Original article from the ACCC (30/11/2023).
The ACCC is seeking views from the aviation industry and other interested parties on Airservices Australia’s draft proposal to increase the prices it charges airlines for its enroute navigation, terminal navigation, and aviation rescue and fire-fighting (ARFF) services.
Airservices is proposing four price increases between April 2024 and January 2026, which collectively would increase the weighted average price for these service lines by 19 per cent (in nominal terms). Airservices last increased its prices by 0.4 per cent in 2015, but subsequently decreased them by two per cent in 2019.
“We want to hear the aviation industry’s views on Airservices Australia’s proposal, in particular the domestic and international airlines that operate in Australian airspace,” ACCC Commissioner Liza Carver said.
“As Airservices Australia is the only declared provider of air traffic control and aviation fire-fighting services the ACCC is required to assess any price increase against statutory criteria.”
An airline may incur Airservices Australia charges of several thousand dollars or more to operate a flight, depending on the route and the size of the aircraft.
According to figures provided by Airservices Australia, airlines flying a Boeing 737-800 from Melbourne to Brisbane currently incur a per passenger cost of about $13 for Airservices Australia’s services. Under the first proposed price change, the per passenger cost would increase to approximately $14 in April 2024.
To fly an Airbus A380 from Singapore to Sydney the current per passenger cost incurred by airlines for Airservices Australia’s services is about $35. Under the first proposed price change, the per passenger cost would increase to approximately $37 in April 2024.
Airservices Australia proposed price change by service line (weighted average)
|Weighted average (nominal)
Source: Airservices Australia Draft Price Notification 2024, p. 5.
When assessing the proposed price increase, the ACCC will consider Airservices Australia’s recovery of efficient costs, including a reasonable rate of return, and how the company’s fixed and common costs are allocated to the relevant service lines and locations.
In forming its view, the ACCC will consider the responses received during this consultation period.
Further information, including the issues paper and Airservices Australia’s draft price notification, is available at Airservices Australia 2023. Submissions are due by 19 January 2024.
Airservices Australia is a government-owned organisation and the monopoly provider of air traffic control services in Australia. It provides:
- Terminal Navigation – air traffic control services provided at an airport to aircraft in close proximity to that airport (that is, aircraft arriving and departing at the airport).
- Enroute navigation – air traffic control services provided to aircraft travelling through Australian airspace but not within terminal navigation range.
- Aviation rescue and fire-fighting – emergency rescue and fire-fighting services provided at an airport.
These services are declared under the Competition and Consumer (Airservices Australia Prices Surveillance) Declaration. Airservices Australia must notify the ACCC of proposed increases to prices charged for these services.
The ACCC is required to assess the proposed price increase in accordance with the Competition and Consumer Act and then notify Airservices Australia on whether it objects to the proposal.
The ACCC does not have the role of approving the proposed price increase.
Following the consultation process, the ACCC will release a preliminary view on the draft price notification. This document will invite further stakeholder feedback. Airservices Australia is then expected to lodge a formal notification of the price rise with the ACCC.
Airservices Australia must also give written notice of the proposed price increase to the Minister for Infrastructure, Transport, Regional Development and Local Government who may approve or disapprove of the proposal. Airservices Australia can only increase its prices if the Minister approves or does not disapprove of the proposal within 30 days.
Airservices Australia provided an initial draft price notification to the ACCC on 27 September 2023, relating to the period from 2023-24 to 2026-27. Following consultation with the ACCC, Airservices provided a revised draft price notification on 13 November 2023. The revised notification covers 2023-24 to 2025-26, thereby removing the 2026-27 financial year. There are no other material differences between the original and revised notifications.
The last price notification from Airservices Australia considered by the ACCC was in 2015.