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A.C.C.C. approves price reform at Sydney Airport

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M e d ia R e le a s e

The Australian Competition and Consumer Commission has accepted the restructuring of charges for aeronautical services at Sydney Airport proposed by the Federal Airports Corporation for 1998/99. x nlScJ

Under the FAC's proposals, the new charges at the airport will come into effect in October 1998. They will involve a reduction in the basic landing charge for use of the runways and taxiways, removal of peak and shoulder landing charges, an increase in the minimum landing charge (to be phased in over a number of years)

and an increase in the international terminal charge.

Average aeronautical prices will not increase as part of the restructure.

"The ACCC recognises that there is a strong case for the move to user pays at Sydney," ACCC Chairman, Professor Allan Pels, said today. “The new charges reflect the principle of user pays and aim to remove historical cross-subsidies. They will send appropriate pricing signals for efficient use of airport services and appropriate signals for new investment decisions."

The FAC also proposed price rises in 1999/2000 and 2000/01 to support significant new investments at the airport.

"The ACCC recognises that investment expenditure at Sydney airport is required and undertakes to allow increases in charges for aeronautical services sufficient to justify the investments," he said. “However, the ACCC is not in a position to make a decision on the FAC’s proposed price rises for the 1999/2000 and the 2000/2001 financial years at this point in time. There are three main reasons for this. The first

relates to the transfer of the FAC’s assets to the Sydney Airports Corporation. A new declaration will apply to the SAC which means that the SAC will be required under the Prices Surveillance Act 1983 to renotify for future price increases.

"The second issue is uncertainty over the magnitude of the price increases required. The proposed price rises are driven largely by future costs and revenues which cannot be accurately assessed at this stage. The extent to which increases in charges are justified will depend on variables such as traffic volume and capital expenditure. These and other relevant variable will need to be reviewed by the ACCC in the lead up to the introduction of any price increases.

"Thirdly there are some unresolved issues regarding depreciation charges to be applied to the FAC’s new capital expenditure program and appropriate rates of

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return. The ACCC has encouraged the SAC to work through these issues in consultation with airport users with a view to notifying the ACCC at a later date.""

Further information Ms Lin Enright, Director, Public Relations, (02) 6243 1108 or (0414) 613 520 Ms Margaret Arblaster, Senior Assistant Commissioner, (03) 9290 1862 MR 117/98 26 June 1998