports informed the ACCC that the COVID-19 pandemic has triggered a large
reduction in their capital aeronautical expenditure over the past 2 years as they deferred, paused or
cancelled a number of projects in response to falling demand.
In aggregate, the monitored airports gross investment was approximately $0.5 billion in tangible
non-current aeronautical assets in 2020–21, compared to around $1.3 billion in 2018–19.
Table 8.2 shows the gross investment rate in tangible aeronautical assets made by each monitored
airport between 2018–19 and 2020–21. In contrast to the gross capital expenditure dollar amounts
shown in figure 8.1, the gross investment rate below shows airports’ gross tangible aeronautical
investment relative to the size of their existing tangible aeronautical asset bases.
Table 8.2: Gross tangible aeronautical investments to tangible aeronautical assets, by airport (%): 2018–19
to 2020–21
Aeronautical Aeronautical Aeronautical Percentage Percentage

investments in investments investments point change: point change:
2018–19 (%) 2019–20 (%) 2020–21 (%) 2018–19 to 2019–20 to
2019–20 2020–21
Melbourne Airport 27.0 10.8 5.0 -16.2 -5.9
Perth Airport 4.6 5.2 6.2 0.6 1.0
Sydney Airport 8.8 5.2 8.8 -3.5 3.5
Table 8.2 shows that Brisbane and Melbourne airports have significantly reduced their gross tangible
aeronautical investment rates in the 2 years affected by the pandemic. Perth Airport is the only airport
that has invested at a higher rate than prior to the pandemic, though Perth Airport’s rate of investment
in 2018–19 was among the lowest for Perth Airport and the lowest among the monitored airports.
Sydney Airport’s gross tangible aeronautical assets investment rate dipped in 2019–20 but returned to
pre-pandemic level in 2020–21.
Some airports have indicated that there were limited new, major investments commenced in 2020–21
or planned to commence in 2021–22 in anticipation of reduced passenger numbers and certainty
in coming years. Some monitored airports have deferred or reduced the scope of non-essential
investment projects, including delays of major capacity building projects. Monitored airports provided
the following examples of delayed aeronautical projects in their consultation with the ACCC:
new runways delayed by 2 years
apron expansions delayed by 2–4 years
security screening upgrades delayed by 1–3 years
terminal expansions delayed by 2–3 years
taxiway development completion delayed by 3 years.
One monitored airport has indicated that it has resumed some minor projects which it had initially
delayed due to COVID-19 pandemic as reduced passenger numbers presented the airport with an
opportunity to complete works with minimal disruption to normal operations.

Despite reduced demand throughout the COVID-19 pandemic, each monitored airport has continued
or completed some key tangible aeronautical projects. Table 8.3 lists the key investment projects in
aeronautical services and facilities completed or underway in 2020–21.
Table 8.3: Selected key tangible aeronautical investments completed or underway in 2020–21 in real
terms, by airport
Airport Infrastructure Value Status Commencement Completion

($m) Date Date
Brisbane Brisbane’s New Runway 1,240 Completed 12/01/16 12/07/20
International Terminal Fire Panel 8 Completed 1/12/17 30/11/20
Domestic Terminal Standard 3 Check Bag 216 Underway 10/01/18 31/12/25
Screening and capacity upgrades
International Terminal Passenger body 131 Underway 10/01/18 31/12/25
scanners and CT cabin bag screening
International Terminal Bays 65 to 68 and 69 Underway 7/01/18 30/06/27
Links
Melbourne Airfield Perimeter Fence Replacement n/a Completed FY17 FY21
Taxiway Victor (Stage 1 of Taxiway Zulu) n/a Completed FY14 FY21
Runway Development Plan n/a Underway FY14 FY28
T2 Airside Satellite Development n/a Underway FY18 FY30
T2 North Infill Expansion n/a Underway FY18 FY27
T3 Redevelopment n/a Underway FY18 FY23
T1 Redevelopment n/a Underway FY19 FY23
Perth International Gate Upgrade Project 42 Completed 7/01/20 30/06/21
Security Reform Project 71 Underway 14/12/18 31/12/21
Domestic Terminal Lease 8 Underway 10/11/17 31/12/21
Terminal and apron consolidation and 1,000 Underway 1/01/16 31/12/25
development
Parallel Runway Design and Construction 520 Underway 1/02/15 31/12/26
Sydney T1 Southern Bag Room Civil Works/ 15–20 Completed Q3 2019 Q3 2020
Southern Pier Civil Works
Northern Ponds Infrastructure Upgrade 50–75 Completed Q3 2019 Q2 2021
T2 New Conveyor Sort Loop 20–25 Underway Q4 2019 Q4 2022
Runway 16R/34L Central & South 40–50 Underway Q3 2020 Q4 2021
Re-sheet
Source: Information received from airports as part of the monitoring regime.
On-airport car parking and landside access investments

As with investments toward aeronautical assets, some airports had to review their capital expenditure
plan for on-airport car parking and landside access facilities. Monitored airports provided several
examples of multi-year investment delays, including car park and access roads developments.181 The
monitored airports made a total of $314.0 million new non-aeronautical investments in 2020–21.
Table 8.4 lists key investment projects in car parking and landside access services and facilities
completed or underway in 2020–21.
181 Information received from airports as part of the ACCC’s survey responses.

Table 8.4: Selected key car parking and landside access investments completed or underway in 2020–21
and planned for 2021–22 in real terms, by airport.
Airport Description Value ($m) Status Commencement Completion

Date Date
Brisbane New Online Booking System for car 0.5 Completed 1/08/18 30/06/21
parking
Airpark Extension 15 Underway 1/09/18 31/12/25
International Multi level Car Park 2 100 Underway 1/03/18 n/a
Melbourne Landside Access Road Maintenance n/a Completed Q1 2021 Q2 2021
Works
Car Park Façade Cladding replacement n/a Completed Q2 2020 Q1 2021
T4 Express Link n/a Underway Q3 2018 Q1 2022
Elevated Road and Forecourt Stage 2 n/a Underway Q3 2018 Q4 2025
Perth T2 Forecourt Monitoring and Control 1.5 Completed 1/10/16 30/06/21
T1 & 2 Multi Storey Car Park Pod 1 170 Underway n/a n/a
Airport Central Road Upgrade 80 Underway n/a n/a
Car Park Customer Service 1–2 Completed Q1 2020 Q4 2020
Improvements
Sydney Ground Access Improvements 5–10 Underway Q2 2021 Q4 2021
(upgrading taxi rank and a new
limousine waiting area)
Source: Information received from airports as part of the monitoring regime.
The ACCC did not collect quality of service survey or objective indicators data during the pandemic.
The ACCC is therefore not assessing how the reduction in investments affected the quality of service
during the past 2 years.
8.4 Future investment plans

