Chapter 3Key issues for Australia's aviation industry
3.1In the course of this inquiry, witnesses and submitters raised a range of issues regarding challenges and opportunities for Australia's aviation industry. The committee heard evidence about a range of pressing issues facing the aviation industry, which are related to bilateral air service agreements as well as other factors. This chapter examines key issues as follows:
Competition in the aviation industry, including regular reports by the Australian Competition and Consumer Commission (ACCC).
Consumer protections in aviation.
The management of airport slots.
Brisbane Airport demand management.
Air cabotage arrangements.
Regional security screening.
Competition in the aviation industry
3.2A range of inquiry participants expressed concerns about the level of competition in Australia's aviation sector and that this has negative effects for the aviation sector, consumers, and the economy more broadly.
3.3A distinction was drawn between international and domestic markets, with less competition in the latter. Ms Anna Brakey, Commissioner at the ACCC, explained:
In the domestic market, we see that nine out of every 10 passengers fly with either Qantas or Virgin. Qantas is the largest, with a bit over 60 per cent, and Virgin has about 33 per cent of the market. Together they have around 95per cent of the market. In the international market, Qantas holds about half of the domestic market share. There are just more airlines flying in. That's the basis for our conclusion that the domestic market is more concentrated than the international market, although the international market does vary route by route.
3.4Professor Rod Sims AO spoke about the difficult environment for competition:
I think the only way to characterise what is going on is an effective duopoly between Qantas and Virgin. I think they're actually closer to two-thirds of the market. Whether it is 60 or 65 per cent, having one player in any market with that much market share means they have excessive market power. I think that's the way I'd describe it. They're not in a monopoly, because Virgin is there, so there are two of them, but Qantas is by far and away the dominant player. It has both its premium service and its Jetstar service which it can use strategically, so it does make it very difficult for competitors. And not getting access to slots makes it impossible for competitors.
3.5Dr Tony Webber elaborated on the level of competition in both the domestic and international markets:
Domestic competition is obviously quite significantly affected by the dominant market share of the Qantas Group. It has weakened materially since pre COVID, mainly by virtue of the fact that we've seen the exit from the market of Tiger Airways, which was seven per cent of the market, and Virgin is not the same carrier as it was pre COVID. I think, domestically, there is a material amount of market dominance from Qantas. Typically, the way you measure that is to look at their margins and the significance of their profit. Their FY 23 profit was one of the highest in the airline's history.
Internationally, there is materially more competition. That's by virtue if the fact that the Qantas Group's market share domestically is between 65 per cent and 70 per cent, and in the international market it's materially less—less than half of that. The competition that Qantas faces internationally is much stronger than we see with Virgin. That's largely because of the quality of the carriers that it's up against, the quality of their product and the fact that they can provide services at a lower unit cost. Qantas are up against the likes of Singapore, Cathay, Qatar and Emirates, which are very, very high-quality carriers, and it's more difficult for them to compete in that space.
3.6Qantas confirmed that ‘[i]nternationally, Qantas competes against more than 50carriers and total market capacity has more than doubled over the past year’. In relation to domestic travel Qantas did not share competition concerns and noted:
Domestic travel has never been more competitive. For the first time, there are now four large jet operators and as the ACCC noted in its monitoring, with Rex expanding onto mainline routes and the entry of Bonza, competition in Australia has increased following the restart from COVID‑19.
3.7In relation to competition in the domestic aviation market, Ms Hudson emphasised on behalf of Qantas:
We welcome competition. I think that's actually a really important part of Australia. We have one of the most open and competitive markets across the globe. We think it's important, though, that you strike the right balance between growth and growth in tourism but also maintaining a healthy Australian aviation market at the same time.
3.8Qantas spoke about the effects of competition:
This level of competition both domestically and internationally compels the sector to invest and innovate to reduce costs and deliver better service and products to customers. Far from seeking to avoid it, competition has driven some of the Qantas Group’s best innovations, including the establishment of Jetstar, which has put air travel within the reach of Australians who had previously never flown.
