In June 1997, when the Government privatised the Phase I airports, I announced details of the prices oversight regime that would apply to core-regulated privatised airports. The prices oversight regime consists of a price cap on aeronautical services together with prices monitoring of certain aeronautical related services. This system has been in operation for the Phase I privatised airports at Brisbane, Melbourne and Perth since 1 July 1997. More recently, it was applied to the core-regulated Phase II privatised airports with effect from 1 July 1998.

The Commonwealth will retain ownership of the Sydney basin airports (Kingsford Smith, Bankstown, Camden and Hoxton Park) and Essendon Airport (for which there was no successful bidder during the Phase II airport sales). These airports were leased by the Commonwealth to new Government-owned companies on 1 July 1998 and they are subject to the same overall regulatory regime (the Airports Act 1996) which applies to the Phase I and II privatised airports. Sydney (Kingsford Smith) Airport is a core-regulated airport for the purposes of the Act and will therefore also be subject to a similar prices oversight regime to the core-regulated Phase I and II airports.

Aeronautical services at Sydney (Kingsford Smith) Airport are subject to prices surveillance similar to that at other core-regulated airports. Proposed price increases will have to be notified to the ACCC, and the ACCC will assess whether to approve the price increases based on a range of criteria including the views of airport users. The airport will not be subject to a CPI-X price cap at this stage.

Consistent with the arrangements applying to the core-regulated privatised airports, the ACCC will also collect data on the following aeronautical related services at Sydney (Kingsford Smith) Airport:

CANBERRA

13 July 1998

Contact Officers:

Alistair Davey

Treasurer’s Office

(02) 6277 7340

Tony Webster

Treasury

(02) 6263 3274