Timely investment in airport infrastructure is required to meet current and expected future demand.
However, monitored airports have informed the ACCC that they currently consider infrastructure
investment to be riskier, given uncertainty in expected future demand. The monitored airports expect to
resume planned projects when the passenger recovery path becomes clearer, but investment timelines
may change.
The monitored airports have reported the following future investment plans:
Brisbane airport plans to expand the international and domestic terminal area and services and build
a new domestic multi-level car park in the next 3–5 years. Over the next 20 years, Brisbane Airport is
considering the development of new Northern and Western Terminals.182
Melbourne Airport plans to develop a new parallel east–west runway and extend the existing
east–west runway, increasing aircraft movements to almost 100 per hour. Melbourne Airport is also
planning to reconfigure the existing forecourt and multi‑level car park at T123 into a new ground
transport hub to increase capacity for passenger pick‑up and drop-off.183 There is also a plan to
invest in landside road network to improve passenger vehicle circulation and access.184 Both Federal
and Victorian governments are investing in developing Melbourne Airport Rail link, with construction
beginning in 2022 with a target opening date of 2029.185
Perth Airport is planning to expand the international terminal, construct a new terminal to
consolidate all air services into the central precinct, and build a new runway. Perth Airport also
recently announced a ground transport upgrade where it will invest in T1 and T2 multi storey car
182 Brisbane Airport, 2020 Master Plan [PDF], Brisbane Airport website, 2020, pp 215, 225, 228, 232, accessed 2 May 2022.
183 Melbourne Airport, 2018 Master Plan [PDF], Melbourne Airport website, 2018, pp 144, 177, accessed 2 May 2022
184 Melbourne Airport, Melbourne Elevated Road and Forecourt Stage 2 Project: Major Development Plan [PDF], Melbourne
Airport website, 2021, p 5, accessed 2 May 2022.
185 State Government of Victoria, Melbourne Airport Rail Project Overview, n.d., accessed 24 February 2022.

parking and provide taxi and rideshare customers with improved access to the terminal buildings.186
The Federal and Western Australia governments have both funded a new airport-link rail line to
improve access to Perth Airport and this will be in operation in the first half of 2022.187
Sydney Airport has plans to develop additional capacity in each terminal and improve taxiways,
aprons, forecourts and landside infrastructure enhancements. Key capacity upgrades include a new
satellite pier, additional remote aircraft parking and swing gates. Sydney Airport is also planning to
upgrade ground transport access, with a new multi-storey integrated pick-up/drop-off facility and
road upgrades.188
186 Perth Airport, 2020 Master Plan, Perth Airport website, 2020, pp 26, 136, accessed 2 May 2022.
187 Government of Western Australia, Welcome to the Forrestfield-Airport Link Project, Forrestfield-Airport Link website, n.d.,
188 Sydney Airport, 2039 Master Plan, Sydney Airport website, April 2019, pp 14, 20, accessed 4 May 2022.

Appendix A: Landside access options –
access, pricing and facilities
Table A.1: Landside options – Access, pricing and facilities, by airport
Transport Brisbane189 Melbourne190 Perth191 Sydney192
Mode
Terminal The international and Melbourne Airport Perth Airport offers free Sydney Airport offers
pick-up and domestic terminals offer offers a free 1-minute immediate pick-up and free immediate pick-up
drop-off free of charge pick-up pick-up and drop-off drop-off zones at each and drop-off zones
and drop-off zones with zone for all terminals precinct and an express at domestic and
maximum waiting times and a free 15-minute option at T2 allowing international terminals.
of 10 and 30 minutes waiting period inside drivers 5 minutes to The express pick-up
respectively. Drivers the terminal car parks. complete their pick-up zones are free for up to
must remain with their A wait zone is also or drop-off. Long-term 15 minutes.
vehicles when accessing provided near the parking can also be used
these zones. Long-term Car Park for free for less than an
which allows motorists hour.
to wait for 30 minutes at
no charge and up to 60
minutes for $4. Drivers
must remain with their
vehicles when accessing
these zones.
Train Brisbane Airport N/A N/A Both domestic and
is serviced by a international terminals
privately owned and are serviced by rail
operated train service operated by the NSW
called Airtrain that Government, using
is integrated into the privately owned and
suburban train network. operated train stations.
The Airtrain takes A one-way trip for
20 minutes to reach an adult to the CBD
the CBD and also offers costs $19.80 and takes
express services to the roughly 13 minutes.
Gold Coast. The fare is comprised
A single adult fare to of a train fare and
the CBD costs $19.50 an airport station
one way or $37 return. access fee. The NSW
Discounts are available government offers
for online bookings and discounts on the train
for groups. fare if an Opal card or
contactless payment
card is used, and if travel
is in an off-peak period.
The station access fee is
capped weekly.
189 Brisbane Airport, To and From the Airport, Brisbane Airport website, n.d., accessed 24 February 2022.
190 Melbourne Airport, Taxis, Melbourne Airport website, n.d., accessed 24 February 2022.
191 Perth Airport, To and from the airport, Perth Airport website, n.d., accessed 24 February 2022.
192 Sydney Airport, Parking and transport, accessed 24 February 2022.

Public and Brisbane Airport Melbourne Airport Perth Airport does not Sydney Airport charges
private charges a levy on bus charges a levy on bus charge a levy on bus a levy on bus access
buses access depending on access, starting from access. $6.85.
passenger numbers, $3.18 per person. Transperth operates Public buses on
starting from $4.75. Public Transport Victoria buses to and from the route 400 between
Brisbane City Council operates 5 timetabled city, with bus route 380 Bondi Junction and
operates a bus service public bus services from running from the T1/ Eastgardens and 420
within the airport the T4 Ground Transport T2 precinct and bus between Eastgardens
precinct which runs Hub. route 40 from the T3/ and Burwood stop at
to the Toombul There are multiple T4 precinct. Bus route both the T1 international
Interchange. The private buses that 40 offers a direct route and T3 domestic
Interchange provides operate to and from between the airport and terminals. A single ticket
a variety of public Melbourne Airport and the city, whereas route bus fare on this service
transport options to the to areas throughout 380 has other stops. will cost between $2.90
city or the suburbs. metropolitan Melbourne Perth Airport is also and $6.00, however
Private bus operator and across Victoria. serviced by several buses do not travel to
‘Con-X-ion’ offers The main service is the private bus operators the CBD.
door-to-door transfers Skybus service, which connecting the airport A number of private
to or from the Brisbane runs express services to the suburbs and the shuttle bus operators
CBD (from $15 one way regularly to and from city. Private bus fares also service Sydney
or $27 return), Gold the CBD and charges start from $25 for a Airport, including
Coast and Sunshine $19.75 one-way for one-way trip from the Redy2Go and Airport
Coast areas. Skybus adults. airport to the city. Connect, which offer
also offers an express services to the CBD
service to the CBD for starting from $25 one
$15, which takes around way.
38 minutes.
Off-airport Brisbane Airport is Melbourne Airport is Perth Airport is serviced Sydney Airport is
parking serviced by Off-airport serviced by Off-airport by Off-airport parking. serviced by Off-airport
parking. parking. parking.
Taxis Brisbane Airport Melbourne Airport Perth Airport charges a Sydney Airport charges
charges a levy on taxi charges a levy on taxi levy on taxi access from a levy on taxi access
access from $4.00. access from $4.50. $4.00. from $4.75.
Taxis operated by Taxi ranks are located Taxi ranks are located Each terminal at Sydney
Black & White Cabs across from terminals at the front of all Airport has its own
and Yellow Cabs are T1, T2 and T4, and a terminals at Perth sheltered taxi rank. A
available from ranks at pre-booked pick-up Airport, as well as on taxi trip to the CBD
both the domestic and zone is available in Valentine Road within from Sydney Airport
international terminals the outdoor section the General Aviation costs approximately
at Brisbane Airport. of the Terminal Car area. A taxi ride from $45–$55 one way and
A taxi ride for a trip Park at Terminals 1, 2 the airport to the CBD takes approximately
from the airport to & 3. A taxi ride from takes approximately 20 minutes.
Brisbane City costs the airport to the CBD 20 minutes and costs
approximately $45–$55. takes approximately approximately $43 one
Outside of peak periods, 30–40 minutes and way or $86 return.
it is approximately a costs approximately
20-minute drive from $50–$70.
the airport to the city.

