Airport Monitoring Report 2011-12

Airport
Monitoring
Report 2011–12
Adelaide Brisbane Melbourne Perth Sydney
Report

Airport Monitoring Report 2011-12
Price, financial performance and quality of
service monitoring
April 2013

ISBN 978 1 921973 61 1
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Airport Monitoring Report 2011-12 Contents
iii
Contents
Glossary v
Key Findings vii
Summary xiii
1 Overview of the monitoring results for aeronautical services 1
1.1 Introduction 2
1.2 Airport terminal configurations 2
1.3 Key observations from the monitoring results for aeronautical services 4
1.4 Price monitoring results 15
1.5 Quality of service monitoring results 46
1.6 Price and quality outcomes for the airports 52
2 Potential aeronautical capacity issues at airports 53
2.1 Introduction 53
2.2 Recent growth in passenger throughput and aeronautical investment 54
2.3 Congestion is emerging at a number of monitored airports 57
2.4 Passenger throughput is forecast to continue to grow over the next 59
two decades
2.5 Inadequate investment and effects on ongoing congestion 60
2.6 Approaches for dealing with congestion in the short-term and long-term 60
2.7 Airports’ incentives for aeronautical investment 64
2.8 Airports’ current investment plans in response to emerging congestion 65
2.9 Different approaches to funding aeronautical investment 68
2.10 The impact of regulatory access arrangements 71
3 Overview of airport car parking and landside services 73
3.1 Introduction 74
3.2 Airport car parking configurations 74
3.3 Airport car parking prices 77
3.4 Airport car parking revenues, costs and profits 80
3.5 Airport car parking availability and quality 86
3.6 Landside access charges and revenues 90
3.7 Observations from the monitoring results for airport car parking and 93
landside access
3.8 Passenger growth, capacity constraints and investment in airport 97
car parking and landside services
4 Adelaide Airport 103
4.1 Overview of aeronautical and car parking monitoring results 104
4.2 Airport overview and major airport investments 105

Contents Airport Monitoring Report 2011-12
iv
4.3 Aeronautical prices monitoring and financial performance results 108
4.4 Aeronautical services quality of service monitoring results 132
4.5 Car parking services monitoring results 154
4.6 Adelaide Airport price and quality of service monitoring beyond 2011-12 164
5 Brisbane Airport 167
6 Melbourne Airport 231
7 Perth Airport 295
8 Sydney Airport 363
Appendices
A1 Regulatory accounts for the monitored airports 437
A2 Indicators and statistics used in the report 458
A3 Airport car parking statistics 489
A4 History of airport regulation in Australia 504
A5 Regulatory framework 509
A6 Services provided by airports 514
A7 Methodology for this report 517

Airport Monitoring Report 2011-12 Glossary
v
Glossary
AASB Australian Accounting Standards Board
ACCC Australian Competition and Consumer Commission
AC&BPS Australian Customs and Border Protection Service
AGAAP Australian Generally Accepted Accounting Principles
AIFRS Australian equivalents to International Financial Reporting Standards
APS Australian Protective Service
Availability Describes the amount of the facility/service made available relative to demands
for the facility or service. May include whether facilities or services are available
or restricted due to congestion, positioning, maintenance, or repairs, the
accessibility or usefulness of the facility/service provided, and the efficiency of
the system to allocate usage.
BARA Board of Airline Representatives of Australia
BITRE Bureau of Infrastructure, Transport and Regional Economics
CBD central business district
CCA Competition and Consumer Act 2010
CTFR Counter Terrorism First Response
CPI consumer price index
DAFF Department of Agriculture, Fisheries and Forestry, Biosecurity
Biosecurity
DIAC Department of Immigration and Citizenship
DIT Department of Infrastructure and Transport
DTL domestic terminal lease
EBITA earnings before interest, tax and amortisation
EBITDA earnings before interest, tax, depreciation and amortisation
FAC Federal Airports Corporation
FSC full service carrier
GA general aviation
GST goods and services tax
IASB International Accounting Standards Board
LCC low cost carrier

Glossary Airport Monitoring Report 2011-12
vi
LHS left-hand side
LIS Line in the sand
Minister Minister with portfolio responsibility for Transport and Infrastructure
MTOW maximum take-off weight
Peak hour The hour that, on average for each day in the financial year, has the highest
number of (arriving/departing/total of both) passengers.
PC Productivity Commission
PFC passenger facilitation charges
PSC passenger services charge
RHS right-hand side
RPT regular public transport
SLA Service level agreements
Standard Describes the physical condition of the facility/service supplied and condition in
which it is generally maintained.
SAR state of the art renewal
TPA Trade Practices Act 1974 (renamed the Competition and Consumer Act 2010
on 1 January 2011)
White paper Aviation White Paper: Flight path to the future, Australian Government, 2009

Airport Monitoring Report 2011-12 Key Findings
vii
Key Findings – Airport Monitoring 2011-12
The ACCC’s monitoring role for the major airports
This report presents the results of the ACCC’s monitoring of the quality, prices,
costs and profits related to aeronautical and car parking services supplied by
Adelaide, Brisbane, Melbourne, Perth and Sydney airports for the 2011-12 financial
year.
As confirmed in the recent inquiry into the economic regulation of airport services by
the Productivity Commission (PC), the monitored airports have market power.
These airports are monitored to provide information to the public and the
government about the airport operators' performance. However, monitoring does not
restrict the airports from increasing prices or degrading service standards to earn
monopoly profits.
In 2011-12, airports continued to be profitable but quality of service was down
Monitored airports earned profits in 2011-12 but despite continued investment in
aeronautical assets, overall ratings for quality of service were lower at each of the
monitored airports compared with 2010-11.
Sydney, Brisbane and Perth airports reported higher margins in 2011-12 relative to
the previous year. Melbourne Airport’s margins were adversely affected by a jump in
costs while Adelaide Airport experienced a large drop in passenger numbers and
revenue.
The lower overall ratings for quality of service at monitored airports reinforces the
need for more investment as demand for airport services grows more quickly than
airports’ capacity to accommodate the increase in demand.
In 2011-12, demand for airport services was underpinned by solid growth in
passenger numbers
Growth in combined passenger numbers at the monitored airports continued to
drive demand for airport services during 2011-12. Passenger numbers at the
monitored airports increased 2.5 per cent in 2011-12, the tenth consecutive year of
growth in airport patronage.
Total passenger numbers fell at Adelaide Airport, but falls in domestic travel
Sydney and Melbourne airports were offset by solid growth in international
travel at these airports.
Perth Airport registered the strongest growth among monitored airports driven
by substantial growth in domestic travel and strong growth in international
travel. Growth in both domestic and international travel contributed to a solid
increase in passenger numbers at Brisbane Airport.
Average prices charged by airports and aeronautical revenue higher in 2011-12
Combined revenues from aeronautical services at the monitored airports increased
4.5 per cent in 2011-12. All airports other than Adelaide Airport earned higher
aeronautical revenues.

Key Findings Airport Monitoring Report 2011-12
viii
Average aeronautical revenue per passenger (a proxy for average prices) across
monitored airports increased around 1.9 per cent.
Aeronautical revenue per passenger increased at Sydney, Melbourne and
Brisbane airports but fell at Adelaide and Perth airports.
Sydney Airport remained the airport with the highest aeronautical revenue per
passenger at $14.96.
Aeronautical margins also higher in 2011-12
Combined margins on aeronautical services at the five monitored airports increased
2.2 per cent during 2011-12. Margins increased at all airports other than Adelaide
and Melbourne airports.
On a per passenger basis, average aeronautical margins across the monitored
airports were largely unchanged in 2011-12.
Brisbane and Sydney airports earned higher margins per passenger but
Adelaide, Melbourne and Perth airports experiencing lower margins.
Sydney Airport continued to be the airport with the highest aeronautical margin
per passenger at $7.33 per passenger.
Overall quality of aeronautical services fell at all airports during 2011-12
The overall ratings for quality of service (that is, quality of service ratings from
surveys of airlines, passengers, border agencies as well as objective indicators) fell
at each of the monitored airports during 2011-12.
For the first time since 2007-08, none of the airports achieved an overall rating of at
least good, that is, all airports were rated satisfactory.
Key quality of service results for Australia’s monitored airports during 2011-12 were:
Sydney Airport continues to be rated lowest overall. Passengers increased
their ratings within the satisfactory category, while airlines’ ratings dropped
from satisfactory to poor.
Brisbane Airport was rated highest for overall quality of service. Passengers
continued to rate Brisbane Airport good while airlines dropped their ratings
within the satisfactory category. Airlines’ ratings for runway availability
decreased significantly from good in 2010-11 to poor in 2011-12.
Perth Airport continued to be rated second lowest overall. Airlines’ ratings
remained unchanged at poor while passengers’ ratings decreased from good to
satisfactory.
Car parking revenues higher during 2011-12
The number of car park spaces increased at all airports other than Melbourne
Airport in 2011-12. Overall, Melbourne Airport had the largest number of car park
spaces (21 924) followed by Perth Airport (15 626) and Sydney Airport (13 116).