3.9The Australian Chamber – Tourism described potential benefits of improving competition in aviation, submitting that '[i]ncreased competition through additional flights will bring more tourists to Australia and reduce the cost of those flights - a win-win for travellers and Australia's visitor economy.' In addition, the Victorian Chamber of Commerce and Industry submitted that competition in the airline industry 'fosters innovation and drives airlines to continually improve their services, leading to enhanced customer satisfaction. It results in more choices and lower prices for passengers, thereby enhancing the accessibility and affordability of air travel for a broader range of people and increasing airfreight and export opportunities.'
3.10Dr Peter Forsyth submitted:
Airlines continually argue that if competition is allowed in a market they would cease to survive. However, when put to the test they do survive, and sometimes thrive.
Effects of concentration
3.11The Australian Airports Association advanced that '[t]he aviation sector has become one of the most concentrated markets in Australia, both domestically and internationally. This has resulted in a lack of competition, higher airfares and a lower level of service for the travelling public.'
3.12Dr Webber advised the committee that 'Qantas Group's market share domestically is between 65 per cent and 70per cent, and in the international market it's materially less—less than half of that'. When asked about the aggressiveness of Qantas in protecting its market share, Dr Webber said:
Qantas is one of the most aggressive competitors I know. It's an exceptionally aggressive competitor. If a new carrier encroaches on its routes or on its market share then it will aggressively respond. It will do that by adding capacity to routes. It will do that by greater pursuit of corporate markets. That's particularly domestically. It has less of an opportunity internationally because it's a less dominant carrier, but it particularly flexes its muscles domestically…
3.13Rex provided the committee with copies of complaints it made to the ACCC regarding what it alleged was anti-competitive behaviour by Qantas. Mr John Sharp AM also provided specific examples of the types of anti-competitive behaviour it had been exposed to by Qantas:
If you were running an airline like Qantas, would you deploy an aircraft that's worth US$20-odd million, with all those crews and backup services, into a market that had 134, 210 or 417 passengers for the month? That's not a commercial judgement in my view, but that's exactly what Qantas did, and they did it into routes that they'd never shown any interest in until we announced that we were going to move into the domestic airline market. That's what I referred to as bullying. I think it's very aggressive behaviour.
3.14 Professor Allan Fels AO responded to a question about whether Qantas has exploited its effective monopoly to leverage excess profits and price gouge:
I think in recent times that it's obvious in the international sphere. I don't have much evidence on the local market. I wouldn't be surprised.
3.15Professor Fels agreed that the federal government and its policies have played a role in maintaining Qantas’s position as the dominant player, adding that the effect is to make sure ‘the market is not too competitive’.
3.16Mr Tim Jordan, CEO of Bonza Airlines also outlined the direct impact of Qantas behaviour on competition in the Australian aviation sector, especially for the introduction of low-cost carriers and new entrants to the market.
As a consequence of lack of competition, low-cost operated routes have not grown in Australia like in the rest of the world. In 2010 there were 58 low-cost operated routes in Australia. In 2019, just pre-COVID there was—guess what—58 low-cost operated routes in Australia. That is zero per cent growth in Australia, when the rest of the world was busy growing low-cost travel and competitive options. For example, in North America the low-cost carrier operators grew their low-cost routes by some 256 per cent over the same period. Australia was zero.
3.17Qantas submitted:
The suggestion that Qantas should effectively ‘sit still’ or ‘make way’ for its competitors is not reasonable and not how any business operating in a competitive industry can sustainably operate. Importantly, ‘sitting still’ would also lead to an inferior outcome for the Australian public by diminishing competition among carriers and reducing choice for customers.
3.18Professor Fels was in favour of a divestiture power:
I'm strongly in favour of a divestiture power. I believe it would have a very big effect on behaviour, including by Qantas. The fact is that anticompetitive behaviour, in terms of breaching section 46 of the Competition and Consumer Act, the misuse of market power—that law is not effective. There are very few fines. Even if there are, they are quite small relative to the harm. If firms knew there was a possibility of break-up—in the case of Qantas, the separation of domestic from international—it would have a major effect on their behaviour.