Ridesharing Brisbane Airport Melbourne Airport Perth Airport charges a Sydney Airport charges
charges a levy on charges a levy on levy on rideshare access a levy on rideshare
rideshare access from rideshare access from from $4.00. access from $4.35.
$4.00. $4.54. Perth Airport is serviced Both domestic and
Brisbane Airport Melbourne Airport is by rideshare drivers international terminals
has dedicated serviced by rideshare from Uber, Ola and Didi. at Sydney Airport are
pick-up zones for drivers from various The airport provides serviced by rideshare
pre-booked rideshare services, with 2 pick-up dedicated pick-up bays drivers from several
at both domestic and zones available for for rideshare services in services. For both
international terminals. standard services: lane 3 the T1/T2 precinct and the domestic and
A variety of pre-booked of the forecourt in front in the T3/T4 precinct. international terminals,
rideshare operators of T1/T2/T3 and level Charges vary by pre-booked rideshare
service Brisbane Airport, 2 inside the T4 Ground operator. is available from the
including Uber, Ola and Transport Hub. Charges priority pick-up zone.
Didi. Charges vary by vary by operator. Charges vary by
operator. operator.
Private cars Brisbane Airport Melbourne Airport Perth Airport charges Sydney Airport charges
charges a levy on charges a levy on a levy on private car a levy on private car
private car access from private car access from access from $4.00. access from $8.65 for
$4.00. $4.00. Private car (such as Domestic and $11.35 for
Private cars such Chauffeur, hire cars limousines) services International Terminal.
as limousines and and limousines can be can be pre-booked Private car (such as
pre-booked taxis can be pre-arranged to pick-up for pick-up at Perth limousines) services
accessed from Brisbane passengers at any of Airport. Charges vary by can be pre-booked
Airport. Charges vary by the airport’s terminals. operator. at all Sydney Airport
operator. Private cars must be terminals. Limousines
pre-arranged as there are also available for
are no service desks those who have not
at the airport. Charges booked inside the
vary by operator. arrivals area of T1
international. Sydney
Airport provides
dedicated pickup
areas for Limousines
and Hire Cars at both
the International and
Domestic terminals.
Charges vary by
operator.
Bicycle Brisbane Airport Bicycle racks are located N/A Sydney Airport provides
provides bicycle racks on the ground floor of undercover bicycle
at both the international the T1, T2 and T3 car racks on level 1 of the
and domestic terminal park. T1 international terminal
car parks, as well as and adjacent to the
shower facilities at both express pick-up area
terminals. in the T2/T3 domestic
precinct.

Table A.2: Landside information reporting, by airport
Transport Mode Access Brisbane Melbourne Perth Sydney

information
Train Throughput N/A No train access No train access N/A
Revenue ✓ No train access No train access N/A
Public bus Throughput N/A ✓ N/A N/A
Revenue ✓ N/A No airport charge No airport charge
Private bus Throughput Combined with Number of N/A Combined with
private car arriving and off-airport bus
departing
passengers on
SkyBus, Gull and
Donloy services.
Combined with
off-airport bus.
Revenue Combined with ✓ No airport charge Combined with
private car off-airport bus
Off-airport Throughput ✓ Number N/A Combined with
parking bus of bussing private bus
transactions
from Groups
and Charter and
Regional (from
BPS rates).
Combined with
private bus
Revenue ✓ ✓ No airport charge Combined with
private bus
Taxis Throughput ✓ ✓ ✓ ✓
Revenue ✓ ✓ ✓ ✓
Rideshare Throughput Includes limousine ✓ ✓ Priority pickup
and pre-booked including rideshare
taxi
Revenue Includes limousine ✓ ✓ Priority pickup
and pre-booked including rideshare
taxi
Private car Throughput Combined with ✓ ✓ ✓
private bus
Revenue Combined with ✓ ✓ ✓
private bus
Car Rental Throughput N/A N/A ✓ ✓
Operators
Revenue N/A N/A ✓ ✓
All Expenses ✓ N/A ✓ ✓

Appendix B: Supplementary results
Total airport financial performance
Return on total airport tangible non-current assets
Table B.1: Return on total airport tangible non-current assets, by airport: 2018–19 to 2020–21
Airport Airport ROA Airport ROA Percentage point Percentage point

ROA in in 2019–20 in 2020–21 change: 2018–19 to change: 2019–20 to
2018–19 (%) (%) (%) 2019–20 2020–21
Melbourne Airport 11.46 5.94 -1.81 -5.51 -7.75
Perth Airport 8.27 4.29 0.93 -3.98 -3.36
Sydney Airport 17.06 10.72 2.66 -6.34 -8.06

Aeronautical performance
Aeronautical list prices
Brisbane Airport
Table B.2: Brisbane Airport – schedule of published aeronautical charges in real terms and movements
over time: 2016–17 to 2020–21
Charge per
Indexed list prices
unit ($)
(2020–21 base year = 100)
2020–21 2016–17 2017–18 2018–19 2019–20 2020–21
Landing fees
Freight landing fees (per MTOW) 27.90 70.5 81.5 90.0 100.3 100.0
General aviation landing fees (per MTOW) 27.90 70.5 81.5 90.0 100.3 100.0
Rotary wing landing fees (per MTOW) 16.73 70.5 81.5 89.9 100.3 100.0
International private charter and non scheduled
air service landing fee (per MTOW) 27.90 70.5 81.5 90.0 100.3 100.0
Aircraft parking fees
0 to 5,000kg 118.46 90.9 97.2 96.8 99.1 100.0
5,001 to 20,000kg 118.46 93.6 97.2 96.8 99.1 100.0
20,001 to 40,000kg 118.46 97.0 97.2 96.8 99.1 100.0
40,001 to 100,000kg 173.32 97.9 97.2 96.8 99.1 100.0
100,001 to 250,000kg 395.53 97.9 97.2 96.8 99.1 100.0
250,001 to 400,000kg 575.36 97.9 97.2 96.8 99.1 100.0
400,001kg + 762.28 97.9 97.2 96.8 99.1 100.0
Noise surcharge for relevant aircraft – excluding
Goods and Services Tax 0% 100.0 100.0 100.0 100.0 0.0
Runway Charges
Domestic Runway charge (per passenger) 6.55 55.3 70.4 84.3 98.7 100.0
International Runway charge (per passenger) 11.48 55.8 73.3 88.1 100.2 100.0
Terminal charges
International passenger service charge (per
passenger) 26.99 88.3 108.1 105.6 99.0 100.0
Domestic passenger service charge common
user terminal – including aerobridge (per
passenger) 8.55 105.1 114.5 110.1 99.8 100.0
Domestic passenger service charge common
user terminal – excluding aerobridge (per
passenger) 8.09 103.2 111.6 108.9 99.8 100.0
Government mandated security charges
International passenger government mandated
security charge (per passenger) 25.05 15.0 14.7 16.3 15.3 100.0
Domestic passenger government mandated
security charge common user terminal (per
passenger) 4.16 62.9 60.4 63.2 60.0 100.0
Domestic passenger government mandated
security charge Qantas/Virgin terminal (per
passenger) 4.16 3.8 5.0 54.7 60.0 100.0
Other charges
Peak period minimum movement charge 275.00 85.4 104.7 103.0 101.6 100.0

