Key points
The ACCC has decided to not object to Airservices Australia's proposal to increase the prices of several services that it provides to airlines.
Airservices Australia provided the ACCC with a formal price notification on 1 October 2024, which proposed a weighted average 6% price increase across its enroute navigation, terminal navigation, and aviation rescue and fire fighting services.
The ACCC's decision follows an extensive public consultation process spanning several versions of a draft price notification. The prices proposed in the formal price notification are consistent with the prices proposed by Airservices Australia in its 10 July 2024 amended draft price notification.
The ACCC considers that Airservices' proposed price increase is unlikely to lead to it over recovering its costs. It should assist Airservices Australia to stabilise its balance sheet and continue to focus on service quality improvements, which has been a key issue for industry.
Airservices Australia will seek approval of its price increase from the Minister for Infrastructure, Transport, Regional Development and Local Government. Airservices Australia intends to increase prices in December 2024 if the Minister does not object.
While making its decision, the ACCC has also provided Airservices Australia with recommendations to support future price notification processes. The ACCC recommends that Airservices Australia engage in more robust stakeholder engagement and set more robust and transparent performance metrics. This will provide stakeholders greater certainty and clarity about how Airservices has developed prices, the timing and delivery of projects, as well as the breakdown of its costs.
The ACCC understands Airservices Australia is developing a long-term pricing proposal that is expected to begin from the 2026-27 financial year, on which Airservices Australia intends to start consulting in early 2025. The timing of the long-term pricing proposal aligns with the commissioning of several major infrastructure projects, including the OneSKY air traffic management system.
The ACCC's assessment of this anticipated price notification will require careful examination of the prudency and efficiency of the OneSKY investments.
Further information about Airservices Australia's price notification, is available at Airservices Australia 2023.
Background
Airservices Australia is a government-owned organisation and the monopoly provider of air traffic control services in Australia. It provides:
- terminal navigation - air traffic control services provided at an airport to aircraft in close proximity to that airport (that is, aircraft arriving and departing at the airport).
- enroute navigation - air traffic control services provided to aircraft travelling through Australian airspace but not within terminal navigation range.
- aviation rescue and fire-fighting - emergency rescue and fire-fighting services provided at an airport.
These services are declared under the Competition and Consumer (Airservices Australia Prices Surveillance) Declaration. Airservices must notify the ACCC of proposed increases to prices charged for these services.
The ACCC is required to assess the proposed price increase in accordance with the Competition and Consumer Act 2010 and then notify Airservices on whether it objects to the proposal.
The ACCC does not have the role of approving the proposed price increase.
Airservices must also give written notice of the proposed price increase to the Minister for Infrastructure, Transport, Regional Development and Local Government who may approve or disapprove of the proposal. Airservices can only increase its prices if the Minister approves or does not disapprove of the proposal within 30 days.
Airservices provided an initial draft price notification to the ACCC on 27 September 2023, relating to the period from 2023-24 to 2026-27. Following consultation with the ACCC, Airservices provided a revised draft price notification on 13 November 2023 covering 2023-24 to 2025-26, thereby removing the 2026-27 financial year. There were no other material differences between the original and revised notifications.
On 10 July 2024, Airservices provided an amended draft price notification, following stakeholder and ACCC feedback. Airservices' amended notification proposed a single 6% weighted average price increase. On 29 August 2024, the ACCC published its preliminary view not to object to Airservices' proposed price increase.
The last price notification from Airservices Australia considered by the ACCC was in 2015.