ix
Total revenue earned from the monitored airports’ landside access operations
increased by almost 20 per cent to around $28.7 million.
Sydney Airport continues to earn the highest revenue and margin per car park
space ($7654 and $5290 respectively) while Perth Airport reported the lowest
($3239 and $2187 respectively).
Sydney Airport reported the largest increase in landside revenues
(36.9 per cent) and continued to be the airport with the highest revenues from
landside charges ($13.3 million).
Airport investments increased during 2011-12
In 2011-12, monitored airports collectively invested $547.4 million in aeronautical
assets - this was 61.7 per cent more than $339.5 million invested in 2010-11.
Congestion emerging at some airports
Strong growth in passenger numbers in recent years has placed increasing
pressure on existing aeronautical infrastructure and landside arrangements.
Despite continued investment in aeronautical assets, there are signs of congestion
emerging at Australia’s monitored airports. Data published by the Bureau of
Infrastructure, Transport and Regional Economics (BITRE) indicates increasing
incidence of delays to scheduled domestic flight arrivals and departures at
monitored airports. While these data are not direct evidence of capacity constraints
at airports, they are indicative of emerging system-wide congestion.
Aeronautical services:
Brisbane Airport: According to Brisbane Airport the current runway system is
likely to reach capacity in the next two years. While Brisbane Airport is in the
early stages of constructing a new runway, there is conjecture as to how the
project will proceed given the differences between the airport and airlines on
how its cost should be recovered.
Melbourne Airport: investment is planned for expansion of runway capacity in
the next seven years in order to meet the growing demand.
Perth Airport: demand concentration, particularly during ‘fly-in/fly-out’ peak
periods, is placing pressure on its infrastructure. A new domestic terminal was
completed in March 2013.
Sydney Airport: concerns over capacity issues are reflected in the reduction to
poor in this year’s ratings by airlines of availability of airside services, including
runways, taxiways and aprons. The current legislated runway management
system sets a cap of 80 hourly aircraft movements which places limits on
options.
Car parking and landside arrangements:
Evidence of congestion in terminal forecourts and landside services has
prompted airports to improve arrangements for dealing with traffic flows, such
as establishing new public passenger pick up areas and additional car parking
spaces.

x
Investment will be required for additional capacity
Aeronautical services
Forecasts of continued growth in passenger throughput and aircraft
movements at monitored airports suggests that existing aeronautical
infrastructure will be under increasing pressure in the years ahead.
In 2011-12, the decline in overall ratings for quality of service suggests that
demand for aeronautical services, may be growing more quickly than the
apparent ability to accommodate the increased demands placed on
infrastructure, particularly at Brisbane, Sydney and Perth airports.
Australian airports have typically not used peak-period pricing to efficiently
ration excess demand, preferring to ration quantity through slot management
schemes. In the short term, dealing with congestion through slot management
schemes based on grandfathered landing rights may discourage entry of new
airlines.
In the long term, it is apparent that without additional investment in
aeronautical capacity Australia’s largest airports will face challenges in the next
few years continuing to provide aeronautical services that meet the reasonable
expectations of users.
Landside services
In order to facilitate access to landside services and maximise the efficiency of
landside infrastructure networks, Australia’s major airports will need to ensure
that they engage all relevant stakeholders. While an airport is responsible for
planning and developing terminal access roads and car parking facilities within
the airport boundaries, local and state governments must work in conjunction
with the airports.
The ACCC will continue to report on progress with airport investments and how
airports are responding to airside and landside congestion.

xi
Key Performance Indicators 2011-12
Table 1: Key indicators for the monitored airports for 2011-12
Airport Passenger
numbers
(million)
Total
aeronautical
revenue
($million)
Aeronautical
revenue per
passenger
($)
Aeronautical
operating
margin per
passenger
($)
Return on
aeronautical
assets
(%)
Overall
rating for
quality of
service
(out of 5)
Adelaide 7.1 78.1 11.01 4.53 7.6 3.87
Brisbane 21.2 212.4 10.02 4.47 6.8 3.92
Melbourne 28.4 243.6 8.58 3.38 10.1 3.44
Perth 13.3 118.0 8.86 3.12 11.3 3.36
Sydney 36.3 543.5 14.96 7.33 10.5 3.33
Note: Comparisons across monitored airports must be treated with caution. Results can be affected by the airports’
varying terminal configurations and the different approaches to valuing assets.
Table 2: Percentage change in key indicators from 2010-11 to 2011-12
Airport Passenger
numbers
Total
aeronautical
revenue
Aeronautical
revenue per
passenger
Aeronautical
operating
margin per
passenger
Return on
aeronautical
assets
Overall
rating for
quality of
service
Adelaide ▼ 4.0% ▼ 9.3% ▼ 5.5% ▼ 14.8% ▼ 2.6pp ▼ 1.5%
Brisbane ▲ 4.6% ▲ 7.0% ▲ 2.2% ▲ 9.2% ▲ 0.6pp ▼ 7.1%
Melbourne ▲ 0.2% ▲ 5.0% ▲ 4.8% ▼ 9.9% ▼ 2.2pp ▼ 7.6%
Perth ▲ 16.3% ▲ 14.5% ▼ 1.6% ▼ 12.5% ▼ 1.9pp ▼ 8.7%
Sydney ▲ 0.1% ▲ 3.6% ▲ 3.5% ▲ 6.4% ▲ 0.9pp ▼ 9.0%
Note: pp = percentage points
Table 3: Car parking prices as at 30 June 2012
1
Airport Short-term car parking Long-term car parking
1 hour 3 hours 8 hours 24 hours 1 day 7 days
Adelaide $4.00 $11.00 $26.00 $30.00 $25.00 $70.00
Brisbane $14.00 $22.00 $50.00 $50.00 $40.00 $140.00
Melbourne $12.00 $28.00 $55.00 $55.00 $29.00 $77.00
Perth $6.00 $10.20 $15.20 $38.00 $17.00 $93.00
Sydney $16.00 $29.00 $56.00 $56.00 $26.00 $127.00
Table 4: Percentage change in car parking prices from 30 June 2011 to 30 June
2012
Airport Short-term car parking Long-term car parking
1 hour 3 hours 8 hours 24 hours 1 day 7 days
Adelaide 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Brisbane ▲ 7.7% 0.0% ▲ 25.0% ▲ 25.0% 0.0% 0.0%
Melbourne 0.0% 0.0% ▲ 5.8% ▲ 5.8% 0.0% 0.0%
Perth ▲ 7.1% ▲ 2.0% ▲ 1.3% ▲ 5.6% ▲ 6.3% ▲ 5.7%
Sydney ▲ 6.7% ▲11.5% ▲ 7.7% ▲ 7.7% ▲ 4.0% ▲ 4.1%
1
Brisbane, Perth and Sydney airports’ short-term and long-term car parking prices are based on the domestic terminal
car park at each airport. Melbourne Airport’s long-term car parking prices are based on the long-term uncovered car
park located at distance from the terminal precinct.

xii
Table 5: Key car park indicators for the monitored airports for 2011-12
Airport Total
airport car
parking
revenue
($million)
Total
airport car
parking
operating
margin
($million)
Total
airport car
parking
spaces
Airport car
parking
revenue per
car park
space
($)
Airport car
parking
margin per
car park
space
Airport car
parking
revenue as
% of total
airport
revenue
(%)
Adelaide 14.0 9.5 3 002 4 673 3 179 9.7
Brisbane 60.9 37.9 12 862 4 738 2 944 12.5
Melbourne 114.7 86.4 21 924 5 231 3 942 20.0
Perth 50.6 34.2 15 626 3 239 2 187 7.0
Sydney 100.4 69.4 13 116 7 654 5 290 10.0
Table 6: Percentage change in key indicators from 2010-11 to 2011-12
Airport Total
airport car
parking
revenue
($million)
Total
airport car
parking
operating
margin
($million)
Total
airport car
parking
spaces
Airport car
parking
revenue per
car park
space
($)
Airport car
parking
margin per
car park
space
Airport car
parking
revenue as
% of total
airport
revenue
(%)
Adelaide ▼ 4.9% ▼ 10.0% ▲ 0.1% ▼ 5.0% ▼ 10.1% ▲ 0.5pp
Brisbane ▲ 1.4% ▼ 11.8% ▲ 31.7% ▼ 23.0% ▼ 33.0% ▼ 0.6pp
Melbourne ▲ 0.05% ▼ 0.6% ▼ 2.2% ▲ 2.3% ▲ 1.6% ▼ 1.0pp
Perth ▲ 23.2% ▲ 24.3% ▲ 7.4% ▲ 14.7% ▲ 15.8% ▼ 6.9pp
Sydney ▲ 2.5% ▲0.4% ▲ 6.9% ▼ 4.1% ▼ 6.1% ▼ 0.2pp
Note: pp = percentage points
Table 7: Investments in tangible aeronautical non-current assets –
2002-03 to 2011-12 ($M)
$M 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Adelaide 4.4 49.8 135.1 25.3 1.8 3.8 3.1 4.4 38.1 59.9
Brisbane 16.0 8.7 19.9 32.5 92.5 247.6 199.1 150.9 63.2 155.9
Melbourne 22.5 19.7 70.6 42.2 60.6 83.7 161.0 136.7 103.4 155.8
Perth 6.7 7.1 27.6 10.7 15.8 28.4 47.4 45.3 69.7 75.6
Sydney 151.1 49.2 46.3 124.4 161.6 83.9 345.3 227.1 65.0 100.2
Table 8: Investments as proportions of tangible aeronautical non-current assets –
2002-03 to 2011-12 (%)
2002-03
%
2003-04
%
2004-05
%
2005-06
%
2006-07
%
2007-08
%
2008-09
%
2009-10
%
2010-11
%
2011-12
%
Adelaide 3.4 28.3 32.8 6.3 0.5 1.0 0.8 1.2 9.5 13.4
Brisbane 2.8 1.5 2.2 3.5 9.1 19.5 14.2 11.4 4.7 10.8
Melbourne 5.3 4.7 14.9 8.5 11.3 14.1 22.1 16.4 11.5 15.5
Perth 7.7 4.0 14.1 5.9 8.4 13.8 19.4 16.2 20.6 19.0
Sydney 9.2 3.0 2.9 5.6 7.0 3.6 13.5 8.6 2.5 4.0

Airport Monitoring Report 2011-12 Summary
xiii
Summary - Airport Monitoring 2011-12
Prices, revenue, margins and quality of service for
aeronautical services
Demand for aeronautical services
In 2011-12 demand for aeronautical services increased at all airports except Adelaide Airport.
Growth in total passenger numbers was relatively flat at Melbourne and Sydney airports
increasing by 0.2 per cent and 0.1 per cent respectively. Growth was stronger at Brisbane
Airport (4.6 per cent) and Perth Airport (16.3 per cent).
Passenger numbers at Adelaide Airport fell by 4.0 per cent compared with 2010-11. It is likely
that a number of factors may have contributed to the drop in passenger numbers at Adelaide
Airport, including subdued economic conditions, Tiger Airways ceasing operations at the airport
from July 2011 and the Qantas grounding and associated industrial action.
2
Perth and Brisbane airport have experienced strong growth in domestic passenger numbers.
Falls in domestic passenger numbers at Sydney and Melbourne airports were off-set by higher
numbers of international passengers.
Section 1.4.1 discusses airport throughput levels at monitored airports.
Total and average revenues and prices
All airports other than Adelaide Airport earned higher aeronautical revenues during 2011-12.
In 2011-12, higher average prices at Sydney and Melbourne airports contributed to solid growth
in aeronautical revenues of 3.6 per cent and 5.0 per cent respectively despite relatively low
growth in passenger numbers.
Higher average prices and an increase in passenger numbers at Brisbane Airport during
2011-12 contributed to a strong increase in aeronautical revenues of 7.0 per cent.
Perth Airport reported a slight fall in aeronautical revenue per passenger (average prices)
(-1.6 per cent) but significantly higher total aeronautical revenues (14.5 per cent) due mainly to
strong growth in total passenger numbers.
At Adelaide Airport, lower average prices and a fall in passenger numbers resulted in lower
aeronautical revenues (-9.3 per cent).
Sections 1.4.2 and 1.4.3 describe total aeronautical revenues and average prices at monitored
airports.
2
Tiger Airways re-commenced operations at Adelaide Airport after the end of the 2011-12 financial year.