Melbourne Airport
Table B.3: Melbourne Airport – schedule of published aeronautical charges in real terms and movements
over time: 2016–17 to 2020–21
Charge per
Indexed list prices
unit ($)
(2020–21 base year = 100)
2020–21 2016–17 2017–18 2018–19 2019–20 2020–21
Landing fees
International terminal
(per passenger) 24.58 100.3 97.4 94.2 96.0 100.0
Other (domestic services under the ASA)
(per passenger) 5.59 92.3 89.6 86.7 92.4 100.0
Common-user domestic terminals (walk-up rate)
(per passenger) 6.70 98.0 98.5 99.1 98.9 100.0
International freight (per MTOW) 12.54 92.1 90.4 93.4 96.8 100.0
Domestic freight (per MTOW) 12.54 92.1 90.4 93.4 96.8 100.0
General aviation (per MTOW) 23.53 92.2 90.4 93.4 96.8 100.0
Aircraft parking (per 15 minutes) 53.39 92.2 90.4 93.4 96.8 100.0
Check-in desks (per hour) 36.38 104.8 97.2 98.0 99.1 100.0
Minimum charges
International and domestic freight (per landing) N/A N/A N/A N/A N/A N/A
General aviation (per landing) 349.94 92.2 90.4 93.4 96.7 100.0
International terminal passenger and baggage
screening
(per passenger) 21.54 21.6 21.1 19.9 19.3 100.0
Common user domestic terminals passenger and
baggage screening
(per passenger) 7.66 52.1 48.6 45.3 53.6 100.0
Airport security charge – passengers (per
passenger) 1.14 19.6 19.2 28.0 50.8 100.0
Airport security charge – freighters and general
aviation (per MTOW) 3.02 7.4 7.3 10.1 14.0 100.0

Perth Airport
Table B.4: Perth Airport – schedule of published aeronautical charges in real terms and movements over
time: 2016–17 to 2020–21
Charge per
Indexed list prices
unit ($)
(2020–21 base year = 100)
2020–21 2016–17 2017–18 2018–19 2019–20 2020–21
Landing fees
Basic landing charge
International regular passenger transport
(per arriving and departing passenger) 6.87 69.0 71.4 89.0 99.1 100.0
Domestic and regional regular passenger
transport (per arriving and departing
passenger) 6.87 69.0 71.4 89.0 99.1 100.0
Fixed wing (GA, freight and other) (per
tonne MTOW) 12.51 73.9 72.7 89.1 99.2 100.0
Rotary wing (per tonne MTOW) 6.61 69.9 68.8 84.2 93.7 100.0
Minimum landing charge
Fixed wing (per landing) 58.22 73.9 72.9 89.1 99.1 100.0
Rotary wing (per landing) 29.11 73.9 72.7 89.1 99.1 100.0
Basic aircraft parking charge (GA) (per
aircraft per day) 52.01 73.9 72.8 89.1 99.1 100.0
Aircraft storage charge 14.15 73.9 72.7 89.1 99.1 100.0
Peak-period minimum movement charge (on
airfield usage)(a) 259.78 101.2 90.6 98.0 99.1 100.0
Passenger-related services and facilities
International terminal charge (per arriving
and departing passenger) 11.90 113.1 114.9 102.9 94.2 100.0
Common user terminal equipment (CUTE)
usage charge (per departing international
passenger) N/A N/A N/A N/A N/A N/A
Domestic terminal charge (per per arriving
and departing passenger) 12.68 144.8 145.6 89.1 99.1 100.0
Counter terrorism first response – regular
passenger transport (per passenger) 1.36 87.0 93.9 90.7 99.2 100.0
Counter terrorism first response – freight
and other (aircraft > 20 tonne) (per tonne
MTOW) 3.13 35.5 38.3 36.9 40.4 100.0
International passenger and checked bag
screening (per departing international
passenger) 19.85 32.2 22.1 27.9 29.9 100.0
Common user domestic terminal passenger
and checked bag screening (per departing
domestic passenger) 3.63 152.2 140.4 99.4 99.2 100.0

Sydney Airport
Table B.5: Sydney Airport – schedule of published aeronautical charges in real terms and movements over
time: 2016–17 to 2020–21
Charge per
Indexed list prices
unit ($)
(2020–21 base year = 100)
2020–21 2016–17 2017–18 2018–19 2019–20 2020–21
International passenger services charge
(per passenger)(a)* 35.65 89.9 92.2 96.6 100.0 100.0
Domestic passenger services charge (per
passenger)(b)* 5.90 87.3 91.2 97.0 99.6 100.0
Runway charge – non-passenger
movements and GA (per MTOW)* 7.25 88.3 94.8 97.3 99.8 100.0
Runway charge – regional services (per
MTOW)** 3.78 106.6 104.7 103.0 101.6 100.0
Landing charge – rotary wing (per
movement) 33.00 106.7 104.7 103.0 101.6 100.0
Apron charge – major aprons (per
15 minutes) 38.50 106.7 104.7 103.0 101.6 100.0
Apron charge – GA aprons – regional
services (per day) 66.00 106.7 104.7 103.0 101.6 100.0
Apron charge – GA aprons – 0 to 20
tonnes (per day) 154.00 106.7 104.7 103.0 101.6 100.0
Apron charge – GA aprons – 20 to 40
tonnes (per day) 209.00 106.7 104.7 103.0 101.6 100.0
Apron charge – GA aprons – greater than
40 tonnes (per day) 308.00 106.7 104.7 103.0 101.6 100.0
Commercial
Domestic terminal infrastructure charge
agreement N/A N/A N/A N/A N/A
Commercial
Aircraft refuelling services
Commercial
T3 domestic terminal infrastructure agreement N/A N/A N/A N/A N/A
Commercial
Light and emergency aircraft maintenance
Aeronautical services – passenger
processing facilities and activities
International security charges – including
passenger screening, checked bag
screening and additional security measures
(per passenger)(c) 17.33 28.9 28.7 28.5 26.8 100.0
T2 domestic passenger facilitation charge
(per passenger)(d) 9.44 106.7 104.7 103.0 101.6 100.0
T2 regional passenger facilitation charge
(per passenger)(d) 4.95 106.7 104.7 103.0 101.6 100.0
T2 domestic security charges – including
passenger screening, checked bag
screening and additional security measures
(per passenger)(e) 2.37 73.6 78.6 78.0 74.6 100.0
T2 regional security charges – including
passenger screening and checked bag
screening (per passenger)(f) 0.96 107.0 104.7 103.0 101.6 100.0
T2 new investment charge (per passenger)
(g) 0.44 106.7 104.7 103.0 101.6 100.0
International check-in counters (per hour) 27.78 98.8 99.3 99.6 99.6 100.0

