Competition and Regulation Update: Finance Lessons From The Regulation Of UK Airports - A Relevant Case Study For Australian Airports

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INTRODUCTION -

Since 2002 when price cap regulation at Australian capital city airports was abolished and replaced with lighthanded price monitoring by the Australian Competition and Consumer Commission (ACCC), airports and airlines have negotiated terms and conditions of use of aeronautical services without any regulatory intervention or oversight by the ACCC, National Competition Council (NCC) or the Commonwealth Government.

The Productivity Commission (PC) in 2006 and again in 2011 found that there was no evidence to justify the introduction of any heavier-handed forms of regulation at Australian capital city airports, including a return to price cap regulation. Significantly the Commonwealth Government in 2012 unequivocally accepted the PC’s recommendation in this regard and even demonstrated more confidence in the current light-handed regime than the PC by not accepting the PC’s recommendation to marginally enhance the current form of regulation of airports by giving the ACCC power to issue “show cause” notices to the airports. The Commonwealth Government considered the current form of regulation of Australian airports was working well and no additional powers were needed by the ACCC.

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