Summary Airport Monitoring Report 2011-12
xiv
Aeronautical margins
Sydney and Brisbane airports were the only two airports to report higher aeronautical operating
margins per passenger during 2011-12.
At Sydney Airport, aeronautical operating margins per passenger increased 6.4 per cent due to
higher increases in revenue than costs and comparatively low growth in overall passenger
numbers.
At Brisbane Airport, higher aeronautical revenue per passenger coupled with lower
aeronautical operating expenses per passenger resulted in an increase in operating
aeronautical margins per passenger of 9.2 per cent.
Adelaide, Melbourne and Perth airports experienced falls in aeronautical operating margins per
passenger of 14.8 per cent, 9.9 per cent and 12.5 per cent respectively.
At Melbourne Airport, an increase in average aeronautical revenues per passenger of
4.8 per cent was not enough to offset the effects of an increase in aeronautical operating
expenses of 17.3 per cent. Higher depreciation and salaries contributed to higher costs at
Melbourne Airport.
At Adelaide Airport, aeronautical margins per passenger fell as aeronautical revenues per
passenger decreased while operating expenses per passenger increased by 2.4 per cent.
At Perth Airport, aeronautical margins per passenger fell as aeronautical revenues per
passenger fell 1.6 per cent while operating expenses associated with the airport’s expansion
increased.
Section 1.4.5 presents an analysis of aeronautical margins at monitored airports.
Returns on assets
Sydney and Brisbane airports recorded slightly higher returns on aeronautical assets in
2011-12 relative to 2010-11, consistent with the changes in aeronautical operating margins.
Returns fell at the other three monitored airports.
In the 2009-10 and 2010-11 AMRs, the ACCC noted that airports are partially insulated from
the effects of economic shocks (such as the global financial crisis and natural disasters) that
can reduce demand for air travel.
Section 1.4.6 describes returns on assets at monitored airports.
Quality of services
The overall ratings for quality of service (that is, quality of service ratings based on objective
indicators and responses from surveys of airlines, passengers and border agencies) fell at all
monitored airports during 2011-12, with each airport receiving an overall rating of satisfactory.
For the first time since 2007-08, none of the airports achieved an overall rating of good (that is,
a rating equal to 4.0 or higher).
Adelaide Airport’s rating by passengers and airlines decreased within the satisfactory category.
Passengers rated Adelaide Airport lowest along with Sydney Airport while airlines rated it
highest for quality of service provided to airlines.

xv
Brisbane Airport achieved highest overall rating among monitored airports. Passengers’ rating
dropped slightly within the good range while airlines’ ratings decreased but remained
satisfactory. Airlines’ rating for runway availability fell significantly in 2011-12 to poor after it
was rated good in 2010-11. Brisbane Airport was ranked highest by passengers and second
highest by airlines.
Melbourne Airport’s rating by passengers decreased slightly in 2011-12, though remained
good. Airlines’ ratings increased within the satisfactory range. Passengers rated Melbourne
Airport second among the five monitored airports while airlines ranked it third.
Perth Airports’ average passenger rating decreased from good in 2010-11 to satisfactory in
2011-12. Airlines’ rating for Perth Airport remained poor. Passengers rated Perth Airport third
while airlines rated it last for quality of service provided to airlines.
Sydney Airport had the lowest overall rating among monitored airports for 2011-12.
Passengers’ rating increased within the satisfactory range in 2011-12. Sydney Airport was the
only airport that received an increased passenger rating in 2011-12. Airlines’ rating decreased
from satisfactory in 2010-11 to poor in 2011-12. Passengers rated Sydney Airport, along with
Adelaide Airport, lowest among monitored airports while airlines rated it second lowest.
Section 1.5 presents an analysis of quality of service outcomes for all monitored airports.
Emerging capacity constraints in aeronautical infrastructure
While in 2011-12 passenger numbers fell at Adelaide Airport and were essentially flat at
Melbourne and Sydney airports, the monitored airports as a whole have experienced significant
growth in passenger numbers in recent years.
Total passenger throughput at the five monitored airports has increased by 71.1 per cent since
2001-02, with passenger numbers increasing from 62.1 million in 2001-02 to 106.3 million in
2011-12. Aircraft movements have increased by 30.7 per cent over the same time period,
increasing from 733 694 in 2001-02 to 958 863 in 2011-12.
It is likely that further investment will be required by the monitored airports over the next few
years to ensure that aeronautical capacity is sufficient to accommodate the future needs of
users.
Forecasts of continued growth in passenger throughput and aircraft movements at the
monitored airports suggests that existing aeronautical infrastructure is likely to be under
increasing pressure in the medium to long term. The Bureau of Infrastructure, Transport and
Regional Economics (BITRE) has projected that by 2031 total passenger throughput at the five
monitored airports will increase by 103.8 per cent, from 106.3 million passengers in 2011-12 to
216.7 million passengers in 2030-31.
3
BITRE also projected that by 2030, total aircraft
movements at the five monitored airports will increase by 55.5 per cent, from 958 863
movements in 2011-12 to just under 1.5 million movements in 2029-30.
4
If unaddressed, congestion issues will have direct impacts on users of the airports, as well as
indirect impacts on the economy more broadly. Australia’s major airports are a significant
component of the national transport infrastructure, facilitating the movement of people and the
supply of goods and services. As a result, the major airports make a considerable contribution
to Australia’s overall economic prosperity. Notably, the direct contribution of the air and space
3
Bureau of Infrastructure, Transport and Regional Economics, Research Report 133: Air passenger movements
through capital and non-capital city airports to 2030-31, November 2012.
4
Bureau of Infrastructure, Transport and Regional Economics, Research Report 117: Aircraft movements through
capital city airports to 2029-30, April 2010.

xvi
industry to the Australian economy in the year ending 30 June 2012 was approximately
$7.1 billion, or approximately 0.5 per cent of Australia’s Gross Domestic Product.
5
Despite investment in aeronautical assets over the last 11 years, there is evidence of emerging
system-wide congestion at Australia’s monitored airports. According to the BITRE, between
November 2003 and January 2013, the proportion of domestic flights that arrived on-time fell,
on average, 11.4 per cent while the proportion of domestic flights that departed on-time fell
8.9 per cent across monitored airports. At the same time the number of flights into and out of
the monitored airports has increased markedly.
6
The government’s pricing principles for Australian monitored airports provide for the use of
peak-period pricing to deal with the effects of congestion. It is noted, however, that monitored
airports have preferred to ration excess demand through slot management schemes based on
grandfathered landing rights. The use of grandfathered quantity rationing systems may have
the effect of discouraging efficient new entry.
In the long run, the most efficient way for airports to respond to congestion is to invest in new
infrastructure to accommodate the increase in demand. A number of airports have noted the
emergence of capacity constraints and the need for additional capacity.
Melbourne Airport has noted that investment to expand runway capacity will be required before
the end of the decade in order to meet growing demand. Brisbane Airport has stated that it
expects the growth in air travel to start exceeding the capacity of its current runway system
between 2013 and 2015. Perth Airport has noted that demand concentration during peak
periods is placing pressure on its infrastructure.
7
In respect of Sydney Airport, the report to the Australian and NSW governments by the
Steering Committee of the Joint Study on aviation capacity in the Sydney region concluded that
immediate action is needed to increase Sydney Airport’s capacity to meet growing demand.
The Steering Committee concluded that from around 2030, an additional airport will be needed
to supplement the capacity of Sydney Airport.
8
Section 2.3 discusses evidence of congestion at monitored airports.
Master planning process at Australian airports
To ensure that airports continue to invest in airport infrastructure, the government requires
airports to prepare master plans and major development plans, so that airports can indicate the
areas where investments will be undertaken. These plans also require public consultation, so
that users can express views to the airports and the Government about where investment
should be targeted to meet their needs.
Under the Airports Act 1996 (Airports Act), Australian airports are required to establish a
20 year forward-looking master plan, which identifies, for example, development objectives and
future aviation requirements. Master plans are updated by the airports every five years and
have to be approved by the Minister for Infrastructure and Transport (the Minister). The five
monitored airports have master plans in place which are due to be updated over the next two
years.
5
ABS, Australian National Accounts, National Income, Expenditure and Product (ABS cat. no. 5206.0, June 2012,
Table 45).
6
Bureau of Infrastructure, Transport and Regional Economics, Domestic airline on time performance, December 2003
and December 2012.
7
Perth Airport, Submission to ACCC Airport Monitoring Report, 28 September 2012. See also Brad Geatches, Perth
Airport challenges, West Australian Perth, 15 October 2012.
8
Steering Committee, Joint Study on aviation capacity in the Sydney region, March 2012.

