EXPLANATORY STATEMENT

 

Select Legislative Instrument 2007 No. 192

 

Minute No. 20 of 2007 - Minister for Transport and Regional Services

 

Subject - Airports Act 1996

 

Airports Amendment Regulations 2007 (No. 1)

 

Section 252 of the Airports Act 1996 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

 

Section 139 of the Act provides that regulations may require an airport‑operator company to prepare and keep records of audited accounts and reports for the Australian Competition and Consumer Commission (ACCC).

 

The Regulations give effect to recommendation 5.2 of the Productivity Commission’s Review of Price Regulation of Airport Services report (“the Productivity Commission’s Report”) which was provided to the Government in December 2006. The Government decided, amongst other things, to accept recommendation 5.2 that the correct approach to regulation of aeronautical prices via monitoring should continue to apply to the provision of all those aeronautical services in which Sydney (Kingsford-Smith), Melbourne (Tullamarine), Brisbane, Adelaide and Perth airports have significant market power for a further six years.

 

Part 7 of the Airports Regulations 1997 (the Principal Regulations) requires airport operators to provide details of the financial accounts and reports of the specified airports annually to the ACCC. Part 7 already includes a definition of the aeronautical services which the audited financial accounts and reports are required to cover. However, the Government’s acceptance of recommendation 5.2 means that the definition of ‘aeronautical services’ in Part 7 needs be broadened to reflect the significant market power that airports have in delivering a slightly increased range of services than those currently specified in the Principal Regulations.

 

The Regulations also give effect to the Productivity Commission’s Report recommendation that ‘aeronautical services’ be changed to ‘aeronautical services and facilities’ and the definition broadened commensurately. The Regulations add four services and facilities to the previous definition: ground handling services; aircraft refuelling services and facilities; space and facilities, in terminals or airside, essential to efficient airline operations for the handling of arriving and departing aircraft; and sites and buildings used for light or emergency aircraft maintenance.

 

The airports and their major aviation customers were consulted by the Department of Transport and Regional Services on the proposed new definition prior to the Productivity Commission’s 2006 inquiry. All key stakeholders also had extensive opportunity to comment on the proposed new definition during the Commission’s nine month inquiry.

 

The Regulations also alter the form of Part 7 by defining ‘aeronautical services and facilities’ in a new subregulation 7.02A. There will be two categories of ‘aeronautical services and facilities’ (i.e. aircraft-related services and facilities; and, passenger-related services and facilities), instead of the previous three categories of ‘aeronautical services’ (i.e. aircraft landings, take-offs and parking; the embarkation or disembarkation and temporary accommodation of passengers; and the administrative processing of passengers).

 

In addition to the key changes proposed above, the following minor technical amendments have been made:

-         regulation 7.03A has been repealed because it is no longer in force;

-         any reference in the current regulations to ‘aeronautical services’ has been changed to ‘aeronautical services and facilities. Similarly, any reference to ‘non-aeronautical services’ has been changed to ‘non-aeronautical services and facilities’; and

-         the airports effected by the proposed Regulations are now referred to as ‘specified airports’ rather than ‘core regulated airports’.

 

The remaining provisions in the proposed Regulations align the relevant parts of the Act, which have recently been amended by the Airports Amendment Act 2007, with directions pursuant to the Trade Practices Act 1974 giving effect to airport price monitoring by the ACCC.

 

Details of the Regulations are set out in the Attachment.

 

The Act specifies no conditions that need to be satisfied before the power to make the proposed Regulations may be exercised.

 

The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

The Regulations commence on 1 July 2007.

 

The Minute recommends that the Regulations be made in the form proposed.

 

Authority: Section 252 of the Airports Act 1996

 

 

ATTACHMENT

 

Details of the Airports Amendment Regulations 2007 (No. 1)

 

Regulation 1 – Name of Regulations

 

This regulation provides that the title of the Regulations is the Airports Amendment Regulations 2007 (No. 1).

 

Regulation 2 – Commencement

 

This regulation provides for the Regulations to commence on 1 July 2007.

 

Regulation 3 – Amendment of Airports Regulations 1997

 

This regulation provides that the Airports Regulations 1997 (the Principal Regulations) are amended as set out in the Schedule.

 

Schedule – Amendments

 

Items [1]-[2] – Regulation 7.02

 

Regulation 7.02 provides definitions for Part 7 of the Principal Regulations. A definition of “aeronautical services and facilities”, “non-aeronautical services and facilities” and “specified airport” has been added. These items define the new terms introduced into the Principal Regulations.

 

Item [3] – After regulation 7.02

 

Regulation 7.02A has been added to specifically define “aeronautical services and facilities” including the additional aeronautical services and facilities recommended by the Productivity Commission and agreed to by the Government.

 

A definition of “airside area” and “landside area” has been included in new regulation 7.02A. Previously, the terms were defined with reference to a Note in the Airports Act 1996. This amendment gives greater legal force to the definition.

 

Regulation 7.02A also expressly excludes those services and facilities provided to commercially important travellers, or, those not necessary for efficient aviation operations.

 

Regulation 7.02B has been added to set out which are the “specified airports”. This differs from the current regulations where the affected airports are “core regulated airports”. This amendment is administrative in nature.

 

Item [4] – Subregulation 7.03(1)

 

Subregulation 7.03(1) has been amended by replacing the reference to “AASB Standard No. 24” with “AASB Standard No. 127” to reflect changes in accounting standards.

 

Subregulation 7.03(1) has been amended by replacing the reference to “aeronautical services” with “aeronautical services and facilities”. Similarly, “non-aeronautical services” has been changed to “non-aeronautical services and facilities”.

 

A Note has been added after subregulation 7.03(1) which further clarifies what aeronautical costs and revenues are to be reported.

 

Subregulations 7.03(1A) and 7.03(1B) exclude the costs and revenues stemming from the Domestic Terminal Leases. Currently, airports are not required to report such costs and revenues; however, for the sake of clarity this subregulation has been added.

 

Item [5] – Subregulation 7.03(2)

 

This amendment carries forth the change in terminology from “core regulated airport” to “specified airport” as outlined in items [1]-[2].

 

Item [6] – Subregulation 7.03(2A)

 

Subregulation 7.03(2A) has been amended to reflect the change from reporting “aeronautical services” to “aeronautical services and facilities”. Similarly, “non-aeronautical services” has been changed to “non-aeronautical services and facilities”.

 

Item [7] – Subregulation 7.03(4)

 

The current definitions of “aeronautical services”, “airside”, “landside” and “non-aeronautical services” has been omitted as they have been redefined in the Regulations.

 

Item [8] – Regulation 7.03A

 

This regulation has been omitted as it is no longer in force.

Item [9] – Regulation 7.07(1)

 

Subregulation 7.07(1) has been amended to reflect the change in terminology from “aeronautical services” to “aeronautical services and facilities” and, “non-aeronautical services” to “non-aeronautical services and facilities”.