3.19Professor Rod Sims AO agreed that divestiture needs to be considered but emphasised that in the context of aviation:
divestiture is not so much the issue; the slots are the issue. The slots are what they've got. If you wanted divestiture in aviation, you'd get them to divest the slots. That's the problem. It's not like in rail freight, where you have dominance on the east coast, where you could get divestiture. Again, you'd be divesting pathways. If we're thinking aviation, the slots are the crucial issue to open up competition. That's why it's dreadful that they're being governed by the companies that are benefiting from them.
3.20Canberra Airport submitted that the 'domestic airline market is one of the most concentrated, unregulated (and now un-monitored) industries in Australia' and emphasised that 'Qantas and Virgin control 95.1% of the market which is staggering. This is why there is no real price competition and why airfares are so high.' Canberra Airport submitted that 'Australia needs to have a third independent and competitive airline operating in the domestic airline market'. It also made proposals relating to monitoring and investigation by the ACCC, a National Standard for Airline Cancellations, and consumer rights when flights are cancelled.
3.21The Chief Executive Officer of Canberra Airport, Mr Stephen Byron, submitted:
Competition in a domestic airline industry is mainly driven on price by the low‑cost carrier, and we're not seeing that competition. If we look forward three, four and five years, either we need to have an independent third airline with at least 15 per cent of the market or we need to end up with an outcome where Qantas does not continue to be the owner of both Qantas domestic and Jetstar, so that Jetstar would be a true independent airline and would provide competition.
Cancellations and delays
3.22A particular concern expressed by Canberra Airport was the rate of cancellations by Qantas, which it linked to the level of competition:
There is a clear operating practice in place by Qantas to prioritise the cancellation of Canberra to Sydney flights over the cancellation of other flights. Would this be sustainable in a truly competitive market (Qantas have approximately 78% of passengers on this route)?
3.23Canberra Airport highlighted that the level of cancellations by Qantas on the Canberra to Sydney route is 'exceptionally bad - consistently the worst in the country'. It said that in July 2023 Qantas cancelled 'a staggering 11.5% of flights or a total of 53 flights from Canberra to Sydney', which is more than three times the rate of cancellations by Virgin at 3.6percent:
These cancellation rates of Qantas on the Canberra to Sydney route massively exceed those of Virgin Australia (whose service is operated by Link Airways) despite flying in the same weather conditions and flying under the guidance of the same air traffic controllers.
3.24Canberra Airport's CEO, Mr Byron, also submitted 'I think reforming the slot system urgently is an absolutely critical part of fixing the cancellations now. I also think it's a key part of improving competition in the marketplace for domestic aviation, which will lead to lower airfares for Australians.'
3.25The committee heard that a factor contributing to cancellations is the availability of air traffic control staff in certain airports due to limited staff available to deploy in the event of illness. The Chief Customer and External Relations Officer of Airservices Australia, Mr Peter Curran, explained that this was a result of an air traffic controller retirement incentivisation scheme brought in during COVID-19. Despite planning, issues were encountered in relation to the throughput of trainees during the COVID lockdowns and border shutdowns and air traffic levels returned sooner than the forecast recovery. While there is currently a focus on recruitment, Mr Peter Curran, explained that the consequences of staff limitations include that:
…we've had to implement a range of procedures where, to maintain aviation safety, we restrict the throughput—we restrict capacity. At no stage has safety been impacted, but we have had to reduce the number of aircraft that can fly through given volumes of airspace, and that's had the effect of delays and also a level of cancellation….
3.26For example, Mr Curran noted that in Sydney 'we've seen a little over 100cancellations in total during the month of August, of which Airservices was responsible for approximately four per cent'.