xvii
The Government stated in its 2009 National Aviation Policy White Paper (the White Paper) that
improved planning is one of its policy goals for Australian airports, in order to facilitate better
integration and coordination with off-airport planning and to facilitate continued investment in
Australia’s airport infrastructure and land transport links.
9
Following the release of the White
Paper, the Government has increased the requirements for airports to consult and engage with
the broader community throughput the planning process.
Airports must also prepare major development plans for major projects
Under the Airports Act, Australian airports are also required to prepare a major development
plan for each major individual development at an airport, including aeronautical and
non-aeronautical projects. Airports must undertake public consultation on draft major
development plans before submitting the plan to the Minister for approval.
Planning for future investment in aeronautical services
The monitored airports have plans to invest in aeronautical assets over the next few years, in
order to expand aeronautical capacity.
Brisbane Airport has recently completed the detailed design for the first construction phase of
its new parallel runway and has commenced civil works. Brisbane Airport has proposed that
construction will be completed by 2020.
In November 2012, Melbourne Airport announced its preferred orientation for a third runway,
with its proposal to be outlined in its 2013 master plan.
10
Melbourne Airport noted that a third
runway will be required from around 2018-22 to meet the growing demand for access to the
airport.
Perth Airport has planned a number of projects within the international terminal following
opening of a new domestic terminal in March 2013, including an expansion and redesign of the
international arrivals area and the departures customs, security screening and lounge areas. It
has been reported in the media that Perth Airport has commenced planning for a third
runway.
11
Sydney Airport, while constrained by legislative requirements from increasing runway capacity,
is planning to undertake a number of initiatives, including a proposed reconfiguration of the
current domestic and international precincts.
12
ACCC to monitor and report on airports’ investment projects
The ACCC intends to track progress by airports in implementing investment plans. Future
AMRs will assess and report on the extent to which planned investments are taking place.
Chapter 2 presents an in-depth analysis of emerging capacity constraints on the supply of
aeronautical services and future investment needs at monitored airports.
9
Australian Government, National Aviation Policy White Paper, December 2009.
10
Melbourne Airport, Melbourne Airport announces third runway preference, Media Release, 20 November 2012.
11
Examples include; Geoffrey Thomas, Airport had warning of chaos, West Australian, 12 October 2012 and; Brad
Geatches, Perth Airport challenges, 15 October 2012 and; Natalie Gerritsen, Perth unlocks keys to terminal, Australian
Financial Review, 8 January 2013.
12
Sydney Airport, New Vision To Integrate International , Domestic and Regional Services, 5 December 2011, viewed
on 9 January 2013 at; http://www.sydneyairport.com.au/corporate/media-centre/media-releases/media-release-
detail.aspx?item=%7B19FE83DF-66A6-49CA-A219-72C3A4A4C7E0%7D&lst=%7BC313C142-0E4E-4269-A2FB-
BDEB95B3BC9E%7D.

xviii
Prices, revenue, margins and capacity for airport car
parking
The ACCC monitors on-airport car parking prices and revenues, costs and profits associated
with on-airport car parking for all monitored airports.
The ACCC also collects information on charges imposed by airports on operators of alternative
services to on-airport car parking as well as the amount of revenue received from those
operators. Alternatives to on-airport car parking include taxi services, limousine and hire car
services, and private and public bus services.
By imposing excessive charges or restrictive terms and conditions for landside access, airports
could potentially obstruct competition from alternatives to on-airport car parking. This could
have the effect of shifting demand from those alternatives to an airport’s own car parking
services, and allow the airport to charge higher prices.
However, it is important to note that, for the reasons outlined at the end of this chapter, care
needs to be taken when interpreting the levels of on-airport car parking and landside access
prices, revenues, costs and profits, and when making comparisons of performance across the
monitored airports and over time.
Because of the many different types of price points available on car parking (that is, different
prices per different lengths of car park stays), it is not possible to make reference to an average
price for car parking. Instead, car parking revenue, costs and margins per car park space are
used as indicators of unit revenue, unit costs and unit margins.
Prices and Revenues
At Brisbane, Melbourne Perth and Sydney airports car park revenues increased in 2011-12 due
to a combination of higher car parking charges and increased demand. See Table 3 in the Key
Findings for data on car parking prices and revenues.
Perth Airport reported a 23.2 per cent increase in revenues as a result of increases in car park
prices in three of the four price points shown in Table 3 in the Key Findings and an increase of
7.4 per cent in the number of car park spaces.
Brisbane and Sydney airports recorded slight increases in revenue (up 1.4 per cent and
2.5 per cent respectively) and large increases in the number of car park spaces (up
31.7 per cent and 6.9 per cent respectively).
Melbourne Airport’s car parking revenues were largely unchanged in 2011-12. Two of the price
points were increased and the number of car spaces decreased by 2.2 per cent. In 2011-12,
Melbourne Airport earned the highest revenues from car parking ($114.7 million) and the
highest proportion of total airport revenue from car parking (20 per cent).
Car parking prices did not change at Adelaide Airport which recorded a fall in car parking
revenues of 4.9 per cent.
Section 3.3 describes prices charged for car parking at monitored airports, while section 3.4
discusses revenues earned by airport operators from their car parking businesses.
Margins
Two airports, Adelaide and Brisbane, experienced a fall in margins earned on their car parking
operations. Adelaide and Brisbane airports recorded falls in margins, of 10.0 per cent and

xix
11.8 per cent respectively, and in margins per car park space of 10.1 per cent and
33.0 per cent respectively.
Sydney Airport reported a rise in total margins of 0.4 per cent but, because of a rise of
6.9 per cent in the number of car park spaces, margins per car park space fell 6.1 per cent.
Despite this, Sydney Airport continued to earn the highest margin per car park space with
$5 290.
Perth Airport car parking margins increased 24.3 per cent while margin per car park space
increased 15.8 per cent.
Melbourne Airport car parking margins were largely unchanged from 2010-11 levels but
remained the highest among monitored airports ($86.4 million).
Section 3.4 assesses margins earned on car parking facilities at monitored airports.
Landside services
Recent trends in landside access prices and revenues
The ability of operators of landside alternatives to on-airport car parking, such as taxis, trains,
off-airport car parking, buses and hire cars, to supply these services depends on whether they
can have access to airport land, and on the terms and conditions of access.
Airports control access to airport land, and the associated terms and conditions of access, and
so have the ability to influence the level of competition between on-airport car parking and
other off-airport landside alternatives.
Results of monitoring charges and revenues associated with landside access include:
Three airports, Brisbane, Perth and Sydney, increased some charges while Melbourne and
Adelaide airports left all landside access charges unchanged in 2011-12.
Total landside revenue increased at all airports other than Adelaide Airport. Total revenue
earned from landside access operations at all airports increased by almost 20 per cent to
around $28.7 million in 2011-12.
Revenue at Brisbane, Melbourne and Perth airports increased 9.2 per cent, 6.4 per cent and
10.1 per cent respectively. Sydney Airport’s revenue from landside access was the highest of
all five airports at about $13.3 million, increasing by around 36.9 per cent in 2011-12. Sydney
Airport accounted for around 46 per cent of the combined land-side revenue earned by
monitored airports.
Section 3.6 presents additional information on landside charges and revenues.
Investing in landside services
Projected growth in passenger numbers will also increase demand for landside access at
monitored airports. This will create the need for investment in car parking facilities, terminal
roads, kerbside management, and other facilities used by landside operators supplying
alternatives to on-airport car parking.
An airport’s landside infrastructure can be broadly categorised as that existing within an airport
and immediately adjacent to the airport precinct. Landside infrastructure within an airport
broadly consists of car parks, taxi holding areas, train platforms and other facilities, pick-up and
drop-off areas and roads surrounding the terminals and connecting the airport to the major
roads outside of the airport precinct. Beyond the airport boundaries, landside infrastructure
consists of road and rail networks used by consumers to access the airport.

xx
As noted, several major investment projects are underway or have recently been completed by
the monitored airports. Looking forward, it will be imperative that the airports liaise with users
and governments to develop appropriate landside solutions to address growth. Such
engagement with stakeholders will ensure landside developments are fit for purpose, deliver
sufficient spare capacity and integrate with wider infrastructure networks.
Section 3.8 analyses possible capacity issues at landside facilities including future investment
requirements in section 3.8.1.
Cooperation is necessary
Planning, collaboration and investment in landside facilities, particularly those transportation
networks outside of airport borders, will be required to complement significant airside capacity
expansion and aeronautical growth at airports.
Establishing efficient landside networks for getting to and from an airport requires input from a
number of parties such as airports, landside operators, state governments and the
Commonwealth. As airports continue to grow, and the surrounding landside infrastructure
becomes increasingly congested, effective cooperation between responsible parties will be
important to implement effective landside solutions.
It will be important that the airports liaise with users and governments to develop appropriate
landside solutions to address forecast growth, to ensure that they are fit for purpose and deliver
sufficient spare capacity.
Section 3.8.2 discusses investment planning processes for landside facilities.
Monitoring investment outcomes
To improve the scope and ability for the ACCC to assess the airport operator’s performance
and progress against investment plans, this year’s airport monitoring program was extended to
collect details of completed, ongoing and planned investment in landside infrastructure.
By reporting on progress with airport investment, the AMR can provide further observations of
how airports are responding to any congestion issues at the landside and whether there are
issues outside the airport boundaries that are influencing the efficiency of landside
infrastructure networks.
This information, in conjunction with the airports’ own master plans, will assist in assessing the
extent to which the airports are meeting the needs of their users.
The ACCC’s role in monitoring aeronautical and car
parking services
The ACCC’s monitoring role for the major airports
In a number of inquiries into the economic regulation of airport services, the most recent of
which was in 2011, the PC has reiterated that airports monitored by the ACCC have market
power. According to the PC “...the market power of Sydney, Melbourne, Brisbane and Perth
Airports is sufficient to warrant policy attention”.
13
Airports control access to the key
infrastructure necessary for air transportation and for users of airports to access terminals. In
many cases, there is a lack of practical alternatives for travelling overseas and the large
distances between capital cities. Consequently, the air transportation industry plays a pivotal
13
Productivity Commission, Economic Regulation of Airport Services, Inquiry report No. 57, Canberra, December 2011.

