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a i r p o r t sIn the last 12 months the burden of operating the world’smost expensive airports took its toll on Japan with foreigncarriers slashing an average of 100 flights a week from itsmajor points. Some carriers have pulled out of the countryaltogether.Take note, Sydney and China, say airline representatives,while also issuing a warning to other countries, including India,which are thinking of pumping up revenue at the expense ofairlines. In January, the Sydney Airports Corporation applied todouble its user charges. If approved, Sydney will become oneof the world’s most expensive airports.The Foreign Airlines Association of Japan (FAAJ), whichpublished an eye-opening position paper last summer,are campaigning for a massive 50% reduction in fees withgovernment, airports and building companies sharing the load.TOM BALLANTYNE in Sydney and BARRY GRINDROD reporton one of the region’s most contentious aviation issues – airportuser charges.CHARGED UPAirports are natural monopolies and its time they became more competitive,says AAPA chairman and Air New Zealand chief Jim McCreaAsia’s airlines face significant increasesin operating costs by the end of thisyear as some airport owners moveto dramatically lift charges, compoundinggrowing fears among carriers that widerprivate ownership of airport facilities is forcingcarriers to pay more for terminal and runwayservices.Australia’s Sydney airport, still governmentowned but heading for privatisation, hasapplied to more than double its charges. If theAustralian Competition and Consumer Commission(ACCC) approves the move the airport’sincome from airline customers will rise fromUS$64 million to US$138 million annually.The manoeuvre has sparked a storm ofprotest from the 40 plus international airlinesoperating through Sydney. The cost of turningaround a Boeing B747 will jump 130%,from US$2,905 to US$6,635, if the proposedincreases win ACCC support.Warren Bennett, executive director of theBoard of Airline Representatives of Australia(BARA), which represents all the internationalcarriers operating through Sydney, accusedSydney Airports Corporation Limited (SACL)of “arrogance” and warned more new chargesare in the pipeline.Observers warn such developmentscould become commonplace as more regionalairport authorities look at privatisation or partprivatisationand new owners strive to eke outimproved profits for their shareholders.The Sydney move came just weeks afterthe chairman of the Association of Asia PacificAirlines (AAPA), Air New Zealand’s Jim McCrea,expressed deep concern about rising costs inSydney Airport: facing major opposition from airlines over proposed doubling of chargesareas airlines cannot control, including airwaysand airports charges.“They are of major concern to us and inAustralasia they are a particular concern. It’sinteresting that as airports are privatised andsold, not long afterwards the new owners revaluethe assets and on the basis of re-valuingput the charges up and still maintain they areonly recovering the cost of capital or retainingtheir rates of return,” said Mr McCrea.“That’s a circular argument and an invidiousargument and something that has got to besorted out in competition terms.”Mr McCrea described airports as naturalmonopolies. “I have no problem with freeenterprise and deregulation. I call for it. Butthere are a number of infrastructural assetsthat have privileged natural monopoly positionsand they seem to be free to charge asthey choose.“In other words, competition laws areeither non-existent or light-handed, while inthe airline industry competition law is veryinterventionist and so there is quite a difference.”Elsewhere in Asia, China’s largest airport,Beijing Capital International Airport (BCIA) isto raise charges for domestic airlines this yearby up to 50%.The airport also launched a share offer forretail investors in January. BCIA is attemptingto offset the heavy cost of its recent US$108million facelift.Sources believe international operatorsFebruary 2000 | Orient Aviation | 43
a i r p o r t smay be hit with fee increases later.The airport’s existing charges were set in1992 and operating costs have risen considerablywith the opening of a new terminal lastOctober and plans to expand runway and taxiwayfacilities. A dual listing of the airport onthe Hong Kong and New York stock exchanges,to raise around US$400 million, is imminent.Also, late last year the Airports Authorityof India (AAI) announced plans to raise itsroute navigation facility charges at all domesticand international airports by 7.5% in 2000, anincrease aimed at substantially lifting revenue.Worse, the new charges are planned to beretrospective from February, 1999.At the same time AAI, which is in the processof offering 30-year leases on six of its leadingairports to private companies, asked India’sCivil Aviation Ministry for permission to raiselanding and parking fees at all internationalairports by 12.5%.In Australia, if the proposed increasesare granted at Sydney, the country’s majorgateway, they would come into effect on November1, following the 2000 Olympic Games.Prior to the introduction of the new fees therewill be lengthy hearings that will undoubtedlyinvolve a series of torrid submissions fromangry airlines, including local majors Qantasand Ansett.SACL chief executive officer, Tony Stuart,strongly defends the charging restructure.He said it is long overdue and is necessaryto sustain a truly world class gateway forAustralia. The new charges would result in anaverage fare increase of US$6.66 from Sydneyto London when passed on to passengers byairlines.