Airport monitoring repor t 2018–19 February 2020 accc.gov.au Cover photo: Simon_sees from Australia, Sydney Airport (7373562108), Wikimedia Creative Commons Generic 2.0 Licence Australian Competition and Consumer Commission 23 Marcus Clarke Street, Canberra, Australian Capital Territory, 2601 © Commonwealth of Australia 2020 This work is copyright. In addition to any use permitted under the Copyright Act 1968, all material contained within this work is provided under a Creative Commons Attribution 3.0 Australia licence, with the exception of: the Commonwealth Coat of Arms the ACCC and AER logos any illustration, diagram, photograph or graphic over which the Australian Competition and Consumer Commission does not hold copyright, but which may be part of or contained within this publication. The details of the relevant licence conditions are available on the Creative Commons website, as is the full legal code for the CC BY 3.0 AU licence. Requests and inquiries concerning reproduction and rights should be addressed to the Director, Content and Digital Services, ACCC, GPO Box 3131, Canberra ACT 2601. Important notice The information in this publication is for general guidance only. It does not constitute legal or other professional advice, and should not be relied on as a statement of the law in any jurisdiction. Because it is intended only as a general guide, it may contain generalisations. You should obtain professional advice if you have any specific concern. The ACCC has made every reasonable effort to provide current and accurate information, but it does not make any guarantees regarding the accuracy, currency or completeness of that information. Parties who wish to re-publish or otherwise use the information in this publication must check this information for currency and accuracy prior to publication. This should be done prior to each publication edition, as ACCC guidance and relevant transitional legislation frequently change. Any queries parties have should be addressed to the Director, Content and Digital Services, ACCC, GPO Box 3131, Canberra ACT 2601. ACCC 02/20_1655 www.accc.gov.au Contents Glossary v Infographic vii Key industry results 2018–19 viii Executive summary 1 1. Introduction 5 1.1 The ACCC’s monitoring role 5 1.2 Terminal configuration and the impact of domestic terminal5 leases 1.3 The structure of this report 7 2. Industry observations and developments 8 Key Points 8 2.1 Productivity Commission inquiry into the economic regulation8 of airports 2.2 Expiry of domestic terminal leases 10 2.3 Airports continue to develop new capacity 11 2.4 New security requirements for domestic flights 12 3. Performance across the four airports 13 Key Points 13 3.1 Introduction 14 3.2 Aeronautical activity 15 3.3 Aeronautical prices and financial results 16 3.4 Airport car parking prices and financial results 26 3.5 Landside access revenue 33 3.6 Quality of service 34 3.7 Comparing trends in revenue per passenger with aeronautical37 quality of service 3.8 Flight delays on the rise at the monitored airports 38 4. Brisbane Airport 41 Key Points 41 4.1 Introduction 42 4.2 Airport overview and major aeronautical investments 42 4.3 Aeronautical price monitoring and financial performance results44 4.4 Quality of aeronautical and total airport services 52 4.5 Car parking 60 4.6 Landside access 70 5. Melbourne Airport 74 Key Points 74 5.1 Introduction 75 5.2 Airport overview and major aeronautical investments 75 5.3 Aeronautical price monitoring and financial performance results77 5.4 Quality of aeronautical and total airport services 85 5.5 Car parking 95 5.6 Landside access 104 iii Airport monitoring report 2018–19 6. Perth Airport 108 Key Points 108 6.1 Introduction 109 6.2 Airport overview and major aeronautical investments 109 6.3 Aeronautical price monitoring and financial performance results111 6.4 Quality of aeronautical and total airport services 119 6.5 Car parking 130 6.6 Landside access 139 7. Sydney Airport 142 Key Points 142 7.1 Introduction 143 7.2 Airport overview and major investments 143 7.3 Aeronautical price monitoring and financial performance 145results 7.4 Quality of aeronautical and total airport services 157 7.5 Car parking 165 7.6 Landside access 174 A1. History of airport reporting in Australia 179 A1.1 Privatisation of airports 179 A1.2 Productivity Commission inquiries into the price regulation of airport180 services A2. Airport reporting framework 182 A2.1 Prices, costs and profits monitoring 182 A2.2 Quality of service monitoring 182 A2.3 Regulatory oversight of regional air services at Sydney Airport 183 A3. Services provided by airports 184 A3.1 Aeronautical services 184 A3.2 Non-aeronautical services 184 A4. Methodology 185 A4.1 Prices, costs and profits 185 A4.2 Quality of service 188 A4.3 Limitations of monitoring 190 A4.4 Consultation 191 iv Airport monitoring report 2018–19 Glossary ACCC Australian Competition and Consumer Commission 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 Services and facilities provided by airports that are specifically utilised by facilities aircrafts (e.g. runways, aircraft parking bays and taxiways). The full 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 e.g. terminal buildings, runways and taxiways. Aeronautical services and As defined under the Airports Regulations 1997, services and facilities at an facilities airport that are necessary for the operation and maintenance of civil aviation at the airport (including both passenger-related and aircraft-related services and facilities). Apron Airport aprons are areas where planes park and are refuelled, passengers embark and disembark and/or where planes are loaded and unloaded 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 free 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 BITRE Bureau of Infrastructure, Transport and Regional Economics CCA Competition and Consumer Act 2010 (Cth) CPI Consumer Price Index Delayed departure Delayed departures are measured as the proportion of departing flights that do not depart within 15 minutes of their scheduled time (excluding cancelled flights). DTL Domestic terminal lease EBITA Earnings before interest, tax and amortisation FAC Federal Airports Corporation General aviation Aircraft operations that are not regular public transport, such as private charter and aircraft training flights, and Royal Flying Doctor Services. GST Goods and Services Tax Landside Parts of an airport that are not airside areas e.g. access roads and walkways within airport precincts. v Airport monitoring report 2018–19 LIS Line in the sand approach. A regulatory approach to valuing airport assets under which the value of an airport’s aeronautical asset base for monitoring purposes is the value of tangible non-current aeronautical assets reported to the ACCC as at 30 June 2005, plus new investments, less depreciation and disposals. 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 (e.g. the number of check-in desks and flight information display screens) and other measurements (e.g. 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 Passengers that arrive on one flight and depart on another flight generally without leaving the airport. Operating profit Earnings before interest, tax and amortisation (EBITA). Operating profit margin Ratio of EBITA relative to revenue. Overall quality of service A metric derived by aggregating the quality of service monitoring results sourced from objective indicators and surveys of airlines and passengers on the quality of services and facilities provided by the monitored airports. Passenger-related services and Services and facilities provided by airports that are specifically utilised by facilities passengers (e.g. check-in desks, aerobridges and gate lounges). The 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. 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. Real terms A value expressed in the money of a particular base time period (e.g., 2018–19 dollars) in order to remove the impact of inflation.