xxi
role in the Australian economy in facilitating travel as well as movement of time sensitive goods
and services.
Due to concerns that airports could use their position to earn monopoly profits to the detriment
of Australians, the Australian Government has directed the ACCC to monitor the quality, prices,
costs and profits relating to the supply of aeronautical and car parking services by Australia’s
five major airports—Adelaide, Brisbane, Melbourne (Tullamarine), Perth and Sydney (Kingsford
Smith) airports.
The government established a price monitoring approach to regulating airports in 2002
following consideration of the recommendations of a PC inquiry. The move from a price
regulation regime to a monitoring regime was intended to facilitate investment and innovation,
while retaining a constraint on the exercise of market power by the airports in their dealings
with airlines and other customers. In responses to subsequent PC inquiries in 2006 and 2011,
the government has reiterated its commitment to the continuation of the airports monitoring
program.
The ACCC is also required to monitor the quality of service in relation to the provision of
prescribed aspects of airport services and facilities by those airports.
Productivity Commission 2011 inquiry into the economic regulation of airport
services and the Government’s response
During 2010, the government responded to concerns raised by the ACCC in relation to its
2008-09 AMR. These concerns included that Sydney Airport had potentially increased profits
by permitting service-quality standards to fall below that which could be expected in a
competitive environment over a sustained period.
The 2011 PC report into the economic regulation of airport services concluded that Brisbane,
Melbourne, Perth and Sydney airports retain sufficient market power to be of policy concern.
14
The PC recommended that the current monitoring program should continue to operate until at
least 2020.
The government agreed in principle with the PC’s recommendations to continue monitoring of
airports by the ACCC and that the next review of the monitoring program should be done in
2018.
Limitations of monitoring
Monitoring of itself does not restrict airports from using their monopoly position to increase
prices and/or lower service standards.
Monitoring is limited in its scope to undertake a detailed assessment of the performance of
airport operators. The results from monitoring do not provide conclusive evidence as to whether
airport operators are exercising market power. For example, it is not possible to determine
whether airports are earning monopoly rents from information obtained through the monitoring
program. A more detailed evaluation of the airports’ performance would be required to make
more definitive findings, including a comparison with economically efficient benchmarks.
However, such an evaluation is beyond the scope of monitoring. Among other things, within
accepted accounting conventions airports have discretion on asset values. This limits the
usefulness of data on returns on assets as an indicator of economic performance.
14
Productivity Commission, Economic Regulation of Airport Services, Inquiry Report No. 57, Canberra, December
2011.

xxii
Importantly, monitoring does not directly restrict the airports from increasing prices and/or
lowering service standards and does not provide the ACCC with a general power to intervene
in the airports’ conduct in setting of terms and conditions of access.
For these reasons, monitoring is not effective in addressing the policy concern that an
unconstrained airport presents and is not a substitute for effective regulation.
That said, monitoring allows the performance of airports to be considered based on
observations from the monitoring results over time. It is possible for the ACCC to make general
observations about whether certain outcomes might be consistent with firms with market
power. For example, the ACCC may express concerns about an airport’s performance where
prices increase while quality of service is observed to have remained constant or even fallen
below satisfactory, over a sustained period of time.
By providing a greater level of transparency to the airports’ performance, monitoring also seeks
to address information asymmetries that may exist between airports and its customers.
Analysis and interpretation of monitoring results
Presentation of data and charts in the 2011-12 report
The 2010-11 AMR presented most charts and tables with airport data commencing from
2006-07.
In the current AMR, the time series presented and discussed in the accompanying notes
extends from 2001-02 to 2011-12, representing 11 years of data.
The ACCC believes that an appropriate period to assess trends over time is for data to be
presented from 2001-02 to 2011-12. The change to presenting data with a longer time series
enables analysis of pricing and long term asset values and changes over time. Airport assets
are usually long-term investments. Where practicable, long-term time series, such as data
covering the period from 2001-02 is presented in both nominal and real terms.
Monitoring prices, profits and quality of aeronautical services
A number of indicators have been developed to monitor prices, profits and quality of
aeronautical services.
The ACCC publishes a schedule of prices charged by each airport for the supply of
aeronautical services (see chapters 4-8). Airports provide many different types of services with
charges levied on different bases - such as on a per passenger basis or by aircraft weight.
Further, airports might offer discounts for certain periods or to certain users, or there might be
minimum and maximum charges in place which affect some users but not others.
In addition, the price changes for particular airport users might vary depending on the
composition of the airport services they utilise, the times at which they use them and so on. For
example, the costs to an airline of a domestic flight are likely to be different to those associated
with an international one due to differing security and processing requirements. Similarly,
changes in price structure by an airport might affect users in different ways—even to the point
of effectively lowering the costs for one user while raising them for another.
For these reasons, it is difficult to aggregate all services and prices into a single average price
of aeronautical services for monitoring purposes. The lack of a single aggregate price
complicates the task of establishing trends over time given and comparing prices across
airports.

xxiii
Given these complications, the ACCC’s primary measure of average airport prices is
aeronautical revenue per passenger. This relies on a consistently defined service definition and
provides a measure of the cost to airlines expressed in terms of the most significant charging
unit.
Similarly, when measuring net earnings, the ACCC has relied on aeronautical operating
margins per passenger as an indicator of unit profits and return on aeronautical assets as an
indicator of profitability.
Measures of service quality include survey ratings by airlines, passengers and border agencies
as well as objective indicators.
Caveats - monitoring costs and profits
As noted, care should be taken when making comparisons of performance across airports and
over time. There are many factors that may influence the price and quality of service monitoring
results.
The price, cost and profit data presented in this report is based on accounting data provided by
the monitored airports. The main caveats for price monitoring results include:
• difficulties in consistently reporting financial information because of changes in legislation
and regulations that can affect how items are reported (including in accounting practices
such as the transition to Australian equivalents to International Financial Reporting
Standards in 2005–06)
• indicators of profitability based on accounting data in particular are not effective measures
of economic performance and only provide guidance on trends in operating performance
over time
• airports’ return on assets can be significantly affected by the discretion they have on asset
revaluations. This affects the usefulness of analyses of rates of return on assets for
assessing economic performance and also complicates comparisons of changes in rates of
return over time and across airports.
A change in the definition of aeronautical services and non-aeronautical services in 2007–08 by
the Australian Government significantly affected how revenues are reported and reduced the
comparability of airports’ revenues with prior years.
As with other multi-product firms, airports incur a range of costs that are common across
aeronautical and non-aeronautical services. As there is no economically meaningful way of
allocating common costs to individual products and services, allocation of expenses to different
types of services requires some discretion by the airport operators, which in turn can influence
measures of profitability of services.
Financial indicators can provide useful insights into the operational performance of airports
over time. However, they should not be interpreted in isolation as they only provide a partial
indication of performance and are not definitive. Trends of operational performance across
airports are more reliable if comparable results are present for a range of relevant indicators.
For example, the ACCC employs a number of indicators to measure profitability to account for
their respective limitations. Aeronautical operating margin per passenger is used by the ACCC
as a measure of unit profits. However, this measure does not make an allowance for
risk-adjusted returns on capital associated with the provision of services.
The ACCC also uses return on average assets as an additional measure of profitability,
although this measure is likely to vary according to the stage of a given airport’s investment

xxiv
cycle. In addition, rates of return can also be affected by different asset valuation
methodologies employed by airports. Among other things, airports’ upward revaluation of
assets might lower measures of return on average assets. This can possibly distort
comparisons across airports and over time.
In order to establish asset values to facilitate the monitoring of rates of return a ‘line in the sand’
measure was reported for the first time in the 2007–08 ACCC AMR. The line in the sand
approach removes for monitoring purposes the effects of revaluations of aeronautical assets by
airports after 30 June 2005. This approach, however, may also be affected to the extent that
airport operators had chosen to revalue assets prior to this cut-off date.
Another reason that may make comparisons across airports difficult is the fact that the ACCC’s
monitoring role for aeronautical services relates only to those terminals that are owned and
operated by the monitored airports. However, some of the airports’ domestic terminals, such as
the Qantas and Virgin Australia domestic terminals at Brisbane Airport are leased and operated
by those airlines and are not subject to the ACCC’s monitoring. Therefore the revenues, costs,
profits and quality of service associated with those terminals are not included in the monitoring
results presented in this report.
15
Caveats - monitoring quality of service
The provision of airport services can be influenced by different parties and, therefore,
interpretation of the quality of service results need to take these different factors into account.
Indeed, airport services are commonly the combined responsibility of a number of entities—
including airlines, government agencies, the airport operator and sub-lessees of the airport
operator.
The quality of service results should not be considered in isolation of other indicators as doing
so can result in misinterpretation of the outcomes. The objective measures of quality of service
may provide useful context to the understanding of survey results and should therefore be
interpreted in conjunction with each other.
15
Note that the rent charged by the Airport operators to Airlines such as Qantas and Virgin for the use of the terminal is
included in non-aeronautical revenue.

