A report has defended the significantly high cost of parking at Australian airports despite large volumes of complaints from consumers.
Despite masses of complaints from the public, the Productivity Commission has defended the cost of parking at Australian airports, which often exceeds the cost of an airline ticket.
A draft report released today claims consumers place too much value on “convenience” and the cost is justified. See an extract of the report here
“Many consumers resent the price of parking at a major airport because a few hours in a
short-term car park close to the terminal building can cost more than an airline ticket,” the report read.
“(Airports) are the sole provider and there are no substitutes for people who want the convenience of parking within a short walk to the terminal.
“People value the convenience of parking close to the terminal buildings. The
premium that users are prepared to pay for limited space close to terminals creates locational rents.”
The high cost of parking at airports affects many Australians; we are the nation with the highest number of domestic flight seats per capita in the world.
Airport operators hold a monopoly over parking stations next to terminals, but the report notes they are likely to “face greater competitive constraints in the market for at-distance carparking, provided the operators of independent car parks have access to airport terminals for their shuttle buses”.
The report explains carpark pricing was used to “reduce congestion” at the most sought after parking spots. It said operating costs, including having CCTV cameras and “covered parking” that was “more costly to build and operate than open-air car parks”, added to the price.
The report dismisses the idea of airports exercising market power, saying the lack of market diversity is due to land being “scarce” as it’s used for other purposes including car rental businesses.
“Many consumers resent the cost of carparking at the monitored airports,” the report continued
“Carparking charges are not due to airports exercising their market power — the price of parking at-terminal can largely be explained by the value passengers place on convenience, the limited amount of land close to the terminal, and the need to manage congestion.”
The report said the cost could be compared to consumer spending on parking at hospitals, sporting venues and entertainment venues.
The report suggested consumers could use web-based apps to compare options to access airports, including Uber and taxis, before deciding to park on site to avoid being hit with “a nasty surprise”.
The Productivity Commission will deliver its final report to the Federal Government in June.