Airport landside access revenues (source: ACCC, Airport Monitoring Report, 2015-16)

The Age is a strong public advocate for a rail line from Melbourne Airport to the CBD, so it’s no surprise it published an opinion piece on the topic on Monday by former Brumby government Minister, Tony Robinson (A rail link to Melbourne Airport could come down to $7.96}.

Mr Robinson’s contention is that a Melbourne Airport rail link will have a hard time being competitive if passengers must pay the same “usurious” $7.96 surcharge that Sydneysiders pay on top of the standard Opal fare:

How does Sydney Airport get away with this legalised larceny? Quite simply it seems. As a lessee it’s allowed to charge whatever it likes for having a station built on its premises.

He goes on to say that “Sydney’s airport rail line is held up as a template for Melbourne”. Hence:

The lesson is clear. Melbourne airport’s operators will seek to extract the same high rental for the sought after link, meaning the cost of travelling to the airport by rail will be far higher than anyone expects.

The narrative of a greedy monopolist ripping off travellers “because it can” is of course eminently plausible and, since Melbourne Airport is also privately owned (like Sydney, on a 99-year lease), Mr Robinson thinks the same story is inevitable at Tullamarine when a rail line is built. Sounds compelling, but the trouble is some of Mr Robinson’s assumptions are confused.

Back in the late 90s, the NSW Government outlaid circa $700 million to build the track in time for the 2000 Olympics. Airport Link Company put up $200 million to build four stations, on the basis it could levy an access fee on station users. The agreement provided that when specified targets were met, the Government would get 85% of the revenue from the access fee. So:

  • The access fee at the domestic and international terminals isn’t levied by the airport; it’s levied by the owner of the airport railway stations, Airport Link Company, a subsidiary of Westpac. The access fee wasn’t about rent seeking; it was to pay for rail stations.
  • Sydney Airport doesn’t get the money. From August 2014, the NSW government, which owns the rail track, started taking 85% of the circa $90 million yearly revenue from the access fee. The Airport Link Company takes the remainder.
  • The one-way access fee using Opal card is currently $13.80 (it’s on top of the standard Opal fare.). I don’t know where Mr Robinson got his $7.96 figure from.

Now that it’s collecting 85% of the revenue, there’s pressure on the NSW Government to abolish its component of the access fee (see also Should the O’Farrell government lower Sydney Airport rail fares?). Whatever the merits of that proposition, it’s an argument that concerns the government, not the airport owner.

If there’s a villain in this case, it’s NSW Premier and former Minister for Transport, Gladys Berejiklian, who’s continuing to collect what is now widely seen as a tax. She’s presumably delighted to see the airport copping the blame rather than her!

Mr Robinson is wrong about Sydney Airport on this score, but he’s (accidentally) closer to the mark about Melbourne. He doesn’t appear to be aware of it, but travellers using public transport at Melbourne Airport already pay an “access fee”. Moreover, the revenue goes to the owner of Melbourne airport, Australian Pacific Airports Corporation.

The fee is currently $3.60 per pick-up for taxis. According to the ACCC’s latest Airport Monitoring Report, it covers the cost of facilities provided by the airport “such as taxi ranks and the holding yard, cab ranks and other facilities (toilet, prayer room etc.)”. The ACCC doesn’t say what SkyBus pays, but my estimate is $3 – $4 per passenger. The airport would no doubt argue these fees are justified but there are grounds for caution; the ACCC notes:

As airports set the terms and prices to landside access, they are in a position to impede competition for alternatives to on-airport car parking by increasing access prices.

When a rail line is eventually built from Melbourne Airport to the CBD, the owner of the airport might seek to impose an “access fee” on train passengers like it does on SkyBus and taxis. But the case would be weak. All necessary facilities would be provided as part of the rail build i.e. it would be self-contained. Neither Sydney nor Brisbane airports levy an access fee on rail passengers. The idea should be strongly resisted.

When it comes to pricing, the big issue for Melburnians is whether they’ll pay the standard myki zone 1+2 fare ($4.10 one-way) to get to the airport or something in the region of the current SkyBus fare i.e. $19 one-way. As the rail line is estimated to cost $3 – $5 Billion to build, it’s very likely the government of the day would opt for the latter for all bar airport workers (see also Should public transport fares to the airport be subsidised?).