3.27Regarding cancellations, the Chief Executive Officer of Sydney Airport, MrGeoffCulbert, acknowledged that '[o]n average we see cancellations due to weather and traffic control contributing around 50 per cent to the overall cancellations', though also said:
But it's not the only reason. We also see a scenario where the cancellation rates between different airlines differ. If you go back to February this year, Jetstar were cancelling 16.2 per cent of flights on the Sydney-Melbourne route, Qantas were cancelling 11.3 per cent, Virgin were cancelling 9.4 per cent and Rex were cancelling three per cent. These airlines were all flying out of the same airport on the same day in the same weather with the same air traffic control, so unless each individual airline had a different weather cell following it around the airport, it's hard to understand why there was such a big difference.
3.28Mr Ryan Both, Executive General Manager, Aviation at Brisbane Airport Corporation further explained the flow on effects that these cancellations had on the broader Australian airport network, especially related to Sydney airport:
There's the saying in the industry that when Sydney has a sneeze the rest of Australia catches a cold. Whenever an airport is at capacity or near capacity and there is a disruption, it has a significant ripple effect in the system. And that's what we see every time there's a weather disruption or other disruption in Sydney—it affects the major ports.
Competition monitoring of the sector
3.29A specific proposal regarding addressing competition related to ACCC reports on airline competition in Australia. These have been published every quarter for the last three years, following a direction by the Treasurer on 19 June 2020 under subsections 95ZE(1) and 95ZH(1) of the Competition and Consumer Act 2010. In these reports, the ACCC monitored prices, costs and profits relating to the supply of domestic air passenger transport services. This direction expired after three years, with the 12th and final report released in June 2023.
3.30It its evidence to the committee, Qantas noted that it gave feedback to the Australian Government in which it did not support continuation of the ACCC reports on airline competition in Australia:
We were asked by the government whether we supported the continuation of the monitoring regime and we said that we did not.
3.31The Chief Executive Officer of Qantas, Ms Vanessa Hudson, said:
We don't support a continuation of that review, because the findings were not significant. We also comply continuously with the ACCC and we collaborate with them continuously in the monitoring powers that they have in an existing way.
3.32The view of Qantas was not shared by a range of other witnesses. For example, Mr Byron, Chief Executive Officer of Canberra Airport, was of the view that 'it is imperative for the ACCC monitoring to be continued and, in some ways, I find it astounding that it was ever ended'. He also stressed that 'it's very important that there's no gap in the reporting that they've been doing'. He said:
I believe the ACCC has much to report on, particularly following the release of the Qantas, Alliance Airlines and Regional Express annual financial results and all of the other matters that have been going on—in particular in relation to the COVID flight credits deadline, where Qantas, under the pressure of litigation, removed the deadline but it remains for Virgin. I think there's further work to be done in relation to the issue of airline credits where the airline's cancelled the flight. I don't know why there's allowed to be a deadline at all on any of the credits. This is just an effort by Qantas and Virgin to get a windfall profit at a 100 per cent margin, and what they are doing is taking the customers' money when they haven't provided the service.
3.33The continuation of the ACCC reporting was also supported by the Australian Travel Industry Association:
This reporting allows oversight into the overall health and recovery of the domestic aviation sector to support Australia's overall economic growth. This quarterly report allows consumers and industry stakeholders to receive timely and relevant information about capacity, prices and consumer complaints.
3.34The Chief Executive Officer of Cairns Airport, Mr Richard Barker, also expressed support for competition monitoring:
From our perspective one of the things that we would be supportive of—and this is a recommendation that has been made by others—is the restoration of the monitoring of airlines and their performance. As noted by other participants, it's a very heavily concentrated industry. While the large airports are monitored to make sure that they are behaving appropriately, I think monitoring the competition of the domestic aviation market is important.
3.35Mr Byron, Canberra Airport, submitted that the monitoring regime 'was very successful', and made suggestions for improvement:
I think they [the ACCC] could have a specific remit to have a show-cause process where there are cancellations, and they could also be charged with a pricing inquiry into the way in which airfares are set and the way in which dynamic pricing plays out in an industry where two players have 95 per cent of the market. Dynamic pricing is relatively common in the Australian economy—for example, in hotels. That plays out in cities that have literally hundreds of hotels, but here, with the concentration of Qantas and Virgin, the way in which they set prices and monitor each others' prices, and who is leading the prices up as seats fill up, is a matter that warrants further inquiry. They would have the ability to support the government in developing a policy approach to deliver a more competitive aviation market.
