ACCC rejects Productivity Commission and Proposes Heavier Regulations on Airports

The Australian Competition & Consumer Commission has rejected a Productivity Commission draft report that found the system of price monitoring of airports could be improved but did not recommend heavier regulations.

The ACCC has argued that the current ‘light-handed regulation’ and price monitoring of airports introduced by the Howard Government is no longer effective. The ACCC is looking at heavier regulation to constrain the airports’ exercise of market power as opposed to merely monitoring it. It argues that the system of monitoring and inquiries will not provide an effective permanent solution and would not prevent airports from maximising prices and imposing costs on airlines that would ultimately be paid for by the consumer.

The ACCC recognises the use of market powers by airports as contributing to higher prices and/or lower quality services that would directly affect airlines and passengers that use the airports. It further recommends that it be allowed to arbitrate any disputes between airports and airlines.

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What are your thoughts on this matter? Should the ACCC intervene or should the airports be allowed to regulate their own affairs? 

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