Airport lease logic questioned

An aviation expert has challenged comments by advisers to the Town of Port Hedland that customer service at Australia’s major airports had improved under private leases.

Airlineratings.com editor Geoffrey Thomas said airline executives and the Australian Competition and Consumer Commission had instead criticised private managers of the airports.

He said the ACCC found that while profits had gone up at the Sydney, Perth, Brisbane and Melbourne airports, services had not done likewise.

“The ACCC says that ‘despite growth in aeronautical margins and revenue, there has been no considerable change to the overall average quality of service ratings for the airports’, ” Thomas said.

“Brisbane Airport again was the only airport to achieve a rating of ‘good’, while the other three monitored airports were rated as ‘satisfactory’.”

Thomas’ comments come as Hedland’s airport could be leased under a similar model to that used at the major airports.

Hedland councillors will decide in August whether or not to lease the asset out on a 50-year contract to a private consortium.

Speaking at a public information meeting this month, a consultant for the Town from The Airport Group, Paddy Jilek, argued the private consortiums looking to secure the lease for Hedland airport would be likely to boost services locally.

He said not only did the large investors have the corporate muscle to negotiate new routes with airlines, but they were likely to invest large sums in infrastructure.

Mr Jilek said investors in Perth airport, for instance, had “spent multiples of what they were required to spend (on infrastructure development under their lease conditions).”

However, Thomas disagreed, arguing investment by the airport operators had not kept up with demand.

“Airline executives all agree that the privatisation of airports in Australia has been a failure because they have not made adequate investments in infrastructure (in) a timely manner, ” he said.

“The ACCC has also said that airports like Perth have left investment (in airport infrastructure) to the very last minute.”

The ACCC last year called for the operators to invest more in the airports to “deal with current congestion, accommodate future passenger growth, and improve service levels”.

“Despite some significant investment, the monitored airports have continued to generate substantial revenue and profitability increases, yet we are not seeing any substantial increases in the overall average quality of service indicators at these airports, ” ACCC chairman Rod Sims said.

“In fact, service quality at all monitored airports has declined over the past decade, despite higher unit revenues at all airports.”