News: SYD UPDATE 1-Australia panel backs tougher oversight of airport service costs

• Airport profit margins among world's highest -airlines
• Government cannot regulate pricing or intervene in fee disputes
• Airports should drop anti-competitive contract clauses- report

(Adds more details from final report)

SINGAPORE, Oct 22 (Reuters) - Australia's Productivity Commission on Tuesday said airport operators should be required to provide more information to the competition regulator on their service costs but stopped short of recommending pricing controls.

Airlines had argued that more oversight was needed to keep a lid on rising access fees that have helped drive the profit margins of Australia's largely monopoly airports to rank among the world's highest, according to carrier-sponsored research.

The current light-handed regime, in which the government cannot regulate airport fees or even intervene in disputes over them, remains valid, according to a final report issued after a 16-month battle between airports and airlines.

The government panel said Australia's largest airports should be required to report their revenues and costs from providing domestic and international services to airlines and to remove anti-competitive clauses from contracts with airlines.

The commission did not rule out recommending harsher regulations in future, including areas such as pricing, if airports were found to have abused their market power.

The Australian Airports Association and Airlines for Australia & New Zealand (A4ANZ), which respectively represent the interests of airports and airlines, did not respond immediately to requests for comment.