Airport Monitoring Report 2011-12 Overview of the monitoring results for aeronautical services
1
1 Overview of the monitoring results
for aeronautical services
Key points
Trends in prices, costs and margins for aeronautical services
• With the exception of Adelaide Airport, passenger numbers increased at the monitored
airports in 2011-12. Sydney Airport has had the highest passenger throughput in every
year since 2001-02, while Perth Airport has had the highest growth in passenger
throughput since 2001-02.
• Domestic passenger numbers fell but international passenger numbers increased in
2011-12 at Australia’s two largest airports at Sydney and Melbourne. On the other hand,
domestic passenger travel made significant contributions to the strong growth in passenger
numbers at Perth and Brisbane airports.
• Aeronautical revenue per passenger (an indicator of average prices) fell at Adelaide and
Perth airports but rose at the other monitored airports.
• Sydney Airport remained the airport with the highest aeronautical revenue per passenger at
$14.95 per passenger compared with the second highest at Adelaide Airport with $11.01
per passenger.
• Adelaide, Melbourne and Perth airports reported a decrease in aeronautical operating
margin per passenger (an indicator of profitability), while Brisbane and Sydney airports
reported an increase in aeronautical operating margin per passenger.
• Sydney Airport continued to be the airport with the highest aeronautical margin per
passenger at $7.33 per passenger compared with the second highest at Adelaide Airport
with $4.53 per passenger.
Trends in quality of service for aeronautical services
• Overall quality of service ratings, based on objective indicators and encompassing the
views of airlines, passengers and border agencies, decreased for all monitored airports in
2011-12, though all airports remained rated as satisfactory.
• Sydney Airport recorded the lowest ratings in terms of overall quality of service for the
seventh consecutive year.
• Airlines’ ratings, which can provide a more direct indication of the quality that the airport
operators provide, decreased at Adelaide, Brisbane and Sydney airports in 2011-12.
Airlines’ rating of Melbourne Airport’s quality of service increased, and remained
unchanged at Perth Airport.
Price and quality ratings for the airports
• Sydney Airport had the highest aeronautical revenue per passenger and the lowest overall
rating for quality of service in 2011-12.
• In contrast, Melbourne Airport had the lowest aeronautical revenue per passenger and was
third behind Brisbane and Adelaide airports for overall quality of service.

Overview of the monitoring results for aeronautical services Airport Monitoring Report 2011-12
2
1.1 Introduction
This chapter presents observations on the performance of Adelaide, Brisbane, Melbourne
(Tullamarine), Perth and Sydney (Kingsford Smith) airports in relation to the supply of
aeronautical services.
For the purposes of the ACCC AMRs, aeronautical services are defined as services provided
by airport infrastructure to facilitate air transportation of passengers and freight. Under
regulation 7.02 of the Airports Regulations 1997, aeronautical services and facilities are defined
as “services and facilities at an airport that are necessary for the operation and maintenance of
civil aviation at the airport”. These include services and facilities listed in the tables
accompanying the regulations: aircraft-related services and facilities such as runways,
taxiways, and passenger-related services and facilities such as public areas in terminals,
departure and holding lounges.
Section 2 describes terminal configurations at different airports. Section 1.3 provides some key
observations about the performance of each of the monitored airports during 2011-12. Key
indicators relating to activity, prices, revenues, costs, margins and investments for aeronautical
services are discussed in section 1.4, showing changes in indicators over time in nominal
values, as well as inflation-adjusted values. Section 1.5 presents the quality of service results,
while section 1.6 compares the airports’ price and quality of service outcomes for the most
recent year (2011-12).
More detailed information about the monitoring results for aeronautical services since 2001-02
is provided on an airport-by-airport basis in chapters 4 to 8. Monitoring data going back to
2001-02 is presented in order to provide an analysis of long-term trends. Aeronautical assets,
such as terminals and runways, are generally long-lived assets, and long-term analysis can
provide an indication of the adequacy of these investments over time.
Appendices A.1 and A.2 of this report provide the individual airports’ regulatory accounts and
detailed information on the airports’ indicators and statistics used in this report. For details
regarding the approach taken by the ACCC in preparing the measures used in this report, as
well as a full list of aeronautical services covered by the monitoring program, see appendices
A.4 to A.7.
1.2 Airport terminal configurations
The monitored airports have considerably different terminal configurations. Some airports offer
a combined terminal for international and domestic passengers, while others have separate
terminals.
Importantly, some of the domestic terminals at the monitored airports are leased and operated
by airlines under domestic terminal leases (DTLs). Under DTLs, airlines operate their terminals
independently of the airports and have greater discretion over the quality of services and
facilities offered.
16
The existence of DTLs at some of the monitored airports complicates
comparisons of monitoring results across airports (see box 1.2.1)
The various terminal configurations offered by the monitored airports and the DTLs that apply
are outlined in table 1.2.1.
16
For more detailed information on the implications of domestic terminal leases, see chapter 3 of the ACCC’s Airport
Monitoring Report 2008-09.

3
Table 1.2.1: Terminal configurations at the monitored airports
Airport Terminal configuration Domestic terminal leases (DTLs)
Adelaide One multi-user integrated terminal (T1) that
services international, domestic and regional
passengers
None (expired February 2006)
Brisbane One international terminal and one domestic
terminal
The majority of the domestic
terminal is occupied by Qantas
and Virgin Australia under DTLs
(expires December 2018)
Melbourne One international terminal and three domestic
terminals as follows:
• T1—Qantas domestic terminal
• T2—international terminal
• T3—common-user domestic terminal (Virgin
Australia, Regional Express and Skywest)
• T4—common-user domestic terminal (Tiger
Airways)
T1 (Qantas domestic terminal)
(expires December 2018)
Perth One international terminal and two domestic
Airways, Virgin Australia and others)
(expires 2018)
Sydney One international terminal and two domestic
Airways, Jetstar, Virgin Australia, Regional
Express and others)
(expires June 2019)

4
Box 1.2.1: Domestic Terminal Leases
Comparisons of airports’ revenues, prices, costs, margins and quality of service are
complicated by domestic terminal leases (DTLs) at some of the monitored airports.
The direction issued to the ACCC under s.95ZF of the CCA to undertake airport monitoring up
to 2011-12 (Direction No 29) relates to aeronautical and car parking services and facilities
provided by Sydney Airport Corporation Limited (Sydney Airport), Australia Pacific Airports
Corporation Limited (Melbourne Airport), Brisbane Airport Corporation Pty Limited (Brisbane
Airport), Perth Airport Pty Ltd (Perth Airport) and Adelaide Airport Limited (Adelaide Airport).
The Airports Regulations 1997 define aeronautical services and facilities to include both
aircraft-related and passenger-related services and facilities provided at an airport.
17
However,
the ACCC’s monitoring program does not include passenger-related services and facilities that
are provided within a terminal that is occupied and operated by an airline under a DTL.
Therefore, the revenues, prices, costs, margins and quality of service associated with the
passenger-related services and facilities provided within these terminals are excluded from the
results presented in this report.
18
Adelaide Airport is the only monitored airport that does not have any DTLs. Adelaide Airport
opened its multi-user terminal in October 2005, with Qantas transferring its domestic operations
from the terminal that it occupied and operated under a DTL to the new terminal in February
2006. Therefore, monitoring data collected from Adelaide Airport prior to February 2006 does
not include data on passenger-related services and facilities provided within the domestic
terminal operations of Qantas. This contributed to Adelaide Airport reporting significant
increases in aeronautical revenue, expenses and margins in 2005-06 and 2006-07, as data on
passenger-related services and facilities previously provided within the domestic terminal
operations of Qantas were included in the monitoring programme for the first time.
1.3 Key observations from the monitoring results for
aeronautical services
In performing its monitoring role, the ACCC looks at levels and trends across a range of
indicators—including prices, costs, margins, returns on assets, investment and quality of
service—at the individual airports. However, although observations from monitoring may raise
some concerns about an individual airport’s performance, monitoring does not allow a detailed
assessment of the airport’s performance to be undertaken and cannot be used to conclusively
establish whether an airport has exercised market power to earn monopoly rents. The
limitations of monitoring are set out in further detail in the executive summary, while appendix
A.7 discusses the ACCC’s monitoring methodology.
For the purposes of the discussion in this section, analysis of quality of service is focused on
the quality of service provided to airlines and on the results of the airline survey results, as
airline ratings can provide a more direct indicator of the quality of service that the airport
operator provides. This is because airports provide services directly to airlines under
commercial arrangements and are in a position to make an informed assessment of quality
against price.
17
Aeronautical services and facilities have the meaning given by regulation 7.02A of the Airports Regulations 1997.
18
For more detailed information on the implications of domestic terminal leases, see chapter 3 of the ACCC’s Airport
Monitoring Report 2008-09.

5
Given the complex nature of airports’ bundling of charges, and changes on the basis of how
these charges are applied, the ACCC adopts aeronautical revenue per passenger as an
indicator of average prices that the airlines pay to airports. Aeronautical operating expenses
per passenger are used as an indication of unit costs.
It should be noted that aeronautical revenue and aeronautical operating expenses on a per
passenger basis include revenues and costs associated with the provision of government
mandated security services. The revenues and costs associated with these services do not
reflect decisions made by airport operators. Therefore, where appropriate, the discussion in this
chapter and the individual airport chapters (chapters 4-8) also consider aeronautical revenue
per passenger and aeronautical operating expenses per passenger excluding security.
Unlike average prices and unit costs, aeronautical operating margin per passenger is
discussed including security. This is because government mandated security revenue is set to
recover the costs associated with security services and does not affect the overall profitability
of the airports.
The following sections outline some observations from the monitoring results for each of the
airports.
1.3.1 Observations about Adelaide Airport
In 2011-12, Adelaide Airport was the only monitored airport to report a decrease in passenger
numbers, with passenger numbers decreasing by 4.0 per cent to 7.1 million passengers. A
number of factors may have contributed to the drop in passenger numbers at Adelaide Airport,
including subdued economic conditions, Tiger Airways ceasing operations at the airport from
July 2011
19
and the Qantas grounding and associated industrial action.
Declining passenger numbers impacted on Adelaide Airport’s aeronautical revenue during
2011-12, with total aeronautical revenue decreasing by 9.3 per cent. The impact on
aeronautical operating expenses was less pronounced, with total aeronautical operating
expenses decreasing by 1.7 per cent.
In 2011-12, Adelaide Airport’s aeronautical operating margin decreased by 18.3 per cent and
decreased by 14.8 per cent on a per passenger basis.
As a measure of investment in aeronautical services, Adelaide Airport’s additions as a
percentage of tangible non-current assets for aeronautical services have been relatively low
since the completion of the new multi-user terminal in 2006. However, Adelaide Airport has
begun to increase its additions over the last two years, with additions increasing to
13.4 per cent of tangible non-current aeronautical assets in 2011-12. Adelaide Airport’s
additions during 2011-12 have mostly related to the landside infrastructure project, which
involved construction of a new car park and landside facilities.
Chart 1.3.1 shows that since the opening of its new multi-user terminal in 2006, quality of
service results improved significantly at Adelaide Airport and have on average been rated as
satisfactory or above. This is in contrast with the period prior to the opening of the new
terminal, when Adelaide Airport recorded poor quality of service results.
19
Tiger Airways re-commenced operations at Adelaide Airport after the end of the 2011-12 financial year.

