Qantas boss Alan Joyce has accused Australian monopoly-owned major airports of having the airlines and their passengers "over a barrel", charging excessive fees and pushing up airfares.
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On the eve of Treasurer Josh Frydenberg's decision next month on future regulation of airport charges, Mr Joyce and Virgin Australia's Paul Scurrah have united to prosecute their case that airport owners are extracting monopoly rents which are making airline travel more expensive.
At the Canberra Press Club on Wednesday, Mr Joyce and Mr Scurrah will argue excessive airport charges are holding back Australia's productivity.
Mr Scurrah will further say many airports are generating profit margins that are grossly inflated because of their pricing power.
The increasingly toxic battle between the airlines and the airports has reached a fever pitch - each side trading insults and corralling powerful supporters.
The airline's owners, some of the largest superannuation industry funds in the country, have threatened Mr Frydenberg with withholding $20 billion in future investment for Sydney's Western Suburbs airport and an additional runway in Melbourne.
The Australian Airports Association will hit back on Wednesday accusing airlines of engaging in a "disingenuous attempt to increase airline profits at the expense of investment".
"This isn't the first time we've seen this; Qantas was down in Canberra in 2014 asking for a handout from the government and since then they've made $6 billion in profit. In the last year alone, Qantas made more profit than the four major Australian airports combined," Australian Airports Association Caroline Wilkie said.
The umbrella group representing Australian airlines has the support of the overseas airlines, car rental operators, the Australian Retailers Association and the Ride Share Drivers Association. It has enlisted high profile former chairman of the Australian Competition and Consumer Commission, Graeme Samuel, to lead its lobbying charge.
Mr Joyce and Mr Scurrah are asking the federal government to introduce a system of arbitration as a mechanism to resolve pricing and investment disputes between airports and their users which include airlines, retailers and taxis.
'Why? Because it's fair, not one-sided and will drive economic growth. Not just for Virgin Australia, but for tourism operators, for importers and exporters and all Australian businesses who trade with national and overseas partners,' Scurrah will argue.
The Australian Competition and Consumer Commission supports arbitration. Its chairman Rod Sims told ABC Radio National on Tuesday, "we've been putting the view for some time at the ACCC that you've got airports, which are effectively unregulated monopolies. We've been proposing for some time a negotiate-arbitrate regime."
However, a Productivity Commission report on airport charges now before Mr Frydenberg, is widely understood to recommend the status quo of price monitoring rather than interfering with unregulated airport pricing.
"You would think that where monopoly exists, there would be a straightforward dispute resolution system as a safeguard. That's how it works in other parts of the economy," Joyce will say.
Joyce argues there is an imbalance in negotiating power between the airports and the airlines.
"Australian airports are literally the only game in town. Their business model is based on it. We can't just up-stumps and fly to the next airport 15 minutes down the road. They have airlines andpassengers over a barrel," he will say at the Press Gallery address.
One of Australia's largest airport investors HRL Morrison and Co disputes that the incumbent airlines have the national interest at heart and instead have a vested interest in not growing capacity at airports in order to increase the yield (the price paid) on airline tickets.
The group's head of asset management, Steven Fitzgerald, said a major problem with an arbitrated system was the time-frame. "The concept that this would be a simple matter between two parties is not practical," he said. He argues arbitration would become a proxy for deciding investment programs for each airport.
Ms Wilkie said the airline campaign was about self-interest, not the interests of passengers, tourism or the Australian economy.
"Qantas and Virgin want to squeeze competition out of the market to entrench the domestic duopoly and they know that's exactly what will happen if they turn the screws on airport investment."
- SMH/The Age
