Michael Pascoe writes:

Even by Macquarie Bank standards, the
latest try-on by Sydney Airport is breath-taking: an attempt to
transfer the risk of a sharp fall in passenger numbers on to the

The question raised by such an outrageous
grab though is how worried Macquarie Bank must be about its much-vaunted model
to attempt such a stunt.

The scheme is exposed by the Australian
Competition Tribunal in its detailed reasons for partially re-regulating the
monopoly – and in the process, the ACT shoots down Max Moore-Wilton’s feeble
attempt to defend his outfit’s greed and abuse of power.

Richard Gluyas has the story in The
Sydney Airport’s draft aeronautical services agreement included “an unusual and
onerous” clause that would allow it to hike charges to fully recover revenue losses
that would occur if domestic or international passenger numbers fell by 20%.

Despite the best efforts by the Australian
Financial Review’s

Chanticleer, most punters are unaware of just how precarious the Sydney
Airport financial structure is thanks to the mountain of debt being
from the high price Macquarie Bank paid. An outbreak of terrorism or
bird flu
that saw a sharp fall in passenger numbers could be disastrous for the
Millionaire Factory.

Given the competition spotlight Sydney Airport has been under, an
investor might wonder at the extent of Macquarie’s hubris to draft such a clause – or worry about how fragile the
structure might be.

As Gluyas reports: “The tribunal uses the
proposed force majeure clause as an example of SACL’s misuse of its monopoly power, where it is
seeking to impose an unreasonable condition that is unlikely to exist in a
functioning, competitive market.”

The re-regulation Sydney Airport has
brought on itself will have further deepened the contempt it’s held in by other
Australian airports. If there’s one group that dislikes SACL more than the
airlines and passengers, it’s the other airports as they have correctly
feared the Macquarie gouge would result in re-regulation. Their concern is that Sydney might not be
the last airport to be declared, as they are nearly all monopolies.