3.36Ms Carla Jayne Hrdlicka, CEO and Managing Director, Virgin Australia commented:
We're very open to that monitoring regime being extended. This was before my time, but I think we asked for it in the first place. We embrace the process. It does require a lot of additional time from our team to support that process, but we felt like that was time well invested to ensure that we had good perspective ourselves on what was important to the ACCC and that we were with a good overlay from a competition regulator standpoint on the industry itself, given my comments earlier about the imbalance of power in our industry.
3.37Mr James Goodwin, Chief Executive, Australian Airports Association submitted:
In fact the airports, for instance, are formally monitored by the ACCC, and, even going back to June 2022, we called on the Australian government to extend and fund the ACCC's monitoring of airlines. We've had some long correspondence and a long history of calling for that. We feel that provides the evidence that both consumers and the regulator need to be able to make decisions. So that's very important.
3.38Mr Goodwin added that ‘[o]ne of the strongest recommendations we'd like to see out of this is that the ACCC resumes the airline monitoring’.
3.39Mr Jim Parashos, Acting Chief Executive Officer, Melbourne Airport, also supported the ACCC monitoring:
We do support the re-introduction of the ACCC airline monitoring. I think that would be an appropriate starting point. We also really support bringing back confidence into the Australian domestic travel market because we are of the view that the uncertainty as to whether people will get away on time or around high cancellations does have a dampening effect on demand. We are at 97 per cent of pre-COVID international capacity and at just over 90 per cent for domestic, so we are lagging significantly in domestic recovery, which I think also speaks to the need for additional capacity. I think it's also important to highlight that, in our agreements with our airline customers, we have contractual service level agreements with them around infrastructure, aerobridge availability, gate availability and so forth, and we are financially penalised as airports when we cannot or do not provide the infrastructure for a range of reasons. We think that, given that the airlines are happy for that approach with us as airport customers, the same should apply to the travelling public.
3.40In its final report, the ACCC observed that the direction expired and said that a 'further direction to the ACCC would provide continued transparency and scrutiny of the industry at a time when new and expanding airlines are still trying to establish themselves'.
Consumer protections in aviation
3.41Evidence in the inquiry contemplated protections for consumers dealing with delays, cancellations, and other issues. For example, Ms Rosie Thomas, Director, Campaigns and Communications, CHOICE, said that '[c]onsumer advocates have been highlighting problems in the airline market for many years.' CHOICE highlighted a major report it published in July 2021 which 'found there are a number of key problems in the aviation sector', many of which 'remain ongoing'. These include 'inconsistent and often unsatisfactory rights for consumers' and 'difficulties when consumers try to understand or exercise their rights to receive a remedy'.
3.42An existing body to support aviation consumers is the Airline Customer Advocate. This is a free and independent service to eligible customers of Australian airlines which seeks to facilitate resolution of unresolved complaints about airline services. In a June 2023 report, the ACCC observed that this 'industry-based scheme' is 'generally ineffective'.
3.43This view was supported by Mr Brody, Chair of the Consumers Federation of Australia, who said the Airline Customer Advocate 'in our view, has been a failure'. He explained:
For example, during the period of COVID, it contended it could not accept the most common complaints from consumers around COVID related cancelled travel. So that was a fail. We'd also suggest that eligible complaints to that entity must have followed an internal process first, at the airline, but we hear that customers can't access that internal process, so then they give up, and I think complaint fatigue sets in. I think there does need to be a new system for complaints, both at the internal level and at the external level with an ombudsman scheme.
3.44The establishment of a travel and tourism industry ombudsman was recommended by CHOICE, which proposed the ombudsman would investigate complaints and 'have the power to issue determinations and decisions which industry are obliged to act on'. Ms Rosie Thomas, Director, Campaigns and Communications, CHOICE, said this ombudsman would replace the Airline Customer Advocate.