Terminal access roads (per vehicle –
various charges)(h) 4.00 106.7 104.7 103.0 101.6 100.0
Minimum charges
Minimum charge for runway use
(per movement) 66.00 106.7 104.7 103.0 101.6 100.0
Minimum charge for regional services
(0 – 5 tonnes) 22.00 106.7 104.7 103.0 101.6 100.0
Minimum charge for regional services
(5 – 10 tonnes) 45.38 106.7 104.7 103.0 101.6 100.0
Minimum charge for regional services (over
10 tonnes) 55.00 106.7 104.7 103.0 101.6 100.0
* Minimum charge for runway use is applicable.
** Minimum charge for regional air services is applicable.
(a) Charged per arriving and departing international passenger, excluding transfer and transit passengers, and infants
and positioning crew. Applies to runway use and terminal facilities.
(b) Charged per arriving and departing domestic passenger, excluding infants and positioning crew. Applies to runway
use, however, commercially agreed charges also applied.
(c) Charged as a component of the international PSC, and recovers the cost of passenger screening, checked bag
screening and additional security measures. This charge includes an element that relates to security charges.
(d) Levied per arriving and departing passenger, excluding infants and positioning crew. This is a scheduled charge –
specific arrangements apply under commercial agreements with major users.
(e) Applies to domestic users of T2 to recover the cost of passenger, checked bag screening and additional security
measures. This charge includes an element that relates to security charges – note comments in (d).
(f) Applies to regional users of T2 to partly recover the cost of passenger and checked bag screening.
(g) Levied per arriving and departing domestic passenger in T2.
(h) Levied on vehicle pick-ups to recover costs associated with the provision of ground access facilities.
On-time performance
Figure B.1: Percentage of domestic flight that are delayed for the 4 monitored airports: 2007–08 to
2020–21
30%
25%
Domestic flights delayed (%)
20%
15%
10%
5%
0%
2007–08
2008–09
2009–10
2010–11
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Source: BITRE.

Non-aeronautical performance
Car parking revenue per vehicle
Figure B.2: Brisbane Airport – average car parking revenue, costs and profit per car in real terms, 2011–12 to
2020–21
50
40
Dollars per car ($)
30
20
10
0
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Revenue per car Expenses per car Profit per car
Figure B.3: Melbourne Airport – average car parking revenue, costs and profit per car in real terms, 2011–12
to 2020–21
100
80
60
Dollars per car ($)
40
20
-20
-40
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21

Figure B.4: Perth Airport – average car parking revenue, costs and profit per car: 2011–12 to 2020–21
70
60
50
Dollars per car ($)
40
30
20
10
0
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Figure B.5: Sydney Airport – average car parking revenue, costs and profit per car in real terms, 2011–12 to
2020–21
90
80
70
60
Dollars per car ($)
50
40
30
20
10
0
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21

Short-term car park pricing
Figure B.6: Brisbane Airport – selected short-term drive-up car parking prices in real terms – at terminal:
30 June 2008 to 30 June 2021
70
60
50
40
Price ($)
30
20
10
0
30–Jun–08
30–Jun–09
30–Jun–10
30–Jun–11
30–Jun–12
30–Jun–13
30–Jun–14
30–Jun–15
30–Jun–16
30–Jun–17
30–Jun–18
30–Jun–19
28–Mar–20
30–Jun–21
30 mins to 1 hour 1 to 2 hours 2 to 3 hours 3 to 4 hours 4 to 24 hours
Figure B.7: Melbourne Airport – selected short-term drive-up car parking prices in real terms – at terminal:
30 June 2008 to 30 June 2021
70
60
50
40
Price ($)
30
20
10
0
30–Jun–08
30–Jun–09
30–Jun–10
30–Jun–11
30–Jun–12
30–Jun–13
30–Jun–14
30–Jun–15
30–Jun–16
30–Jun–17
30–Jun–18
30–Jun–19
28–Mar–20
30–Jun–21

Figure B.8: Perth Airport – selected short-term drive-up car parking prices in real terms – at terminal:
30 June 2008 to 30 June 2021
60
50
40
Price ($)
30
20
10
0
30–Jun–08
30–Jun–09
30–Jun–10
30–Jun–11
30–Jun–12
30–Jun–13
30–Jun–14
30–Jun–15
30–Jun–16
30–Jun–17
30–Jun–18
30–Jun–19
28–Mar–20
30–Jun–21
Figure B.9: Sydney Airport - selected short-term drive-up car parking prices in real terms – at terminal:
30 June 2008 to 30 June 2021
70
60
50
40
Price ($)
30
20
10
0
30–Jun–08
30–Jun–09
30–Jun–10
30–Jun–11
30–Jun–12
30–Jun–13
30–Jun–14
30–Jun–15
30–Jun–16
30–Jun–17
30–Jun–18
30–Jun–19
28–Mar–20
30–Jun–21
up to 30 minutes 30 minutes to 1 hour 1 to 2 hours 2 to 3 hours 3 to 24 hours

Long-term car park pricing
Figure B.10: Brisbane Airport - selected long-term drive-up car parking prices in real terms – at terminal:
30 June 2016 to 30 June 2021
160
140
120
Price ($)
100
80
60
40
20
0
30–Jun–16 30–Jun–17 30–Jun–18 30–Jun–19 28–Mar–20 30–Jun–21
Figure B.11: Melbourne Airport – selected long-term drive-up car parking prices in real terms – at terminal:
30 June 2008 to 30 June 2021
120
100
80
Price ($)
60
40
20
0
30–Jun–08
30–Jun–09
30–Jun–10
30–Jun–11
30–Jun–12
30–Jun–13
30–Jun–14
30–Jun–15
30–Jun–16
30–Jun–17
30–Jun–18
30–Jun–19
28–Mar–20
30–Jun–21

Figure B.12: Perth Airport – selected long-term drive-up car parking prices in real terms – at terminal:
30 June 2008 to 30 June 2021
160
140
120
100
Price ($)
80
60
40
20
0
30–Jun–08
30–Jun–09
30–Jun–10
30–Jun–11
30–Jun–12
30–Jun–13
30–Jun–14
30–Jun–15
30–Jun–16
30–Jun–17
30–Jun–18
30–Jun–19
28–Mar–20
30–Jun–21
Figure B.13: Sydney Airport – selected long-term drive-up car parking prices in real terms – at terminal:
30 June 2008 to 30 June 2021
180
160
140
120
100
Price ($)
80
60
40
20
0
30–Jun–08
30–Jun–09
30–Jun–10
30–Jun–11
30–Jun–12
30–Jun–13
30–Jun–14
30–Jun–15
30–Jun–16
30–Jun–17
30–Jun–18
30–Jun–19
28–Mar–20
30–Jun–21

Landside access fees
Private cars
Figure B.14: Landside access fees for private cars in real terms, by airport: 2009–10 to 2020–21
14
Landside access fees for private cars ($)
12
10
0
2009–10
2010–13
2011–12
2012–13
2013–14
2014–15
2015–16
2016–17
2017–18
2018–19
2019–20
2020–21
Brisbane Melbourne Perth Sydney

Notes: Real values in 2020–21 dollars. For 2009–10 and 2011–12, relevant price information for Brisbane Airport were not
available.
Private buses
Table B.6: Brisbane and Melbourne airports – Private bus landside access fees in real terms, 2009–10 to
2020–21
2009–10 2010–11 2011–12 2012–13 2013–14 2014–15 2015–16 2016–17 2017–18 2018–19 2019–20 2020–21
Brisbane NA 8.66 NA 9.56 9.30 9.37 9.47 9.55 9.56 9.58 9.65 9.50
Airport –
Private bus
($)
Melbourne Various Various Various Various Various 3.30 4.18 4.51 4.65 4.66 4.67 4.60
Airport –
Private bus
($)
Notes: Real values in 2020–21 dollars.

