Will a rail line stop high airport parking prices?

Passenger mode share for access to Brisbane and Melbourne airports (ACCC)

The ACCC has fingered Melbourne Airport for its monopolistic approach to parking. In its latest Airport Monitoring report, it accuses the operator of imposing excessive levies on private buses and limiting the service offering of off-airport parking establishments:

Excessive access levies could have the effect of shifting demand to on-airport parking and, consequently, allow the airport to increase car parking prices. These factors point to Melbourne Airport earning monopoly profits from its car parking operations.

The comments section of The Age’s story about the report is bubbling over with calls from outraged punters calling for a rail line to be built from the CBD in order to bust the monopoly power of the airport operator, Australia Pacific Airports Corporation.

Irrespective of the overall merits of building an airport rail link, I can’t see that it would have any more than a marginal impact on the airport’s parking policies. It might (or might not) be justified on other grounds, but a train is not really a substitute for parking.

Travellers who park at the airport are by definition residents of Melbourne and have access to a car. A rail line from the CBD is not going to be attractive when most trips made by residents – including business trips – either originate or terminate at home (or both). When you’re catching a 7:00 am flight you don’t usually catch the train into the office first. Likewise if your flight gets you back into town at 7:00 pm or later, most travellers go straight home.

Rail is not going to be an attractive alternative for the great bulk of the 99% of residents who live outside the CBD or the 92% who live outside the inner city. Rather than walk to their local station, take a train and then change onto the airport line, they’ll drive.

In many cases their employer (or the taxpayer!) is in any event paying for their airport parking.

Brisbane is an instructive case because like Tullamarine it’s a considerable distance from the city centre (see chart). According to the ACCC, the Airtrain captures just 5% of all trips generated by Brisbane airport (both travellers and staff) even though it’s easily accessible from the main terminal and stops at a number of stations before and after the CBD. That’s considerably less than the ACCC’s estimate of 14% mode share for buses at Melbourne Airport.

Market power means airport parking costs more than it should at Melbourne Airport, but prices aren’t so high that they deter residents from driving. My family and I parked in the uncovered long term car park at Melbourne Airport from 23 to 30 December for $89 (see fee calculator). A return cab fare from our place costs $100-$120.

The cost of parking for a day (6am to 9pm) is $29 in the long term car park. That’s not much more than the $26 return fare from the CBD on Skybus. You can pay $50 if you want to be within 2-3 minutes of the terminals.

The way to tackle monopolistic pricing at the airport isn’t to spend billions constructing a rail line. I don’t think it matters all that much whether the airport is a privately or publicly owned monopolist, either. Monopolists need to be regulated. The ACCC should stop the ‘jawboning’ (it said much the same thing about monopolistic practises last year) and start doing what it’s supposed to do – in the first instance, it should take action to remove the anti-competitive aspects of the levies and restrictive practises that prevent other parking operators from competing effectively.

And the State government should have a close look at why taxis cost so much – the maximum permitted cab fare from Manhattan to the airport when I was there last year was $50.

P.S. note that for some reason the ACCC did not use the same colours in the legend for both charts

21 Comments on “Will a rail line stop high airport parking prices?”

  1. David says:

    Or, you could argue that the parking is priced exactly at market, as the carparks continue to be well-patronised while alternatives involving more hassle (eg offsite) also remain in business.
    If the parking were truly OUTRAGEOUS, no-one would drive and park there, and alternative options would take market share from the airport.
    The airport owners are only doing what they are legally required to for their shareholders – maximise profit – while the car users are choosing to pay for convenience, when they could (and often do) choose slight inconvenience for lower parking charges, or avoid them completely by utilising dropoffs, Skybus, or cabcharges…
    As soon as you start regulating prices you run the risk that you (most likely) underprice the resource. The next thing everyone will be complaining about the lack of parking, but who will be expected to foot the bill for more multi-deck parking right next to the terminal? If the Government chips in, why should taxpayers that never use Melbourne airport be subsidising those who do, and if it doesn’t, should the Airport operator be providing something at under cost (potentially causing it to skimp on things that might matter, as seen at Heathrow in recent times…)

    • Alan Davies says:

      But the ACCC is arguing that prices are too high because of excessive market power i.e the Airport’s parking prices would be lower if competitors weren’t excluded by restrictive practices. But no one’s arguing for regulating prices, but rather for tackling practices that smother competition, such as excessive entry levies.

      • David says:

        It does beg the question, why privatise a monopoly if you’re going to have to regulate (and interfering with its commercial access arrangements with other commercial providers is regulation) it anyway.

  2. Michael says:

    After spending 3 weeks overseas with the kids the cheapest option for getting home after a night flight was to hire a small car. The experience of Tullamarine would struggle to match some airports in developing countries. It’s frankly an embarrassment to imagine what kind of impression this experience leaves on international visitors. Why can’t Melbourne have an airport that functions as a gateway to the city, a place to visit in it’s own right that doesn’t leave you with the feeling you’ve just been mugged. Instead we have this tawdry rent-seeker’s wet dream. Of course this can be achieved with or without a rail line, but it stands to reason that getting to the airport shouldn’t cost as much as your flight.

    • Alan Davies says:

      I think another example of the Airport having little regard for the welfare of customers is the shocking congestion in the arrival and departure access roads.

      I can’t see any logical reason why flights should always cost more than getting to the airport. We’re just used to that being the case.

      • Michael says:

        The market isn’t really entirely responsible for the wonder of air travel so why should we allow a private monopoly to act as a gatekeeper to what should be a public good in a modern city? Why should going to the airport cost substantially more than going to other places in the city? I guess multi-story carparks are all Australia can handle in terms of modern aviation.