3.45Mr Brody of the Consumers Federation of Australia gave further comment on the proposed ombudsman, saying that:
…for other sectors where there is an external ombudsman appointed, those ombudsmen have to meet benchmarks which are published by Treasury. They include the need to be independent, effective, accountable et cetera. Currently, the Airline Customer Advocate does not meet those minimum benchmarks. We would say that establishing a new travel and tourism industry ombudsman that actually has greater resources to resolve disputes and meet those minimum benchmarks would be necessary.
3.46Ms Thomas said CHOICE also recommends 'the federal government introduce minimum consumer protections for airlines'. Of these protections, she explained:
CHOICE and [the Consumers Federation of Australia] recommend that these include a compensation scheme for delayed and cancelled flights; clearer rights to refunds, including additional refund protections for people experiencing financial hardship; minimum requirements for travel vouchers or credits; and minimum requirements for customer service, including during high-demand times.
3.47It was noted that in the European Union, Canada, the US and UK, there are certain consumer rights where passengers are entitled to compensation for delayed or cancelled flights. Dr Webber provided his view on this proposal:
I think that it would be difficult to apply internationally simply because the international business across most routes around the world has a very thin margin. It is very easy for those businesses to turn from being a profit-making to being loss making. It just takes a $10 or $15 jump in the jet fuel price overnight to completely annihilate the profits on those routes. Those margins are very, very sensitive. Adding additional costs to that sector would be difficult to apply. Domestically, it is a different matter though. Domestically, competition is such that we have two dominant carriers. One is very dominant and the other less so. The ability to increase prices in response to high unit costs is easier domestically. In my view, most passengers value their time. If their time is wasted then they should be compensated.
3.48The Australian Travel Industry Association submitted that '[w]ithout a strong consumer protection framework that is fit-for-purpose in the aviation industry - like that present in the EU for statutory compensation in certain instances of delay or cancellation - Australian consumer outcomes will remain sub-optimal.' It recommended:
Globally, consumer rights have been strengthened following the performance of airlines regarding cancellations and credits during COVID.
Reform is needed to simplify refund rights where a flight is cancelled, and passengers are not accommodated on the same day.
3.49Ms Thomas, CHOICE, supported 'a compensation scheme similar to what they have in Europe' and was of the view these changes need to occur more quickly than the timeline for the Green and White papers:
If flights are delayed more than a certain amount then there'd be a bit more standardisation and prescription around what you're entitled to. Currently, whether or not you get a meal voucher will depend not just on the airline but also on the class of booking and everything.
3.50Mr Brody, Consumer Federation of Australia, expressed the view that 'rules relating to frequent flyer points—access to them, use of them et cetera—would be sensible to be the subject matter of the minimum consumer protections framework' proposed by CHOICE. He said:
Having standards that are equivalent across all airlines and their associated frequent flyer programs would ensure that people are able to access them when they need to, that they have a level of fairness and standardisation in their value that is not changed at the whim of the airlines and that there would be an oversight arrangement as well. Also, [Ms Thomas of CHOICE] mentioned the proposal for an aviation and tourism industry ombudsman. If people felt that in their particular circumstances they were treated unfairly, they could make a complaint to that ombudsman, who would be able to resolve that matter on the basis of what is fair and reasonable.
3.51Mr Brody also referred to a proposal 'from the federal government to introduce an unfair trading prohibition to our consumer law'. He explained how this may apply to the frequent flyer points issue:
This would fill the gap that exists in the existing consumer law. Currently we have prohibitions on misleading conduct or unconscionable conduct or unfair contract terms, but not broader unfair trading practices. Changing, at will, the value or devaluing frequent flyer points that have been purchased on a certain understanding may well be in that category of an unfair trading practice. CHOICE and CFA are very strong supporters of that proposal, and Treasury is currently consulting on that.
3.52Regarding flight credits, Mr Brody and Ms Thomas both observed that consumers have had varied experiences. Mr Brody proposed 'there needs to be a minimum standard for credits and vouchers across all airlines'. He also posited that 'there shouldn't be any expiry requirement on credits and vouchers', and one option could be that the credits:
…do expire after a certain period—say, for a new flight service. At that point, they might be provided with cash. So there would be an incentive then for the airlines to give you access to your credit voucher rather than just stringing you along, as we've seen among the complaints relating to Qantas.
