Airfares set to climb thanks to major upgrades at Australia’s four biggest airports, warns ACCC

Travellers will end up footing the bill for major expansion works at Australia’s four biggest airports, the consumer watchdog has warned, as airlines are hit with higher charges for the improvements.

The Australian Competition and Consumer Commission on Thursday said Brisbane, Melbourne, Sydney and Perth airports collectively spent $1.5 billion last financial year to upgrade aeronautical facilities like runways and terminals.

Over the next decade, the four airports plan to spend a total of $20b on new infrastructure projects.

The investment comes as airports continue to earn substantial profits from carparks, with Brisbane, Melbourne, Sydney and Perth collectively raking in more than $400 million in the 2025 financial year.

According to the ACCC’s latest airport monitoring report, Brisbane’s carparks were the most lucrative, collecting $125.3m in profit by slugging passengers a $25 fee to park between 30 and 60 minutes — the most expensive in the country.

Meanwhile, Sydney gained 66.3¢ on every dollar charged for parking, Perth 61.4¢ and Melbourne 59.5¢.

The airports are now gearing up for major projects, including Perth Airport’s new terminal and runway development, Melbourne’s third runway project, Sydney’s proposed integration of its T2 and T3 domestic terminals, as well as a third terminal at Brisbane Airport.

“Large capital programs are likely to place upward pressure on airport charges paid by airlines, which may result in higher airfares for passengers as these costs are recouped,” ACCC commissioner Anna Brakey said.

“It is important that airport charges reflect sensible and timely investment decisions, efficient costs and a rate of return that matches the risks involved.”

The Australian Airports Association said a surge in international passenger growth last financial year delivered strong results for the four major airports, enabling further investment in upgrades as demand continues to test capacity.

AAA chief executive Simon Westaway said airports were responding with sustained private investment to support long-term connectivity and ensure infrastructure kept pace with future demand.

“Airport charges are typically set through long-term commercial agreements and do not fluctuate with demand in the way airline ticket prices can. They represent only a small proportion of the total airfare,” he said.

“These charges help fund the critical infrastructure that passengers rely on every day.”

Airport charges are not regulated and the ACCC has consistently raised concerns the current monitoring framework is inadequate and an ineffective constraint on the behaviour of the major airports, who hold market power.

But Mr Westaway pointed to four consecutive Productivity Commission inquiries that found the current regulatory framework remained appropriate and that airports have not systematically exercised their market power.