Appendix C: Background information
Methodology
This chapter explains the methodology used by the ACCC in preparing the measures used in this report
for monitoring prices, costs and profits, financial reporting and quality of service.
Further information can be found in the following publications on the ACCC website:
Airport prices monitoring and financial reporting guideline193
Guideline for quality of service monitoring at airports.194
Prices, costs and profits

The monitoring results in this report relate to the financial performance of the monitored airports
including prices, costs and profits. While these results may serve as indirect indicators of economic
efficiency, they do not indicate conclusively whether or not airports are exercising their market power to
earn monopoly rents.
Aeronautical and total airport measures

The ACCC uses aeronautical revenue per passenger as an indicator of airports’ average prices, and
profits and returns on aeronautical assets as an indicator of airports’ profitability. The ACCC also reports
on total airport revenue, costs and profits.
There have been some changes in the scope of aeronautical services in the past. This has resulted in the
inclusion of revenue of some services such as aircraft refuelling in airports’ regulatory accounts, which
were previously excluded.195 This is one of the issues that affects the comparison of data across airports
and over time.
Prices
The ACCC uses aeronautical revenue per passenger as a proxy measure of changes in average airport
prices. The ACCC has reported on changes in this measure since 2003–04.
Ideally the ACCC would use a direct measure of prices in the form of a price index. However, in most
cases it is not possible for the ACCC to compile such an index. For example, the price of using an airport
cannot simply be measured by adding up the different charges in place at a given point in time because
charges can be levied on different bases – such as on a per passenger basis or by aircraft weight. Also,
airports might offer discounts for certain periods or to certain users, or there might be charges in place,
which affect some users but not others.
In addition, the price changes for particular airport users may vary depending on the composition of the
airport services they utilise and the times at which they use them. For example, the costs of a domestic
flight to an airline are likely to be different to those associated with an international flight due to differing
security and processing requirements. Similarly, changes in price structure imposed by an airport might
affect users in different ways, such as lowering the costs for one user while raising them for another.
193 Available at https://www.accc.gov.au/publications/airport-prices-monitoring-financial-reporting-guideline.

194 Available at https://www.accc.gov.au/publications/guideline-for-quality-of-service-monitoring-at-airports.
195 Brisbane, Perth and Sydney airports treated the revenue they derived from aircraft refuelling as non‑aeronautical under
Direction 27 (1 July 2002 to 30 June 2007), while subsequent Directions required aircraft refuelling to be included as
aeronautical revenue.

Costs and profits
While there are many profitability measures, the ACCC uses earnings before interest, tax and
amortisation (EBITA). This measure takes into account depreciation costs. EBITA is reported separately
for the total airport and a business component such as aeronautical or car parking operations. The
ACCC also reports operating profit as a percentage of revenue (operating profit margin).
The ACCC has reported on changes in aeronautical operating expenses per passenger and aeronautical
profit per passenger since 2002–03. Aeronautical profit excluding security costs is not discussed in
this report because government mandated security revenue is set to recover the costs associated with
security services and does not affect the overall profitability of airports.
EBITA provides a measure of airport operating performance, as distinct from financial performance. It
is useful for revealing trends in operating performance over time. However, as a measure of profitability
it does not consider the full capital cost associated with the provision of services. Since it also includes
non-cash items such as depreciation, operating margin does not provide a measure of net cash flow
from airport operations either.
Rates of return
Rate of return measures can also inform analyses of profitability. The rate of return measure used
by the ACCC in this report is ‘return on assets,’ which may be expressed in a number of forms (for
example, pre- or post‑tax returns, and including or excluding interest expenses and/or depreciation and
amortisation). The ACCC’s approach to calculating rates of return in this report is discussed below.
Since rate of return measures can be susceptible to assets revaluations made by individual airports,
the ACCC uses the line-in-the-sand approach (discussed below) to asset valuations that removes the
effects of such revaluations.
Return on assets
This report also looks at the rate of return that airports earn from their assets. This measure consists of
EBITA on the average value (of opening and closing balances) of tangible non‑current assets. The ratio
provides a measure of the efficiency with which an entity uses its assets to produce operating profit
before interest, tax and amortisation. Given the limitations in using a return on equity measure for the
monitored airports, the ACCC considers that a return on assets measure is a more useful indicator of an
airport’s rate of return and operating performance.
EBITA on average tangible non-current assets is not affected by management decisions regarding
capital structure, which can significantly affect interest expenses and tax payable, and therefore
post-tax returns. Financing decisions do not reflect the operating profitability of providing airport
services. Therefore, measures of EBITA on average tangible non-current assets allow for a more
comparable basis for comparing operating performance across airports.
Non-tangible assets are excluded to limit the extent to which airport owners’ expectations of growth in
value (as reflected in goodwill or lease premiums) may obscure changes in the profitability of providing
services. In particular, lease premiums paid could reflect the expectation of future price and profit
increases that take advantage of airports’ monopoly power.
While having some advantages, measures of return on assets also have their limitations. For example,
they are affected by the airport operator’s valuation of its assets. Since the ACCC’s monitoring regime
commenced, a number of airports have revalued their assets upwards, thereby lowering the measure
of return on assets. A line-in-the-sand (LIS) measure was introduced in 2007–08 to reduce the effect of
such revaluations.
Finally, in preparing this report the ACCC has not assessed the appropriateness of airport asset
valuations as it has done in some other industries where prices are regulated. However, this report does
provide details of asset values reported by airports over time.

LIS aeronautical asset base
The ACCC has required airport operators to report under the LIS approach since 2007–08.196 Under this
approach, the value of an airport’s aeronautical asset base is determined to be the value of tangible
non-current assets as of 30 June 2005197, adjusted for depreciation, additions (or new investment) and
disposals for subsequent reporting periods. This information was required in addition to the airport
operators’ regulatory accounts based on Australian International Financial Reporting Standards (AIFRS)
(which include any revaluations to the assets recorded since 30 June 2005).
The LIS approach removes the effect of revaluations of aeronautical assets by airports for monitoring
purposes from 30 June 2005 onwards. For example, an upward revaluation of a tangible non-current
aeronautical asset occurring after 30 June 2005 would be recognised in the regulatory accounts
prepared under AIFRS but not in the LIS asset base. As a result, to the extent that subsequent
revaluations have taken place, the LIS asset base is lower. There is also a flow-on effect of a lower value
of depreciation under the LIS approach and, therefore, lower operating expenses.
Previously where applicable, the ACCC has provided details of the LIS values in the price monitoring
section of this report and comments in relation to the effect of reporting the data on this basis. So far,
only Brisbane Airport and Sydney Airport have revalued their assets since 30 June 2005. Since the
2016–17 airport monitoring report, the ACCC has stopped reporting non-LIS values and has only used
the LIS values in its reporting.
Airport car parking