6
Chart 1.3.1: Airlines’ average ratings for quality of service at Adelaide Airport,
2001-02 to 2011-12
It should be noted that following the release of the 2011-12 AMR, Adelaide Airport will be
required to join the second-tier price and quality of service reporting process established by the
National Aviation Policy White Paper in December 2009. This is a self-administered scheme,
where the airport will be expected to disclose on its website:
• prices of aeronautical services
• prices of car parking services
• various quality of service outcomes
• airport complaint-handling processes and outcomes.
The reasons for this change to the monitoring regime are discussed in more detail in Adelaide
Airport’s individual airport chapter (chapter 4).
1.3.2 Observations about Brisbane Airport
In 2011-12 over 21 million passengers travelled through Brisbane Airport, an increase of
4.7 per cent over 2010-11 numbers. International passenger numbers increased 4.9 per cent in
2011-12 while domestic passenger numbers increased 4.6 per cent. In 2011-12, almost
78 per cent of passengers were travelling domestically, while just over 21 per cent were
international passengers. Both domestic and international travellers contributed to the increase
in passenger numbers at Brisbane Airport in 2011-12. Since 2001-02 domestic and
international travellers have contributed roughly equally to the 70.3 per cent growth in
passenger numbers. Since 2007-08 domestic passengers travelling through Brisbane Airport
have increased by 14.4 per cent compared with 7.5 per cent growth in international
passengers.
Since 2001-02, Brisbane Airport’s quality of service indicators have been consistently rated as
satisfactory to good. These quality of service trends were repeated during 2011-12.
0
1
2
3
4
5
6
2001–02
2002–03
2003–04
2004–05
2005–06
2006–07
2007–08
2008–09
2009–10
2010–11
2011–12
Averagerating
International terminal Domestic terminal
Airside services and facilities Management's responsiveness
Excellent
Good
Poor
Very poor
Satisfactory

7
In 2011-12, Brisbane Airport increased prices for a number of services, while prices of other
services were unchanged, such as landing fees, aircraft parking fees and noise surcharge.
Airlines continue to rate Brisbane Airport’s quality of service as satisfactory or
higher but identify runway availability as a problem
Average quality of service ratings for Brisbane Airport have consistently been rated as
satisfactory. Individual ratings have ranged from satisfactory to good over the period 2001-02 to
2010-11. However in 2011-12, airlines changed their rating of runway availability which
declined from good to poor. Commentary from the airlines on this issue referred to significant
delays during peak periods. Some airlines noted that Brisbane Airport was taking measures to
address the issue.
Brisbane Airport has completed the detailed design for the first construction phase for a new
parallel runway. Civil works have commenced and the new runway is expected to be
commissioned in 2020. The ACCC notes the new runway was approved by the state and
Australian governments in 2007.
Prior to 2011-12, airlines’ rating of the availability of check-in desks in 2003-04 and airlines’
rating of the standard of aerobridges in 2007-08 were the only occasions when ratings were
less than satisfactory across the range of Brisbane Airport’s individual services and facilities.
It is noted that recent media articles have stated that Brisbane Airport has been unable to reach
a commercial agreement with airlines regarding the funding of its new parallel runway.
20
The
construction of this runway is unusual as it is spread over eight or nine years, with about half
the cost being involved in preparing the site for the runway.
Chart 1.3.2: Airlines’ average ratings for quality of service at Brisbane Airport,
2001-02 to 2011-12
21
Chart 1.3.2 presents average quality of service indicators for Brisbane Airport as rated by
airlines. Of the three average indicators presented, not one increased or decreased between
20
Robyn Ironside, Airlines angry at new toll, Courier Mail, Brisbane, 28 September 2012 and; Steve Creedy, Runway
bill irks carriers, The Australian, 5 October 2012.
21
Note that average measures for Brisbane Airport’s domestic terminal are not presented due to the unavailability of
some individual quality of service indicators.
0
1
2
3
4
5
6
2001–02
2002–03
2003–04
2004–05
2005–06
2006–07
2007–08
2008–09
2009–10
2010–11
2011–12
Averagerating
International terminal Airside services and facilities Management's responsiveness
Excellent
Good
Poor
Very poor
Satisfactory

8
categories during 2011-12. Airline ratings for the international terminal increased slightly within
the satisfactory category, while the rating for management responsiveness decreased slightly
within the same category. There was a larger decrease in the rating for airside services and
facilities, primarily due to the decline in the airlines’ rating of runway availability.
Brisbane Airport’s average prices and unit margins are higher, but is investing
in aeronautical services
Brisbane Airport’s aeronautical revenue per passenger increased by 2.2 per cent in 2011-12, to
$10.02 per passenger. This is lower than the 4.7 per cent annual increase in aeronautical
revenue per passenger in 2010-11.
In 2011-12, Brisbane Airport’s aeronautical operating margin per passenger was $4.47,
representing an increase of 9.2 per cent from 2010-11. This is the smallest annual increase for
the operating margin over the period from 2001-02 to 2011-12.
Since 2001-02, Brisbane Airport’s aeronautical operating margin per passenger has increased
significantly. Brisbane Airport’s aeronautical operating margin per passenger was negative in
2001-02, however, since 2002-03 aeronautical operating margin per passenger has increased
by 397.7 per cent. This increase is equivalent to an average annual increase of 19.5 per cent
per annum. When adjusted for inflation, this increase is equivalent to an average annual
increase of 14.7 per cent. In 2011-12, Brisbane Airport’s aeronautical operating margin per
passenger increase was driven by the operating margin increasing at a faster rate than the
number of passengers.
Brisbane Airport increased terminal charges for international and domestic passengers in
2011-12, while aircraft related charges, aircraft parking fees and noise surcharge remained
unchanged. Brisbane Airport has advised that price increases were set out in the five-year
pricing agreements with airlines to recover the costs of investment. However, and as noted in
the 2010-11 AMR, the ACCC is cognisant that in submissions to the PC’s inquiry airlines
claimed that, while there are agreements in place with airports, commercial negotiations with
some airports tend to be one-sided and dysfunctional.
22
The ACCC is not privy to the
commercial negotiations between Brisbane Airport and the airlines and, therefore, is unable to
determine whether or not the price increases at Brisbane Airport are a reflection of the high
quality of services delivered at the airport or whether they are a symptom of an imbalance in
the negotiating power between airlines and the airport. That said, the airlines have not raised
any specific concerns in their survey responses and the ACCC continues to note the high
quality of service results at the airport.
Brisbane Airport has increased its level of investment in aeronautical services in recent years.
Between 2006-07 and 2011-12, annual additions as a percentage of tangible non-current
assets for aeronautical assets have been over 10.0 per cent on average, with the exception of
2010-11 when addition as a percentage of tangible non-current assets for aeronautical services
fell to 4.7 per cent. In 2011-12, additions as a percentage of tangible non-current assets
increased to 10.8 per cent.
1.3.3 Observations about Melbourne Airport
Melbourne Airport had the second largest number of passengers among monitored airports
pass through its terminals in 2011-12, with 28.4 million passengers. This represented an
increase of 0.2 per cent over 2010-11: international passenger numbers increased by
7.6 per cent while domestic passenger numbers fell by 2.0 per cent. In 2011-12, domestic
passengers accounted for around three quarters of total passengers travelling through
Melbourne Airport. Melbourne Airport stated that the decrease in domestic passengers in
22
Productivity Commission, Economic Regulation of Airport Services, Inquiry report no. 57, Canberra, December 2011.

9
2011-12 reflected some of the difficulties experienced by domestic operators during the year.
23
In particular, Melbourne Airport pointed to the cessation of services by Tiger Airways at the
airport between 2 July 2011 and 10 August 2011, as well as the Qantas grounding and
associated industrial issues. That said, international passenger numbers have been growing at
a faster rate than domestic passenger numbers over the last ten years: since 2001-02,
international passenger numbers have increased 96.8 per cent compared with 67.5 per cent for
domestic passenger numbers.
Melbourne Airport had the largest increase in aeronautical revenue per passenger among the
monitored airports in 2011-12, increasing by 4.8 per cent to $8.58 per passenger.
The ACCC has observed that since 2001-02, Melbourne Airport’s quality of service ratings
have largely remained above satisfactory. Following a decline in the airport’s rating in 2010-11,
quality of service ratings by airlines have somewhat improved in 2011-12.
Following a decline in ratings by airlines for quality of service last year, airline
ratings have shown improvement in 2011-12
In 2011-12 Melbourne Airport’s quality of service ratings by airlines improved within the
satisfactory range, with airlines noting improvements in its international terminal services and
facilities, as shown in chart 1.3.3. In particular, airlines noted improvements in baggage
processing facilities at the international terminal. However, some airlines continued to state that
services at the international and domestic terminal were constrained during peak periods.
Chart 1.3.3: Airlines’ average ratings for quality of service at Melbourne Airport,
2001-02 to 2011-12
On average, from 2001-02 to 2011-12, airlines have generally rated Melbourne Airport’s quality
of service as satisfactory. Airline average ratings for the airport’s quality of service, however,
experienced a notable decline in 2004-05 and again in 2010-11 but recovered in 2011-12.
Services provided at the domestic terminal were the only services that received a poor rating in
2011-12.
23
Melbourne Airport, Melbourne Airport achieves 8 per cent international growth for 2011/12, Media Release, 24 July
2012. See: http://melbourneairport.com.au/News-Events/News-Events-Archive/2012/melbourne-airport-achieves-8-per-
cent-international-growth-for-2011-12.html.
0
1
2
3
4
5
6
2001–02
2002–03
2003–04
2004–05
2005–06
2006–07
2007–08
2008–09
2009–10
2010–11
2011–12
Averagerating
Excellent
Good
Poor
Very poor
Satisfactory

