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Qantas claims a major review into competition policy has failed to spell out a solution to fixing monopoly pricing by the country's airports, pointing out that the "only true leverage" for airlines in negotiations is to threaten to reduce or stop flying to destinations. Australia's largest airline said it was disappointed the Harper review had found that a "light-handed approach" to regulation appeared to be working well, and that any changes would be right for only some airports. "It fails to recognise that airports generally need to be subject to an effective access and pricing regime," it said. The airline's call for stronger regulatory tools is contained in submissions just made public following the final report from the Harper review on competition policy in March. Virgin Australia also joined Qantas in voicing its opposition to the Harper review's recommendation that the bar be raised for deciding when the competition regulator should be called in to help set prices and conditions for an airport. Qantas emphasised that its "only true leverage" in negotiations over charges was a threat to reduce or stop flying to an airport. Airport fees comprise about 9 per cent of the airline's costs. "In most cases, an airline cannot afford to make good on that threat for a number of reasons including loss of business confidence, claims by passengers with bookings, loss of revenue, redundancy of aircraft assets, redundancy of airport investments and so on," it said in its submission. Qantas said the final terms of any deal "ultimately reflect the market power of the airport", giving the latter a return on assets significantly higher than similar businesses. The airline claimed airports' monopolistic tactics included "engaging in protracted, costly and unproductive" negotiations over pricing, "arbitrarily increasing" charges by more than inflation and launching legal action to enforce "unilaterally imposed price increases". However, Sydney Airport said a light-handed approach to regulation was working well and cited a finding from the Productivity Commission that price increases did not indicate systemic misuse of market power. "The airport price increases continue to relate to substantial investment, and should not raise concerns," it said. The Board of Airline Representatives, a lobby group representing foreign airlines, said raising the bar for deciding when the regulator should be brought in to decide pricing and conditions would make it harder for airlines experiencing difficulties with Australia's major airports. While foreign airlines last week struck a five-year deal for charges at Sydney Airport, Qantas and Virgin are still in the final stages of cementing their own agreements for long-term pricing at Australia's largest airport. Small Business Minister Bruce Billson is considering the Harper review's recommendations, and has made clear the government will not decide whether to take them up until late this year. Qantas and Virgin also renewed their opposition in their submissions to the Harper review's proposal to allow foreign airlines to fly on domestic routes to poorly served destinations and island territories. Trade Minister Andrew Robb had also spearheaded a plan to allow foreign airlines to fly between airports above the Tropic of Capricorn, which includes Cairns, Darwin and Broome, in an effort to boost economic growth in northern Australia. However, the Abbott government dumped the proposal last month after opposition from within Cabinet and lobbying by Qantas and Virgin.

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