The ACCC monitors and reports on airport car parking prices, revenue, costs and profits (in real terms)
under a direction issued on 12 June 2012 pursuant to s. 95ZF of Part VIIA of the CCA. The ACCC also
reports on changes in the supply of airport car parking and the quality of airport car parking services.
In addition to drive-up rates, the ACCC commenced collecting prices for booking airport car
parking online for the 2014–15 report following consultation with the monitored airports. The
ACCC has compared drive-up, online and the average of these 2 charges that customers pay at the
monitored airports.
Landside access charges and revenues

The ACCC also collects information on landside access charges and revenues although it is not required
to do so under a ministerial direction. Access to airport land and in particular, landside areas controlled
by airport operators is a necessary input in the supply of downstream services such as taxis, buses and
off-airport parking. The suppliers of these services require landside access to drop-off and/or pick-up
airport users at the terminals.
As a result, airports may have incentives to obstruct competition from alternative transport modes to
on-airport car parking by imposing excessive charges or restrictive terms and conditions for landside
access. Such behaviour may shift demand to an airport’s own car parking services. Therefore, the
ACCC also collects information about airports’ charges for operators who provide competing services
to on-airport car parking as well as the amount of revenue received from those operators.
196 This approach was recommended by the PC in its 2006 inquiry and was supported by the government. The PC said
that some airports revalued assets for a range of non-price reasons and the intention of revaluations is ‘to provide a
justification for higher charges at some stage in the future’. The PC considered that it was inappropriate to base increases in
aeronautical charges on asset revaluations.
197 Airport revaluations that occurred prior to the 30 June 2005 cut-off date remain in the LIS asset base.

Quality of service
Quality of service monitoring complements price monitoring because, instead of increasing prices, an
airport with market power may decide to cut costs by lowering its service standards.
The ACCC monitors the quality of service at the facilities that are subject to price monitoring, including:
airside facilities such as runways, taxiways and aprons
terminal facilities such as international departure lounges and baggage systems
car parking
taxi facilities and kerbside pick-up and drop-off points.
However, domestic terminals leased to airlines are not within the scope of the quality of service
monitoring program.
Further information on the ACCC’s approach can be found in the Guideline for quality of service
monitoring at airports on the ACCC website.
Issues concerning interpretation of results

A variety of factors outside the immediate control of the airport operator may influence the quality of
service results. For example, the staffing and provision of IT equipment for check‑in services by airlines
and the staffing by the on-airport government border agencies may affect the quality of experience for
passengers as they pass through an airport. This in turn may influence those passengers’ ratings of the
airport. Airservices Australia, airlines and other service providers may also affect quality outcomes such
as causing delays in aircraft departure.
In addition, investment in terminal infrastructure is ‘lumpy’ and there may be a lag between an increase
in passenger and flight numbers and an increase in the capacity of airport infrastructure. Such a lag
could highlight capacity constraints reflected in the quality of service indicators and therefore identify
areas for increased investment.
To inform its analysis of the monitoring data, the ACCC provides airports with the opportunity to explain
where there have been mitigating circumstances influencing the results of monitoring.
Sources of information
The quality of service analysis in this report draws on information from a number of different sources.
These sources include airport operators’ surveys of passengers, airlines and landside operators.198
Airport operators
Airport operators provide the ACCC with a range of objective data related to the number or size of
various facilities and throughput at those facilities. These include the number of passengers at peak
hours, the number of aerobridges and the size of gate lounges. The ACCC has converted these
numbers and sizes to indicators of quality of service, such as the number of passengers per square
metre of lounge area during peak hour.
The derived objective indicators are shown in charts in the body of the report. The data on which these
objective indicators are based can be found in a spreadsheet on the ACCC’s website http://www.
accc.gov.au/regulated-infrastructure/airports-aviation/airports-monitoring. Measures relating to the
size of facilities are generally presented as at the end of the relevant financial year, whereas measures
of throughput – such as numbers of passengers or bags – relate to the whole financial year, unless
otherwise specified (such as daily or during peak hour).
198 Landside operators include taxi and bus industry bodies, as well as off-airport car parking operators.

Passenger perception surveys
The passenger perception surveys are arranged by each airport and may differ in their coverage and
detail. However, these surveys should provide information consistent with that specified in the Airports
Regulations and quality of service guidelines. The areas covered include passenger check-in, security
clearance, government inspection, gate lounges, washrooms, baggage processing and trolleys, signage
and wayfinding, car parking and airport access for arriving and departing passengers.
These surveys ask respondents to rate their level of satisfaction with the airport facilities on a scale from
1 to 5 (table B.1). These are then converted into 5 ratings ranging from ‘very poor’ to ‘excellent’.
Table B.1: Ratings of satisfaction for airport facilities and services
Scales 1–1.49 1.50–2.49 2.50–3.49 3.50–4.49 4.5–5

Average ratings Very poor Poor Satisfactory Good Excellent
The average ratings for each indicator in the passenger perception surveys are shown for each
airport. The average ratings for domestic terminals and international terminals are presented over time
where possible.
Airline surveys
The ACCC conducts an annual survey of airlines about their perception of the quality of facilities they
used at the monitored airports. Questions relate to both terminal facilities (aerobridges, check-in
and baggage processing) and airside facilities (runways, taxiways, aprons, aircraft gates and ground
equipment sites). Airlines are asked to rate 2 aspects of these facilities:
availability – that is, the availability of infrastructure and equipment and the occurrence of delays in
gaining access to those facilities
standard – that is, the ability of equipment to perform the function intended, the reliability of the
equipment and the probability of it breaking down.
Airlines are also asked to rate the airport operator’s responsiveness or approach to addressing problems
and concerns with the above facilities. Full details of the questions are contained in a spreadsheet
on the ACCC’s website http://www.accc.gov.au/regulated-infrastructure/airports-aviation/airports-
monitoring.
The scale used for airline ratings is the same as that of the passenger perceptions surveys and shown
in table B.1. Ratings given by airlines were averaged across airlines to give an average rating for each
facility at each airport. The rating given by each airline is given equal weight, regardless of the number
of passengers flown or flights. Airlines are also given the opportunity to provide an explanation of
their ratings.
Given that airlines may potentially have an incentive to deliberately under-report quality for airports,
the ACCC verifies airlines’ responses when needed. In particular, if an airline gives an airport a rating
of below ‘satisfactory’, the ACCC will seek comments and additional information from the airline, and
provide the relevant airport operator with an opportunity to respond to non-confidential commentary
by airlines.
Under the ACCC monitoring regime, airlines are not required to provide survey information for the
domestic facilities they operate themselves under domestic terminal leases.
Because airline surveys are conducted on a voluntary basis, airlines’ participation in the ACCC’s survey
varies each year with typically only a small number of responses received by the ACCC. As a result,
service quality ratings obtained from airline survey results tend to vary more than passenger ratings.
This may impact on the reliability of the overall service quality ratings for the monitored airports.

