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SYD Parking Profits Soar - AFR

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    Sydney Airport car park profits soar to record highs on back of fat margins
    • http://www.copyright link/content/dam/images/g/h/6/p/f/7/image.related.afrArticleLead.620x350.guqwu6.png/1488697338816.jpg
    The ACCC has said Sydney Airport's huge 73 per cent profit margin on car parking shows it lacks competitive pressures on pricing. Lisa Wiltse
    by David Marin-Guzman
    Sydney Airport is making record profits from car parking and has overtaken Melbourne to have the highest profit margin at 73¢ for every dollar gained.
    The competition regulator's annual report on the country's four biggest airports, including Sydney, Melbourne, Brisbane and Perth, showed Sydney made $97.8 million in profit from car parking in the last financial year, the largest since privatisation in 2002.
    The result was driven by a decade-high increase in profits per car parking space, up 9.1 per cent over the year, and from a 6.9 per cent rise in revenue. Profit margins also rose from 71.5 per cent to 73.1 per cent.
    Sydney was the only one of the four airports to see a rise in profit from car parking and its profit per car space was 53.7 per cent greater than the next highest.
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    Melbourne Airport, which ranked last year as the highest profit earner, saw its margin slashed from an average 75¢ in the dollar over the last decade to 59¢ in 2015-16.

    The sharp downturn in margins was attributed to a change in the airport's costing methodology and a resulting 24.8 per cent increase in expenses per car parking space.
    While Sydney and Melbourne have increased the overall quality of their service from "satisfactory" to "good", the report said "both airports still have room for improvement".
    Still high margins

    Brisbane Airport and Perth Airport's profit margins fell slightly but were still high at 66¢ in the dollar and 55¢ respectively.

    "The returns that the airports get on car parking show that they do not face significant competitive constraints when setting prices," Australian Competition and Consumer Commission chairman Rod Sims said.
    The report flagged that the increasing popularity of ride sharing services such as UberX and GoCar "may see more people choose not to drive to the airport".
    "Ridesharing may therefore place slightly more competitive pressure on airports to provide cheaper car parking services."
    But Mr Sims told The Australian Financial Review the regulator was seeing the reverse in practice due to airports significantly increasing access prices for taxis, Uber and off-airport carpark operators.

    "They're in a great position where they can levy charges on their only competitor," he said.
    "The only thing people can do is to book [car park spaces] online – if you book online, it's quite a discount. But only about 15 per cent of motorists do that."
    Despite falling airline ticket prices, the airports' profit margins from fees charged to airlines, known as aeronautical revenue, remained high. Sydney Airport recorded the highest margin at 46.7 per cent.
    "The ACCC estimates that over the past decade, these airports have collected $1.57 billion more in revenue from airlines than they would otherwise have collected if average prices were held constant in real terms," Mr Sims said.

    Read more: http://www.copyright link/business/...-of-fat-margins-20170304-guqwu6#ixzz4aQxzS7No
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