Price gouging at Melbourne airport

Simon O'Brien reports:

Airport parking charges continue to be issue at most Australian airports where parking costs are continuing to rise.

The latest report by the Australian Competition and Consumer Commission (ACCC) (April 6) showed that Melbourne's Tullamarine Airport had the highest parking fees in the country.

The report by the ACCC on Australia's airports revealed that Melbourne Airport makes about 75 per cent or $67 (Aus.) million profit on parking. This has raised heated accusations that there is price gouging.

The airport was privatised in 1997 and is owned by Australia Pacific Airports Corporation, a partnership of AMP, Westpac Bank through Hastings Funds Management and Deutsche Asset Management. APAC also owns Launceston airport in Tasmania.

According to the ACCC reporting in the last financial year, Melbourne Airport earned 21 per cent of its income or about $90 million from its car parks, almost double the revenue percentage of any other airport in Australia. Sydney by comparison earns seven per cent.

The commission stated that it believes the prices charged may reflect not only "locational rents", justified by proximity to the airport, but also "monopoly rents", gained by the airport operators using their market position to push prices even higher.

It was concerned that airport operators may be using their regulatory role to in effect direct traffic toward their car parks, noting that they "are in a position to limit vehicle standing times - especially for dropping off and picking up passengers — in excess of the necessary security provisions".

The effect of the high fees has been to make the approach roads to Tullamarine airport in effect informal car parks. In return the airport's response has been to as been landscape the area and fence it off with a rope festooned with little yellow flags to prevent people parking.

APAC management declined to respond to the the ACCC claims or to a list of questions from Melbourne's premier newspaper The Age, stating: "The … report for 2007-08 released by the ACCC shows Melbourne Airport is Australia's most efficient, with the lowest aeronautical operating expenses per passenger in the country.""

All of which is correct, but beside the point.

Short-term parking fees now stand at $12 an hour and $18 for two hours. They have risen by no less than 50 per cent in the past financial year. Interviews with consumers have reinforced the idea that the airport is "gouging" motorists. One consumer claimed that the charges were "criminal".

Clearly feelings are running high.

The situation is exacerbated in the case of Melbourne by several factors. One of these is the fact that the airport lacks a connecting rail link to the city. This means of course that travellers must use motorised transport.

The Public Transport Users Association president, Daniel Bowen has strongly supported an airport railway link: "The airport is a major traffic generator, not just for travellers but for the many workers who go to the airport daily and have little option but to drive," he said.

Sydney and Brisbane airports both have efficient rail links to their airports. However despite the fact that Melbourne Tullamarine was opened in 1970, the State Government has effectively shelved such a scheme, despite being committed to it in opposition.

Naturally this has led to rumours that the State Government is too close to APAC. There is also vigorous opposition to the idea from taxi drivers who claim airport fares are vital for maintaining business in the middle of a recession.

Of course the alternative to rail and private travel is bus transport, but even here there are problems.

The airport offers long-term parking for as little as $69 a week at its shuttle-bus-connected long-term park, its main parking competition are the off-site operators around Gladstone Park.

But the APAC gets a slice of this, charging $3 every time one of their shuttle buses makes a set-down or pick-up. The ACCC report states that, airports often made life difficult, "for these businesses, providing minimal bus parking often in awkward places."

Some of these companies, which run four shuttles continuously, are understood to pay Melbourne Airport $100,000 a year. A nice source of additional income.

A second problem is that Melbourne Airport is the only international airport in Victoria, so once again there is no competition.

Although the report was commissioned by the federal government, it has not acted on it in any way and of course the ACCC has no powers to enforce any of its findings.

The Minister, Chris Bowen has since moved on, but not before stating that the Government would "continue to examine" car park charging developments and levels of new investment in car parking space, then "reflect on what further action might be appropriate".

So far no action has proven to be appropriate and the level of complaints continues.

Competition expert Frank Zumbo, an associate professor at the University of NSW school of business, has said the Government could "easily drive down" airport parking fees generally by requiring the supply of on-airport parking keep pace with demand.

Again that does not seem to be happening.

But it is not all bad news. Interestingly, Melbourne airport was ranked first among Australia's key airports for the car parking quality of service in 2007-8. Perth airport was ranked second.

SO

 

 

 

Comments

[mini cabs]

Depending on traffic and your location in the city centre, it takes around 30 minutes by taxi. Expect to pay around $40.

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