Australia’s Major Airports See Surge In Aeronautical Revenue

The four largest airports in Australia collectively earned an operating profit of A$1 billion ($635 million) from aeronautical revenue in the fiscal year ended June 30, 2024, while also resuming infrastructure investment after a pandemic-related pause.

According to the latest Airport Monitoring Report issued by the Australian Competition and Consumer Commission (ACCC), the four airports—Brisbane (BNE), Melbourne (MEL), Perth (PER) and Sydney (SYD)—collectively increased aeronautical revenue 24.3% year-over-year to A$2.6 billion in the 2023-24 fiscal year.

“Each airport reported its highest-ever [annual] revenues from aeronautical services, paid by airlines, for the use of facilities such as runways and terminals,” the ACCC stated in the report issued March 17. “Record aeronautical revenues were reported despite passenger numbers not yet returning to pre-pandemic levels at three of the airports.”

Total passengers handled across the four airports for 2023-24 rose 13.7% year-over-year to 114.6 million, but that remained 4.7% below the 2018-19 fiscal year, according to the ACCC.

Sydney Airport led the way with an A$570.5 million operating profit (as measured by earnings before interest, taxes and amortization) from aeronautical revenue in 2023-24, up 126.7% year-over-year and 17.6% above 2018-19 levels. “These figures are somewhat inflated by back-payments [to SYD] by airlines for services provided in 2022–23,” the ACCC noted.

MEL followed with an A$198.9 million operating profit for 2023-24, up 64.1% year over year, but down 14.7% from 2018-19. Brisbane Airport posted an operating profit of A$194.7 million, also up 64.1% year over year, but down 14.1% from 2018-19.

PER was the only of the four airports to see a drop in its aeronautical operating profit for 2023-24, decreasing 29.1% year over year to A$70.7 million. The ACCC said it “understands that this is due to increases in operating costs, particularly those relating to security.” PER’s 2023-24 aeronautical operating profit was 22.2% below 2018-19 levels.

SYD generated A$29.36 in aeronautical revenue per passenger for the 2023-24 fiscal year, up 20.6% year-over-year. BNE’s per-passenger aeronautical revenue rose 4.6% year-over-year to A$21.33. PER generated A$18.57 per passenger, down 8.6%, while MEL’s per-passenger aeronautical revenue rose 4.2% to A$17.88. 

“The increase in aeronautical revenues in 2023-24 was driven in large part by the continued recovery in international passenger numbers, which rose by 32.1% [year over year] at the four airports monitored in our report,” ACCC Commissioner Anna Brakey said in a statement. “Domestic passenger numbers also grew by 6.7% … Sydney Airport was once again clearly the most profitable of the four major airports for aeronautical services in 2023-24, both in aggregate and on a per-passenger basis.”

Restarting Investment

The ACCC report noted that “after years of relatively little investment due to the pandemic, the airports have recommenced investment. The airports invested A$985.1 million in aeronautical facilities in 2023–24, although this will increase substantially in coming years with new runways, new terminals and terminal refurbishments.”

According to the ACCC, MEL invested A$502.3 million in aeronautical facilities in 2023-24, up 38.6% year over year. SYD invested A$221.3 million, up 139.6%. BNE invested A$193.3 million, up 155.6%. Perth Airport invested A$65.2 million, up 28.9%.

“Major projects that are underway, or that have been announced, include new runways for Melbourne and Perth, new terminals for Perth and Brisbane, upgrades to terminals in Brisbane, Sydney and Melbourne, and the opening of the new airport at Western Sydney,” the ACCC said.

The ACCC added that the airports also saw increases in non-aeronautical revenue.

“Collectively, the four airports earned A$387.8 million in operating profits from car parking activities, with Brisbane, Melbourne and Perth earning more profits than pre-pandemic (2018–19),” the report stated. “Brisbane Airport reported the highest car parking operating profit of A$113.4 million and the highest profit margin of 76.6%. Revenues from landside transport access services such as those provided to taxis, rideshare operators and buses grew by 17.9% in 2023–24 to A$69.6 million.”

Monitoring Versus Regulation

The ACCC is mandated by the Australian government to issue annual Airport Monitoring Reports. The government sees the reports, which started in 2002, as a way to monitor airport aeronautical pricing—creating transparency—without imposing regulations. 

“The government intended that the move from a price regulation regime to a monitoring regime would facilitate investment and innovation,” the ACCC said.

But the commission warned this may not be sufficient. “It is generally accepted that Australia’s four major airports are regional monopolies and therefore have market power,” the report said. “As a result, there is a concern that at some airports, airport users, including airlines, do not possess enough bargaining power to ensure appropriate commercial outcomes. An airport not constrained by competition or regulation could be expected to exercise its market power to earn monopoly profit to the detriment of airport users and the broader Australian economy.”

Without competitive pressure, “an unconstrained airport may also lack the incentive to operate efficiently or adopt innovative technologies and service models. Price monitoring, which is a 'lighter-handed' measure than price regulation, can provide some transparency over the airports’ performance and allows for some general observations to be made regarding whether they are taking advantage of the lack of competition.”

However, the ACCC added, “monitoring is limited in its ability to address behavior that is detrimental to consumers. For example, monitoring does not directly restrict the airports from increasing prices and/or allowing service quality to decline. In particular, it does not provide the ACCC with the ability to intervene in the airports’ setting of terms and conditions of access to the airports’ infrastructure.”

Passengers are generally positive about service at the four airports, though airlines are less enthusiastic. The ACCC collects information about airport quality of service via passenger surveys, airline surveys and other measures such as the number of passengers per check-in desk.

“All four airports maintained an overall average rating of ‘good’ [the second-highest possible rating] for their quality of service in 2023–24,” the ACCC said. “The 2023-24 results were mainly driven by passenger ratings, which have generally remained high (and contribute heavily to the overall rating). Ratings from airlines were lower, with all four airports receiving a ‘satisfactory’ result.”

SYD “consistently received the lowest quality of service rating by passengers before COVID-19, but it has improved notably since then,” the ACCC said. “Sydney Airport’s rating declined slightly in 2023–24, but remained within the ‘good’ range.”