      • Michael says:

        BTW, I’m glad your back posting again.

      • David says:

        But why shouldn’t flights be cheap? ~180 people agree to travel squished in at the same time in a vehicle amortised over 15-20 years; vehicles that are already very fuel-efficient and becoming more so; and departing and leaving from a limited number of locations at at set times. It’s a recipe for efficiency – a B-double of the sky.
        And trust me, if you ain’t paying less than the trip to the airport if you bought at the last minute or are travelling at peak times – there is far more variability in flight prices than intra-city transport to ensure maximum yield is obtained. OK, you might pay occasionally pay more than your flight to get to the airport but most people, most of the time, will not.

        Contrast to flight efficiency to the ‘last mile’ home, where everyone is dispersed, mostly want private vehicles, and gets more than 30″ of legroom… is it any wonder that sometimes it costs more?

      • Alan Davies says:

        Michael, I addressed the question of why going to the airport costs more than going elsewhere once before. Really, the question is: why shouldn’t airport trips by PT be subsidised like other PT trips?

        It should always be desirable not to have a subsidy if possible and in the airport’s case you can (usually) get away with that because most of your passengers are: (1) visitors (2) on business and so not paying personally, or (3) only flying occasionally.

        There’s probably also an argument that most people who fly can afford to travel on the ground leg without a subsidy.

  3. David says:

    I guess I should address the main thrust of the post – I concur that a rail line wouldn’t really help. It’d probably grab a few more points of market share from Skybus, but unless you’re on the route of the line, and it stops midway, you’re stuck with CBD-Airport pax only, which is not a signficant change from the status quo.
    If you can’t be bothered changing train->bus at Southern Cross, you’re not likely to be any more enamoured of changing trains either. Perhaps with an integrated fare it would be more common, but the opportunity for an airport surcharge fare is rarely missed.

  4. Mahyar says:

    But at least with a publicly owned monopoly, the benefits ostensibly accrue to the ‘people’. I think that’s the argument anyway.

    • Joseph says:

      How about if a publicly owned monopoly is privatised and the price paid by the purchasers reflects the cost of parking? The ‘people’ have then already received due payment. A bit rich to then complain.

      I believe Sydney Airport claims that car parking charges have only gone up at the rate of inflation since privatisation. The gouging, if it exists, was all done by government. Did the ACCC ever complain when it was the government being anti-competitive?

      The situation is somewhat similar to Telstra, the government sells it for a price which reflects the market structure. The ACCC then whines about pricing, the government changes the structure and the shareholders have been robbed.

  5. Matt says:

    Actually I would pretty much argue the opposite. The only reason I ever park in an airport carpark is that the public transport to the airport is not good enough. And I’d only be in a taxi if work was paying for it.

    The airport has thousands of jobs and is one of the major employment nodes in the city and it has no train link. If you ignore that and say airline passengers can afford to be ripped off on their ground legs, then I’d point out once again that the airport has thousands of jobs and no rail links. Your arguments against an airport rail link are therefore moot.

    • Alan Davies says:

      No train at Melbourne, but there is public transport. According to the ACCC’s estimates, bus has a higher share at Melbourne Airport than trains do at either Brisbane Airport (5%) or Sydney Airport (10%).

      Sydney Airport is very interesting. Only 13% of trips involve on-airport parking, but a whopping 37% are by taxi and another 19% are ‘kiss and fly’.

    • Yvonne says:

      I agree Matt. An airport rail link would be used by those who work at the airport and a considerable number of tourists, as well as removing a proportion of airline passengers cars from the freeway (it’s a hideous drive to the airport on Monday mornings). The people who work out there won’t use the Skybus because it is too expensive, so they are left with nothing but car travel. The new Smart Bus will take you from Broadmeadows station, but drops passengers a good distance from the terminal – so it’s not really encouraging any travellers to use public transport is it? Surely the fewer cars and the more people on public transport, the better for us all?

      • Alan Davies says:

        Very few airport workers would be likely to use a train. The Sydney airport train only captures 10% of all trips to the airport. Moreover, public transport captures less than 10% of work trips to those outer suburban activity centres in Melbourne that are on rail lines.

        Tourists would certainly use a rail line but what’s the big advantage in shifting them out of one form of public transport (Skybus) and onto another (rail)? Is it worth a billion dollars or more?

        Airport workers actually get a discount fare on Skybus. It is indeed expensive for the rest of us, but no more than the Brisbane and Sydney airport trains. I don’t believe any Government would build a new rail line from the CBD to Melbourne airport and charge no more than a zone 2 fare.

        The limited access of Smartbus to the airport is symptomatic of monopoly control.

        The emphasis should be on improving public transport to the airport, not on a train.

  6. […] I discussed last week, Brisbane’s airport – like Melbourne’s – is also located a considerable distance from the […]

  7. […] a doubling of demand within twenty years. On current settings, with 69% of trips to the airport made by private car and 17% by taxi, the outcome could either be gridlock or massive expansion of the freeway […]

  8. […] a train would have no impact on the price of airport parking, which is one of the key gripes of those who support the rail line. High prices are the result of […]

  9. […] ACCC, even at the two Australian airports that have direct train services to the CBD – Sydney and Brisbane – rail’s mode share is no higher than 10%. Melbourne Airport also has attributes that would be […]

  10. […] there’s no doubt their prediction would prove to be enormously over-optimistic. Brisbane has a train from the CBD to the airport that carries just 5% of all travellers (another 3% come by bus). Sydney has a train too – it only […]

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