Calculating overall quality of aeronautical service ratings for each airport
For each airport, the ACCC calculates a single overall quality of service rating in relation to total services
at the airport. As for each of the many specific measures of quality of service, the overall rating is
a score out of 5. A score of between 1 and 1.49 represents ‘very poor’ performance, while a score
between 4.50 and 5 represents ‘excellent’ performance.
The overall rating is calculated using a combination of the results from airline surveys, passenger
surveys, and objective indicators (for example, the number of departing passengers per check-in desk,
kiosk and bag drop facility during peak hour).
The overall rating is the simple average of the scores that the airport achieved against each of the
specific quality of service measures from airline surveys, passenger surveys and objective indicators.
For example, Sydney Airport scored an average of 3.60 across 105 performance measures in 2018–19.
Among those measures, 30 were obtained from airline surveys, 48 were from passenger surveys and
the remaining 27 were objective indicators.
While airports’ performance against the quality of service measures in the airline surveys and passenger
surveys are already rated as scores out of 5, ratings of performance against objective indicators need to
be calculated.
This process consists of producing a set of benchmarks for each measure based on how the 4 airports
performed against that measure. If an airport’s performance against that measure is equal to the
average performance across the 4 airports in that year, it will receive a score of 3 out of 5. If an airport
performs better than the benchmark average, it will receive score of 4 or 5 depending how close its
performance is compared to the benchmark. Similarly if its performance is below the benchmark, it will
be rated 1 or 2.
An implication of this methodology is that an airport’s rating with respect to objective indicators is
relative to that of the other 3 airports. This means an airport can report the same raw performance
figures to the ACCC as the previous year, but find its rating for that measure going up or down. It also
means that it is not possible for all airports to be rated highly or rated poorly. This is not the case for an
airport’s ratings based on airline and passenger surveys, which are independent of ratings given to the
other airports.
Limitations of monitoring
Monitoring does not directly restrict airports from increasing prices and/or lowering service quality. Nor
does it provide the ACCC with a general power to intervene in airports’ setting of terms and conditions
of access to airports’ infrastructure.
In addition, the ACCC’s monitoring of airports is limited in scope and does not enable the ACCC to
assess in detail whether an airport has exercised market power to earn monopoly profits.
Monitoring information cannot be used to assess the appropriateness of the level of

prices and profits
When assessing the level of prices and profits, it is common regulatory practice to undertake an
assessment of the firm’s economic returns against their efficient long-run costs of providing services.
This may involve a public process to rigorously determine an economic value of the firm’s asset base
(that is, the regulatory asset base (RAB)) and the firm’s required rate of return on capital (that is, the
weighted average cost of capital).
In the case of airports, however, the benchmark for efficient long run costs has not been set. Instead,
airports’ asset values under monitoring are based on their accounting values rather than their
economic value. Importantly, the accounting value of assets may include revaluations that have been
undertaken at airports’ discretion and that can distort assessments of airports’ performance. For
example, in some years, some airports have revalued their assets upwards, which lowers their return
on assets. Consequently, airports’ asset values under monitoring do not provide a reliable indicator
of airports’ RAB, which is needed to make a meaningful assessment of whether airports are earning
monopoly rents.

As discussed earlier, the ACCC has adopted the ‘line-in-the-sand’ approach since 2007–08 to address
the issues associated with airports revaluing their assets. However, this approach only removes any
asset valuations that have occurred after 30 June 2005.
Judgement about airports’ performance cannot be made based on trends in

airports’ prices, profits and quality of service alone
An airport that is already pricing at or near monopoly levels may only report gradual increases in prices
and profitability over time. Therefore, trends in prices and profitability alone cannot tell us conclusively
whether an airport is extracting monopoly profits. Further, monitoring cannot clearly distinguish
between various factors that may contribute to increasing profitability, some of which may raise cause
for concern about an airport’s performance while others may not. For example, increasing profitability
by increasing prices whilst lowering or holding constant quality of services over a sustained period of
time may indicate an airport exercising market power, which may be a concern. In contrast, increasing
profitability due to increased efficiency in operations or economies of scale may not necessarily
raise concerns.
Monitoring does not provide meaningful comparisons of the prices, profits and
quality of service across airports
Because airports’ approaches to valuing their assets may vary, it is difficult to meaningfully compare
profitability between airports based on reported return on assets. There are also some other specific
reasons that make comparisons difficult.
In the case of airport car parking, the range of services provided by airports varies significantly with
some parking provided in close proximity to the airport terminals for convenience, while some car
parking is located at a distance from the terminals. Comparisons of airport car parking prices, revenues,
costs and profits are therefore complicated by these various car parking configurations.

Ministerial directions
Aeronautical services and facilities direction under s. 95ZF of the
Competition and Consumer Act 2010 (CCA)

Car parking services direction under s. 95ZF of the CCA


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Airport monitoring

Airport Monitoring Report 2020–21 viii

Key performance indicators for 2020–21 10

2. Negotiation of aeronautical service agreements 25

3. Total airport operational and financial performance 44

iii Airport monitoring report 2020–21

8. Investments by monitored airports 99

Appendix A: Landside access options – access, pricing and facilities 112

Appendix B: Supplementary results 116

Appendix C: Background information 129

iv Airport monitoring report 2020–21

v Airport monitoring report 2020–21

vi Airport monitoring report 2020–21

vii Airport monitoring report 2020–21

viii Airport monitoring report 2020–21

ix Airport monitoring report 2020–21

1 Airport monitoring report 2020–21

Table 1: Total operating profit and margin, by airport: 2018–19 to 2020–21

Airport profit ($millions) Airport profit margin (%)

2 Airport monitoring report 2020–21

3 Airport monitoring report 2020–21

Figure 2: Aeronautical profit margins, by airport: 2007–08 to 2020–21

Brisbane Airport Melbourne Airport Perth Airport Sydney Airport

4 Airport monitoring report 2020–21

Figure 3: Car parking profit margins, by airport: 2004–05 to 2020–21

5 Airport monitoring report 2020–21

Perth Airport vs Qantas case indicates that light-handed regulatory regime

6 Airport monitoring report 2020–21

If the APPs worked as intended, they would provide for:

7 Airport monitoring report 2020–21

8 Airport monitoring report 2020–21

PER SYD International Domestic

30 0.3m 95% BNE 7.6m 43%

20 0.2m 97% MEL 5.9m 68%

10 0.1m 97% PER 5.8m 31%

AERONAUTICAL INVESTMENT AERONAUTICAL PROFIT MARGINS*

AVERAGE DAILY CAR PARKING CAR PARKING PROFIT MARGINS*

8000 MEL -23.5%  72.1 pp

4000 PER 43.9%  9.2 pp

0 SYD 14.5%  45.2 pp

9 Airport monitoring report 2020–21

Aero Aero Aero Profit

Table 2: Changes in key aeronautical indicators from 2019–20 to 2020–21

Aero revenue Aero

Table 3: Key car parking indicators for 2020–21

Revenue Operating Revenue share

Table 4: Changes in key car parking indicators from 2019–20 to 2020–21

Car Revenue Operating Revenue share

10 Airport monitoring report 2020–21

1.2 Services provided by airports

The following sections discuss these in more detail.

21 ACCC calculation based on BITRE Airport Traffic Data (1985–86 to 2020–21).

11 Airport monitoring report 2020–21

1.2.2 Airport car parking services

30 Part 7 of the Airports Regulations.

12 Airport monitoring report 2020–21

13 Airport monitoring report 2020–21

Landside transport operators