3.53Mr Stephen Byron, CEO, Canberra Airport offered his view:
I think the first thing that should happen when there's a cancellation is that the passengers should have an automatic right to get their money back. Hidden behind this business of tricky flight credits, people have clear stories and evidence of trying to use these flight credits with Qantas. They have a screen up with the normal booking system to look at available flights. The airline directs them to a second booking site to use the credit, and the same flights aren't there. For example, Qantas often will not have the direct Canberra-Gold Coast flight; they'll route you through Sydney if you're using a credit. So the first thing is that you must be allowed to get your money back if you don't like the flight they've rebooked you on automatically.
Secondly, quite often they will put you on a flight that doesn't work, for example, for an international connection. They'll put you on flights that don't work so you're forced to go and book a different flight for more money. Of course, we know that if you're booking at the last minute the airfares that airlines charge are ramped up to very high levels, so the airfare you have to book to fix the problem that they've caused is higher. Passengers should be compensated for that.
3.54Mr Long of the Australian Travel Industry Association reported that the current situation regarding flight credits is challenging for travel agents:
…because those credits are run by the airline. We don't hold that money. The airline is holding that money. We think that there's probably about $100 million maximum that sits there across all of our carriers in that credit space. We work very much proactively by getting in contact with as many customers as we can. What we have found is that there are some industry-wide redemption issues in regard to the systems and processes certain airlines have put in. Some airlines are doing it better, I think, particularly Virgin Australia, who set up a travel bank where you could access the total amount of money and use it on flights as they go through. The terms and conditions are still challenging. For example, if you've got a $400 flight and you've got a $500 credit, you can't use the $500 credit on that $400 flight. So there are a number of issues that need some further investigation…
3.55Another consumer protection highlighted by Mr Brody was 'a proposal to make noncompliance with consumer guarantees unlawful'. He said:
Currently, in our consumer law, we have certain consumer guarantees, including that services must be provided with due care and skill and must be provided on time. That's relevant to airlines. But where those consumer guarantees are not met, the regulator—the ACCC or the state fair trading agencies—do not have power to enforce them. That is a huge gap in the effectiveness of those laws, because they create little deterrence for businesses that don't comply with those consumer guarantees, which are already expected in law.
3.56The CEO of Canberra Airport, Mr Byron, suggested that improved competition would support better outcomes for consumers:
My concern is that, if we don't properly confront what is needed to change the marketplace, to move away from the dominance and concentration we have, then we're going to need more and more consumer protection. The big company, and the big airline, has no respect for its workers and no respect for consumers. That's why we need a much more competitive industry, and the white paper is a key part of that. The second key part of it is the ACCC's monitoring of the industry and the ability for it to provide frank and fearless reporting on a quarterly basis.
3.57When asked for the ACCC's preliminary view on potential consumer protections, the Chair, Ms Gina Cass-Gottlieb, highlighted several matters including consumer guarantees, unfair trading practices, and an external independent ombudsman:
We consider, firstly, that there should be reform to the consumer guarantees under the Australian Consumer Law to make it a contravention for businesses to fail to provide a service as paid for or, as in this case, where there are cancellations, to provide a flight as soon as reasonably and practically possible after a cancellation. The problem currently is that, while there is a legal obligation to provide the consumer the benefit of the consumer guarantee, it is not a contravention of the act if they fail to do so. We are not able to take action showing against any company for a failure to comply with their consumer guarantee obligations. We think that law change will, as you are noting, really set standards and change behaviour by underlining that we would be able to take action for that failure. Secondly, we do consider that a successful implementation of an unfair trading practice, looking not only at terms but business processes and practices that don't give consumers the benefit of the rights that they have. For instance, if there is a capacity to cancel a subscription or to obtain service through a call centre, there should be a process in place to make it effective. We also think that there should be an independent external dispute resolution ombud scheme. We think the airline customer advocate is much too limited and is generally ineffective at creating change in behaviour. Finally, we think there's merit in the government further considering and consulting on a form of consumer compensation scheme, which would supplement the consumer guarantees by providing more specific protections.
