Airport monopoly pricing: why flying between Australian cities costs more than international flights
By Direct Democracy
The absurdity hiding in plain sight
Here's a fact that stops most Australians cold: a return flight from Sydney to Brisbane - roughly 920 kilometres - regularly costs $400–$600 during peak periods. A return flight from Sydney to Bali - nearly 4,700 kilometres - can be booked for under $300.
This isn't a quirk of airline pricing. It's the predictable result of a government policy decision made in the late 1990s and quietly maintained ever since: the full privatisation of Australia's major airports with almost no meaningful price regulation attached.
What actually happened - and when
Between 1996 and 2002, the Howard government sold off Australia's major airports - Sydney, Melbourne, Brisbane, Perth, Adelaide, and others - to private operators. The stated rationale was that private ownership would drive efficiency and investment.
What came with the sale was a regulatory framework so toothless it barely deserves the name. The Australian Competition and Consumer Commission (ACCC) was given the power to monitor airport pricing and publish reports about it. It was not given the power to set price caps, reject excessive charges, or compel airports to negotiate in good faith with airlines.
In plain terms: airports can charge airlines whatever they like for using the terminal, the tarmac, and the infrastructure - and airlines pass those costs directly to you.
How bad is the gouging?
The ACCC has been sounding the alarm for years. Its annual Airport Monitoring Reports consistently find that Australia's major airports earn returns on their aeronautical assets that are significantly above what a competitive market would produce.
Some figures worth knowing:
- Sydney Airport reported a 2023 revenue of approximately $1.7 billion, with aeronautical revenue alone exceeding $650 million
- The ACCC's 2022–23 airport monitoring report found Sydney and Melbourne airports earned returns well above their cost of capital - a standard indicator of monopoly pricing
- Australia's airport charges are among the highest in the Asia-Pacific region, despite the airports requiring airlines to use them - there is no alternative
- Parking at Sydney Airport costs up to $90 per day in the short-stay carpark - revenue that flows back to the same private operator
International routes are cheaper partly because they face genuine competition from foreign carriers and hub airports in Singapore, Dubai, and Doha. Fly Sydney to London and you might route through any of a dozen competing hubs. Fly Sydney to Brisbane and Qantas, Virgin, and Jetstar all have to use Sydney Airport. There is no alternative. The airport knows it. The airlines know it. You pay for it.
Who benefits - and who's hurt
The winners here are clear:
| Winner | How they benefit |
|---|---|
| Airport shareholders | Above-market returns on monopoly assets |
| State and federal governments | Avoided political cost of re-regulation; asset sale proceeds already banked |
| Major parties | Donations and goodwill from infrastructure investors |
The losers are everyone else:
- Regional and outer-suburban Australians who rely on domestic flights to access family, medical care, and work
- Small business owners whose travel costs are embedded in every quote they send interstate
- Tourism operators in cities and regions priced out of attracting domestic visitors
- Working families for whom a domestic holiday requires saving for months
Why has nothing changed?
Labor and the Coalition have both had ample opportunity to act. Both have declined.
The Productivity Commission reviewed airport regulation in 2019 and recommended maintaining the current light-handed approach - a recommendation widely criticised by airlines, consumer groups, and the ACCC itself. The Morrison government accepted those recommendations. The Albanese government has made noise about reviewing airport regulation but has not introduced meaningful price controls.
The explanation isn't complicated. Airport operators are sophisticated political donors and lobbyists. Infrastructure funds that own airport stakes include some of Australia's most powerful institutional investors. Re-regulating airports would reduce the value of their assets - and they will spend significant resources ensuring that doesn't happen.
Meanwhile, no Australian voter has ever been directly asked: should private airport monopolies be able to set their own prices without a regulator's approval? The answer, if they were, is not hard to predict.
What could actually be done
This isn't a technically difficult problem. Options that economists and regulators have proposed include:
- Reintroducing price caps on aeronautical charges at airports with no genuine competition
- Mandatory arbitration when airports and airlines cannot agree on pricing terms
- Publishing standardised pricing comparisons to enable public scrutiny
- Windfall levies on above-benchmark airport returns, with proceeds directed to regional aviation subsidies
New Zealand introduced stronger airport regulation after similar concerns. The UK's Civil Aviation Authority has statutory powers to intervene on airport pricing. Australia has chosen, repeatedly, not to follow suit.
This is exactly why direct democracy matters
The airport pricing problem is a near-perfect illustration of how representative democracy fails ordinary people. The policy is unpopular. The harm is measurable. The fix is known. And yet nothing changes - because the people who benefit from the status quo have direct access to decision-makers, and you don't.
Direct Democracy changes that equation. When members vote on policy directly, it is their preferences - not donor relationships - that determine outcomes. A Direct Democracy member who wants meaningful airport price regulation doesn't need to lobby a minister. They vote, and their elected representative is bound to act on it.
If you're tired of watching both major parties protect the same vested interests while your airfares keep climbing, it's worth asking: what would Australian policy look like if voters actually made the decisions?
We think you'd find out pretty quickly.
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