The ACCC is all
about competition. So why is a recent decision by the watch dog seemingly
anti-competitive?

In
the airline industry, Airservices Australia has a monopoly on the
regulation of air safety in this country. As we wrote recently (21
April, item 8), it’s akin to a single desk – it also doesn’t pay any
state or territory taxes except payroll tax (as set down in the
Airservices Act 1995).

But there are other
companies looking for a slice of the aviation pie. And yet, the ACCC effectively
shut them out recently when it decided to approve a return to network-based
charges for aviation rescue and fire fighting (ARFF) services rather than
location specific pricing, a system which was put in place in 1997 after a
government-commissioned independent inquiry recommended a change from
network-based charges.

What does this all mean? Basically, international
standards require that any airport with over 350,000 passengers per year must
have a fire service. Airservices Australia currently provides this service
across Australia. By treating all airports as one group rather than individual,
Airservices Australia is able to spread its charges for ARFF services across the
airports – it charges levies at gateway airports (Sydney, Melbourne and Brisbane) and that money is taken and used to
cross-subsidise the regional airports, in some instances charging a price which is just 30% of the actual operating cost.

Of course, this
makes good business sense for Airservices, says Terry Godde of Delta Fire
Service. But it’s hardly good for competition. And it’s not great for consumers
either, not to mention the individual airport operators and the airlines “which
have to pass the costs on” adding to the burden of higher fuel costs.

By
reverting to network-based charges, the ACCC has “effectively over-turned one of
the key principles underpinning the reform of Australian airports and
Airservices”, says the Board of Airline Representatives of Australia.

And
strangely, the ACCC explained their findings by explaining that “entry” into the
market by competitors “is unlikely”. But Godde, whose company has fought to
secure regional contracts, argues that this is not the case.

Although
it could be. It’s a “self-fulfilling prophecy”, he
says. If you discriminate against competition, then
“no-one’s going to want to go there”. “Monopolies will do
whatever they can to maintain their position, they do not care about the
consumer(the fare paying passenger), they simply don’t have to, they have an
entrenched position.”