“Reducing delays and congestion andimproving facilities and services against a backdropof increased noise related operationalconstraints has required significant capital investmentover recent years,” said Mr Stuart.“While [we are] expecting the airlines willreact to any increase in costs, the airlines – andtheir passengers – are benefiting significantlyfrom the improved runways, taxiways andterminal facilities through fewer delays, lesscongestion and better traffic flow.“Delays cost everyone money – particularlyairlines – and we have worked hard toimprove the situation to where 88% of flightsin and out of Sydney operate on time, wellahead of comparable airports in the U.S. andEurope.”He said the new charges representeda “fairer, better balanced system” and thatwithin operational and regulatory constraints,Sydney is a highly efficient airport. Independentsurveys showed its operating cost perAirlines give Sydneythumbs downAs public relations go, Sydney Airport could hardly have selected a worse time toannounce huge charge increases. The news only heightened existing anger amongairlines about the airport’s performance.Indeed, carriers were so annoyed at what they claim is poor service at Australia’sprimary air gateway they were in the process of leaking details of a confidential internalairline survey to local media when airport officials dropped their fees bombshell.The survey, which consisted of a series of “quality-of-service” reports compiledby major operators like Qantas Airways, Ansett Australia, Singapore Airlines, BritishAirways, Cathay Pacific Airways and Japan Airlines, rated many of the airport’s facilitiesand services as “very poor” or “poor”. They complained airport staff were eitherdifficult to find or arrogant when approached about problems.The reports, covering the year to the end of October 1999, rated the condition ofground services and facilities such as runways and aprons, taxiways, arrival and departuregates, aerobridges, ground service and storage, check-in and baggage facilities.Among the complaints were:• Baggage processing facilities are unreliable. In September alone United Airlines hadfive separate departures delayed due to failure of the baggage system or its inabilityto cope with demand.• British Airways claimed safety was being compromised because speed limits for groundvehicles were not being enforced.• Japan Airlines complained it sometimes took 20 minutes for aircraft to be pushed backfrom aerobridges.• Singapore Airlines complained about freight storage and equipment, saying facilitieswere congested with not enough bays.• Passengers also expressed frustration at baggage delays, the lack of information atthe airport and the “rough treatment” of their baggage.passenger is half the international average,according to Mr Stuart.If approved, Sydney’s charges would becomparable with Vancouver, London Heathrow,Washington DC and Amsterdam internationalairports, but still below the internationalaverage.“Landing charges at Sydney Airport havebeen artificially low for many years, whichAAPA chairman and ANZ chief,Jim McCrea: concerned overescalation of chargesmeans that Australian taxpayers have, for along time, provided a de-facto subsidy to theairlines and their passengers. The proposedrestructure will remedy that situation and allowus to maintain the massive investment wehave been making in Sydney Airport to bring itto world class standard,” said Mr Stuart.His explanation has done little to temperthe anger of airlines. Said BARA’s Mr Bennett:“The proposed increases are totally unreasonable.If approved, landing fees will rise fromA$2.92 (US$1.90) per tonne to A$8 (US$5.20)per tonne, terminal charges will increase fromA$7.90 (US$5.13) per tonne to A$18 (US$11.70)per passenger. Also, there will be a new parkingcharge of A$55 (US$35.75) per 15 minutes.SACL is displaying the worst characteristics ofmonopoly behaviour.”More new charges are in the pipeline,he said, including a checked bag screening(CBS) fee to pay for a security project criticalto handling passengers during the OlympicGames. The cost of the project has balloonedfrom US$13 million to US$21 million, with CBSnow expected to cost about US$1.60 a passengerat Sydney, three times the likely cost44 | Orient Aviation | February 2000
Page 1 and 2: VOL. 7 NO. 4 FEBRUARY 2000MAGAZINE
Page 3 and 4: P U B L I S H E R ’ S L E T T E R
Page 5 and 6: N E W SRegional round-upMAS winging
Page 7 and 8: N E W Scarriers you can kiss your n
Page 9 and 10: and huge war chest, could be a new
Page 11 and 12: m a i n s t o r yBattlefield Austra
Page 13 and 14: e x e c u t i v e i n t e r v i e w
Page 15 and 16: A s i a n A e r o s p a c eAA 2000
Page 17: visits for DC-10, MD-11, A310 and A
Page 21 and 22: a i r p o r t sOver 100 flights a w
Page 23 and 24: a i r p o r t swould continue to ca
Page 25 and 26: g e n e r a l a v i a t i o nContam
Page 27 and 28: f e a t u r e25 years after the fal
Page 29 and 30: pick me up. I was never interviewed
Page 31 and 32: n e w sJapan Express: JAL is doubli
Page 33 and 34: s p e c i a l r e p o r tThe two ai
Page 35 and 36: the rest of its global business, th
Page 37 and 38: s p e c i a l r e p o r tImproved y
Page 39 and 40: - Qantas Airways, Cathay Pacific Ai

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