The competition watchdog has blocked Sydney Airport Corporation Ltd's proposal to raise fees for regional airlines that operate from Australia's national gateway because it could not show that costs had increased enough to warrant the rise.
The MAp Group majority-owned airport sought in June this year a 2.9 per cent increase in charges for regional airlines serving passengers within NSW.
"Sydney Airport has not satisfied the ACCC that the costs of providing services to regional airlines have increased to the extent that a price increase is required," said ACCC chairman Graeme Samuel.
Despite not lifting prices since 2002, proposed hikes to services including the terminal, check-in, security and runways were denied due to the large increase in passenger volume which has lifted airport renevue substantially in that time, he said.
Sydney Airport said it was baffled by the ACCC's ruling.
According to chief executive Russell Balding, the 2.9 per cent price hike sought was far below the 28.9 per cent increase in the consumer price index (CPI) since 2001.
"The failure of the regulatory system to deliver a fee increase after 10 years is disappointing and difficult to comprehend, particularly given the increase sought was so far below the CPI," he said.
The airport said it would be "documenting" the decision in its submission to the Productivity Commission's review of the economic regulation of Australia's airports.
Regional Express Holdings Ltd (Rex), which is one of three regional carriers operating out of Sydney Airport, said in a statement on Friday it was reviewing the ACCC report.
Under the prices surveillance provisions of the Trade Practices Act 1974, the ACCC has a role in evaluating proposed price increases for services that Sydney Airport provides to regional airlines operating regular passenger flights wholly within NSW. The competition regulator can decide to accept or block the proposed price increases.
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