The Australian Competition and Consumer Commission today issued a final decision opposing a proposal by Airservices Australia to increase prices for terminal navigation and aviation fire-fighting and rescue services. The decision confirms an earlier draft ruling.
Acting ACCC Chairman, Mr Sitesh Bhojani, said that although the proposed increases were temporary, they have come at a time when the aviation industry is experiencing a downturn in activity.
"The problem has arisen as the Airservices Australia proposal is based on a short-term approach to pricing", he said.
"As the ACCC indicated 12 months ago, it expects Airservices to provide a pricing proposal that takes into account likely developments over the medium term. A longer-term approach to pricing would provide better incentives for Airservices to innovate in order to minimise costs.
"The ACCC is concerned that the Airservices' short-term, rate of return-based approach to pricing tends to result in the highest charges when airlines are under the most financial pressure.
"The additional uncertainty this creates for airlines could hinder continued investment in aviation services. This ultimately affects the quality of services delivered to consumers".
The ACCC has consulted widely with interested parties and released a preliminary view on the matter in May 2003. Responses were received from a number of airlines and airports who all supported the ACCC's stance.