Melbourne Airport has backed down in its battle against a hire car driver who refused to pay a string of fines, in a court stoush that casts doubts over thousands of other penalty notices.

The case has prompted calls for tougher regulation of the airport - a corporation with extraordinary powers to set parking fees and impose fines that carry the full weight of criminal law.

Melbourne Airport took Tony Sheridan to court in 2016 after the hire car driver refused to pay four fines for illegally parking in a permit area.

Hire car driver Tony Sheridan has taken on Melbourne Airport over parking fines - and won. Credit:Justin McManus

Mr Sheridan, who was formerly the head of the Victorian Hire Car Association, was fined in 2015 for refusing to display a special parking permit which is required in the area designated for licensed hire car drivers.