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The federal government has given its strongest signal yet that it’s about to move on recommendations to improve the regulation of airport slots, two years after they were first delivered, as consumer dissatisfaction surrounding high airfares continues.
Transport Minister Catherine King released the government’s long-awaited green paper into Australian aviation to 2050 on Thursday, and stated Sydney Airport’s slot allocation scheme would be reformed “in due course”.
Transport Minister Catherine King.Credit: Alex Ellinghausen
Sydney Airport is the biggest gateway into Australia, but is governed by outdated regulation that is regularly criticised by its own management and its airline, airport and tourism partners. The green paper was released for industry consultation ahead of a formal white paper, which is due by the middle of next year.
“We have recently concluded targeted consultation regarding potential changes to the [slot-management] scheme, with a particular eye to modernising the slot allocation framework and strengthening compliance measures to ensure that slots are not being misused by airlines. I will have more announcements to make about these reforms in due course,” King said.
In 2020, former Productivity Commission chair Peter Harris delivered a report following an independent review into the slot management at Sydney Airport which called for an overhaul of its slot management system to make it easier for new entrants, both domestic and international, to fly in and out of the hub.
Successive governments have not yet implemented his recommendations, to the chagrin of some airlines and the country’s airports, who allege the domestic market is not competitive enough.
Prime Minister Anthony Albanese declared earlier this week that Australia is the “most competitive aviation market in the world, bar none”. But the green paper makes it clear the sector, where 95 per cent of passengers are carried by the country’s two biggest airlines, could do more to address the concentration of the industry.
“The Australian domestic aviation market is highly concentrated, and the market is experiencing structural change which may impact the competitive dynamic in the future. With airlines no longer competing ‘head to head’ and focussing on market niches, the Australian government recognises a reduction in competitive tension could adversely impact consumers and businesses that rely on aviation, potentially leading to higher prices and lower service outcomes,” the green paper says.
As it stands, Qantas Airways carries about 60 per cent of passengers through Qantas and Jetstar, while Virgin services more than 35 per cent. Regional Express has a little less than the remaining 5 per cent.
Sydney Airport boss Geoff Culbert said he was pleased the government has committed to acting on the findings.
‘The issues with respect to slots at Sydney Airport need to be addressed urgently to ensure fewer cancellations and delays for passengers.’
“The issues with respect to slots at Sydney Airport need to be addressed urgently to ensure fewer cancellations and delays for passengers, and to drive more competition,” Culbert said.
Australian Airports Association chief James Goodwin said the airports would work with the government ahead of the white paper’s delivery, and said airline competition should be a core focus, “so customers don’t lose confidence in air travel”.
Qantas Airways, Virgin Australia, Regional Express and Bonza said they would review the paper and would work with the government on providing feedback ahead of the white paper’s release.
One senior airline executive who was not authorised to speak publicly said the industry “lives in hope” the government will eventually implement the long-awaited reform at Sydney Airport.
“We look forward to yet again providing the same feedback to the government ahead of the white paper’s delivery, the timing of which is still unknown,” another aviation executive said.
Among the suggestions in the 224-page green paper, the government said it is considering implementing a standalone public inquiry into the pricing of domestic airfares on routes to and from regional areas.
It also said it would look at ways to improve consumer dispute resolution systems for Australian travellers.
“The Australian government is also seeking to understand whether options pursued in other jurisdictions – such as a customer rights charter or a stronger ombudsman model –would deliver benefits to Australia’s aviation sector”, it said.
The government will consider bolstering the independence of the aircraft noise ombudsman and review the industry’s two regulators– the Civil Air Safety Authority and the Australian Transport Safety Bureau– to ensure they remain fit for purpose.
The green paper also indicated the government is looking at how to establish a viable sustainable aviation fuel industry in Australia to assist the sector in its net-zero emissions transition.
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