Statement on airport retail prices

 

Reporting on airport retail pricing today falsely claims the domestic airlines are fighting for a better deal for consumers. They are, in fact, fighting for bigger profits for themselves.

The facts are:

  • Airports do not set retail prices. It would be against the law to do so.
  • Until recently, Qantas operated terminals at Sydney, Melbourne, Brisbane and Perth airports. Many of the retail leases at those terminals were negotiated by Qantas. It’s surprising Qantas’ lobby group is now saying these same leases are unfair.
  • Unlike airports, airlines have direct control over their own prices for food and drinks. Jetstar charges $5 for a large cup of coffee as part of their in flight service, significantly more than the ‘downtown’ prices quoted by the airlines. Jetstar also charges $4 for a 350ml bottle of water – while a 600ml bottle of the same brand of water costs just $1.90 in a supermarket. If the airlines want to campaign on retail pricing, they should examine their own track record too.
  • A4ANZ’s proposed arbitration model would have no impact on the price of a cup of coffee, or the price of car rental.

This is not the first time A4ANZ has used misleading and selective information to hide their true motives. The Productivity Commission’s draft report found the current system is delivering benefits and there is no case for change. The airlines’ real agenda is to drive up their profits at the expense of passengers.

Airport retail operators

We are not aware of any airports who have had concerns raised with them by their retail tenants or car rental operators. Retailers choose to operate at the airport because it is good for their business. They benefit from airport investment to increase passenger numbers and provide better terminals and facilities. The airlines’ proposal would put that investment at risk and limit the growth of the same retail operators they purport to represent. It is baffling that any retail group would support a misleading campaign that, if successful, could damage their future success and lead to poorer outcomes for their customers.

Car rental 

Airports have no involvement in setting car rental prices at the airport. These prices are set by car rental companies, based on their own commercial models. There is also no relationship between ‘airport concession fees’ that may be charged by car rental operators and the commercial agreements they have with airports. These are locational fees charged to their customers for the convenience of picking up a car straight from the terminal.

 

ENDS

14 October 2019

 

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