10
While Melbourne Airport’s average prices increased in 2011-12, the airport is
undertaking investment and is reporting increasing average costs
Melbourne Airport’s aeronautical revenue per passenger (excluding security) has increased in
almost every year since 2002-03.
Between 2001-02 and 2002-03, Melbourne Airport reported a 44.5 per cent increase in
aeronautical revenue per passenger and a 380.7 per cent increase in aeronautical margin per
passenger. This was largely driven by Melbourne Airport increasing aeronautical charges
following the removal of price caps on 1 July 2002.
Between 2002-03 and 2011-12, Melbourne Airport’s aeronautical operating margin per
passenger increased by 43.1 per cent. When adjusted for inflation, the increase in aeronautical
operating margin per passenger since 2002-03 is 12.0 per cent. However, in three of the last
four years Melbourne Airport experienced a decline in aeronautical operating margin per
passenger, which decreased by 9.9 per cent in 2011-12. The decrease in aeronautical
operating margins was driven by an increase in aeronautical operating expenses per
passenger (excluding security) of 20.5 per cent, related mainly to salaries and depreciation
charges. The increase in salaries was due to an increase in staff levels and in average salaries
per staff. Average salaries in 2011-12 were 9.4 per cent higher than the previous year.
Melbourne Airport noted that increases in salaries and depreciation charges were driven by
activities associated with the airport’s expansion, specifically investing in new aeronautical
assets and accommodating passenger growth. Melbourne Airport has noted that staff numbers
have moved in both the planning and construction areas during the year, in line with its current
and future development requirements. Further, Melbourne Airport has stated that operational
staff numbers have moved in line with the need to operate an airport with increasing
congestion.
Melbourne Airport continued to invest in aeronautical services in 2011-12 with additions to
buildings and plant and machinery assets as well as land improvements. Some of the
aeronautical projects completed during 2011-12 include fitting out several departure gates and
works in the baggage reclaim area of the international terminal, as well as expanding rooms for
Australian Customs and Border Protection Services search and interview functions. Since
2006-07, Melbourne Airport’s additions as a percentage of tangible non-current assets for
aeronautical services have remained over 10.0 per cent, with a high of 22.1 per cent in
2008-09. In 2011-12, additions were $155.8 million, or 15.5 per cent of tangible non-current
aeronautical assets.
Melbourne Airport has announced that investment to expand runway capacity will be required
before the end of the decade in order to meet the growing demand for access to the airport.
The proposal is to be outlined in its 2013 draft master plan (chapter 2 provides more detail on
the master planning process).
24
1.3.4 Observations about Perth Airport
Perth Airport faced the fastest growing demand of the monitored airports in 2011-12, with total
passenger numbers increasing by 16.3 per cent to 13.3 million passengers. International
passenger numbers increased by 7 per cent in 2011-12 while domestic passenger numbers
increased 20 per cent. Perth Airport has experienced an increase in passenger numbers of
86.6 per cent since 2005-06. More than three quarters of the total growth in passenger
numbers since 2001-02 has been accounted for by domestic passengers. The share of total
passenger numbers accounted for by domestic passengers has increased from 65.4 per cent in
2001-02 to 73.7 per cent in 2011-12.
24
Melbourne Airport, Melbourne Airport announces third runway preference, Media Release, 20 November 2012.

11
In previous monitoring reports, the ACCC observed that the evidence about Perth Airport was
continuing to show mixed results. Quality of service results were seen to be a concern,
although investment was occurring and price changes were moderate.
In 2011-12, the quality of service results for aeronautical services did not show material
improvements across the majority of indicators measured. Yet, as occurred in previous years,
Perth Airport has invested in terminals and airfield improvements during 2011-12. Although
Perth Airport is investing in upgraded or new facilities, these investments do not appear to be
having a major impact on average quality of service indicators for aeronautical services. That
said, a new domestic terminal that opened in March 2013 is expected to have an impact on
service levels.
In 2011-12, Perth Airport implemented upward and downward revision of the prices of a
number of services. Overall, however, Perth Airport had a slight fall in aeronautical revenue per
passenger among the monitored airports, decreasing by 1.6 per cent to $8.86 per passenger.
Airlines have continued to raise concerns about quality of service levels at
Perth Airport
Perth Airport’s average quality of service ratings by airlines remained at poor in 2011-12. These
service ratings have been at poor in four out of the last five years. This is despite Perth Airport
undertaking substantial investments in aeronautical services. A number of completed
investments in 2011-12 including the terminal 3 phase 1 expansion, other terminal
enhancements and apron reconfiguration and ground support equipment storage upgrades.
Other substantial investments that commenced or were underway during 2011-12 include the
new domestic terminal, completed during 2013, and airfield investments planned for completion
in 2014.
Chart 1.3.4 presents average quality of service indicators for Perth Airport as rated by airlines.
Although none of these quality of service ratings increased between rating categories, there
were slight increases within categories for two of the indicators. The ratings for the domestic
terminal and management’s responsiveness both increased within their categories, but
remained at poor and satisfactory respectively. Airline ratings for the international terminal and
airside services and facilities both decreased within the category of poor.

12
Chart 1.3.4: Airlines’ average ratings for quality of service at Perth Airport,
2001-02 to 2011-12
In the 2011-12 survey results, airlines rated 15 of the 28 indicators at the international terminal,
domestic terminal and airside services as either poor or very poor. Again in 2011-12, airlines
have commented on insufficient numbers (and quality) of aerobridges in both the international
and domestic terminals. Ratings for the availability and standard of all aerobridges were poor
for 2011-12.
A more detailed discussion of Perth Airport’s quality of service results is available in section 7.4
of this report.
Perth Airport is continuing to invest in aeronautical services
As noted, the ACCC has previously acknowledged that Perth Airport had increased investment
in aeronautical services in more recent periods, including a major redevelopment of its airport
announced in November 2010. In particular, this redevelopment includes new and expanded
passenger terminals, expanded aircraft parking areas and public access infrastructure. Perth
Airport noted in 2011-12 that the substantial passenger growth over the past few years has
resulted in the ‘customer experience suffering’ due to passenger congestion during peak hours.
Perth Airport commented that the investment and redevelopment was intended to address this
declining customer experience and standard of quality of service, as well as increasing airport
capacity.
The monitoring results for 2011-12 show that Perth Airport is continuing to invest in
aeronautical services. In 2011-12, Perth Airport’s additions as a percentage of tangible non-
current assets for aeronautical services were 19 per cent, slightly down from the 21 per cent
recorded in 2010-11.
As noted, Perth Airport completed a number of major investment projects during 2011-12,
including the first stage of the terminal 3 refurbishments, various international terminal
refurbishments and a number of airfield improvements. The recently completed new domestic
terminal 2 (opened in March 2013) will primarily service regional Western Australia and some
limited interstate routes. The new terminal is part of a larger investment plan for the airport
which will include a new domestic pier due for completion in 2014.
0
1
2
3
4
5
6
2001–02
2002–03
2003–04
2004–05
2005–06
2006–07
2007–08
2008–09
2009–10
2010–11
2011–12
Averagerating
Excellent
Good
Poor
Very poor
Satisfactory

13
Uncertainty about whether investment is addressing airlines’ concerns
The ACCC noted in the 2010-11 AMR that, in general, concerns about an airport’s performance
where quality of service may be less than satisfactory over a short period of time may be
allayed if the airport is investing to address quality of service concerns.
In the case of Perth Airport, it would appear that investment completed during 2011-12 has not
materially improved quality of service ratings and has not as yet addressed all airlines’
concerns. It remains to be seen if these and other investments to be completed during 2012-13
will address airlines’ concerns.
The ACCC has noted in previous monitoring reports that meaningful negotiations with users for
significant investment projects often take time. However, the ACCC has also noted that long
delays in addressing key users’ concerns would be less likely to occur in an effectively
competitive market.
While Perth Airport has previously advised that most of the issues have arisen in response to
the unexpected surge in demand for aeronautical services in the last few years, the ACCC
notes that it has now been a number of years since Perth Airport first recognised the concerns.
That said, Perth Airport may be reasonably expected to be cautious about new investments if it
is not certain that current high levels of demand for aeronautical services are sustainable in the
long term.
A key question for future monitoring reports will be how Perth Airport responds to the strength
of current throughput growth rates. The completion and commissioning of the new domestic
terminal in early 2013 is a key part of Perth Airport’s strategy for improving service levels.
25
The ACCC intends to closely monitor the extent to which these concerns are addressed by
Perth Airport.
Higher margins are a reflection of increased demand rather than higher prices
As noted above, Perth Airport adjusted a number of charges during 2011-12. International,
domestic and regional landing charges decreased by 6.1 per cent, while basic aircraft parking
charges increased by 5.0 per cent. Passenger related charges generally increased.
However, due to the impact on costs associated with the expansion of aeronautical facilities
and the increase in passenger numbers, aeronautical operating margin per passenger
decreased during 2011-12 by 12.5 per cent to $3.12. Although total aeronautical operating
margin increased by 1.8 per cent in 2011-12, total passengers increased by 16.3 per cent.
Since 2002-03, total aeronautical operating margin has increased by 150.0 per cent, an
average annual increase of 10.7 per cent per annum. When adjusted for inflation, the average
annual increase is 7.7 per cent per annum. Over the same period, annual passenger numbers
increased 147.7 per cent to 13.3 million passengers, equivalent to an average annual increase
of 10.6 per cent per annum. As a result, it appears that the increase in total aeronautical
operating margins seen at Perth Airport since 2002-03 may have been mainly driven by
passenger growth, rather than increasing list prices.
During 2002-03, aeronautical operating margin per passenger increased by 1220.6 per cent,
largely driven by higher aeronautical charges following the removal of price caps on
1 July 2002. Since 2002-03, Perth Airport’s aeronautical operating margin per passenger has
increased by 0.9 per cent. This represents an annualised increase of 0.1 per cent per annum.
When adjusted for inflation, aeronautical operating margin per passenger had decreased by an
average of 2.6 per cent per annum.
25
The ACCC notes that Perth Airport has plans to implement a slot management scheme to balance supply and
demand during peak periods from the end of March 2013.

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