Macquarie faces its critics

By Administrator |

Australia's Productivity Commission has launched an investigation into whether Sydney Airport's owners Macquarie, Ferrovial and others have been abusing their monopoly position.

The Commission says it is responding to customer complaints about Sydney's pricing and a sometimes hostile anti-Sydney Airport local press. Ferrovial holds a 21% share in Sydney Airport which it has agreed to sell to Macquarie if the Ferrovial-led consortium succeeds in acquiring a controlling interest in BAA. Macquarie already owns more than 50% of Sydney airport.
Australia's Treasurer Peter Costello and the Transport Minister Warren Truss have both stated that a public inquiry will review whether it is necessary to introduce new regulatory pricing systems for Australia's airports. Regulatory pricing caps were abolished in 2002. The Board of Airline Representatives of Australia, which represents foreign airlines in the country has also joined in, complaining that Sydney's charges are excessive.
These developments come at a bad time for both Ferrovial and Macquarie who will have already noted comments by the Civil Aviation Authority (CAA) in the UK that it expects any suitor for BAA to take on the same regulatory responsibilities and investment levels that BAA faces with its three London airport.
At the same time, Macquarie also came in for criticism from some Danish politicians last year after it acquired 52% control of Copenhagen Airport for $2.5bn in December 2005. The Danish government retains 39.2% which it says is not for sale.
The duty free contracts at both Sydney and Copenhagen are currently in tendering processes and are major contributors to the revenues of both airports. A new five-year contract is due to begin at Copenhagen on March 1 2007. Based on last year's sales and assuming no growth, the Copenhagen duty free contract is worth around $550m over the five-year period, while the Sydney Airport Corporation (SACL) says it values the sales turnover at Sydney Airport at around A$220m ($166m) a year. Nuance's contract at Sydney expires on October 31 2006.


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