Issues with loyalty programs
3.58The committee received first hand evidence of the issues discussed above. It received over 100submissions—which were published on the committee's website with the submitters' names withheld—from individuals expressing concerns about their experience with the Qantas frequent flyer program. A common grievance was that submitters felt their frequent flyer points were not as valuable as they should be, considering what points had been worth in the past, and this left them unable to travel as planned, sometimes after years of loyalty.
3.59To take some examples, one submitter said:
Back between 2000 and 2010, I flew [e]very month with Qantas, hoping the credit points I earned on the more expensive Carrier would be provide me travel in times of need when money was tight.
I had also planned to surprise my two boys when they married, as when I stopped flying, my points were enough to secure two return tickets to Europe.
Over the last decade, I held onto these as a savings plan, only to now find out that they had been diluted severely and there is no longer the hope I had for my years of loyalty.
3.60Another submitter referred to accumulating points 'through our loyalty to Qantas', however:
Unfortunately, it has come to our attention that the value of our frequent flyer points has been diminishing due to changes in the program, such as increased redemption rates, limited availability of reward flights, and additional fees and charges. This has left us feeling disheartened, as the points we have accrued were intended to provide us with a more accessible means of experiencing the world during our retirement years.
3.61A further submitter said:
I am writing to join the many voices in grievance of Qantas' Frequent Flyer plunge in points value.
From a personal experience, I have found that points for both Melbourne to London and Los Angeles have almost doubled to what they were only a few years ago (I fly these legs reasonably often).
The amount of reward seats available has also dwindled to near nonexistence.
3.62The committee gave Qantas an opportunity to respond to the submissions. A response from the Qantas Loyalty Chief Executive Officer, Ms Olivia Wirth, said:
The Qantas Frequent Flyer program is successful only because our 15million members see value in the points they earn and use. In the 12months to 30 June 2023, our members earned 175 billion points and redeemed 155 billion points. We appreciate that no two members are the same in how they choose to earn and use their Qantas Points. That is why we are expanding our program to offer a range of partners to earn with and rewards to enjoy.
3.63The response outlined the approach by Qantas in relation to different aspects of frequent flyer rewards; including reward seat availability, classic reward seat pricing and points expiry. It also said that Qantas 'would appreciate the opportunity to engage with the members who have raised concerns so that we can address any outstanding issues directly'.
3.64The committee obtained appropriate contact details from Qantas and passed those details to the submitters so that they may contact Qantas about their concerns if they wish.
Management of airport slots
3.65In October 2020, the then Department of Infrastructure, Transport, Regional Development and Communications commissioned an independent review into demand management at Sydney Airport. This was undertaken by Mr Peter Harris AO, who provided a report dated February 2021. The review was commissioned to determine if the Sydney Airport demand management objectives remain relevant and the scheme is fit-for-purpose, including through:
providing for the efficient use of airport infrastructure, while managing the impacts of noise to maintain livability for the Sydney community,
encouraging competition and resilience within the industry, and
facilitating recovery from the COVID-19 pandemic, such as through being responsive to changes and opportunities in the market.
3.66Following the Harris Review being handed down, DITRDCA commenced consultation with industry, community and government stakeholders. This included 25technical working group meetings in order to provide advice on specific proposals to give effect to the recommendations of the review of the Sydney Airport Demand Management Scheme.
3.67Notwithstanding the Harris Review, some inquiry participants raised concerns about the management of airport slots and allegations of 'slot hoarding' by airlines. Slots refer to time periods for take off or landing granted to a specific airline by the operator of an airport. Slot hoarding refers to action taken by airlines to take up excessive airport use rights to prevent other carriers from accessing slots.
3.68Evidence indicated that the salience of this issue varies between airports. While airport slots at Sydney Airport received close attention, Darwin International Airport reported that it 'is not slot constrained and has very few limitations on airlines wishing to operate international services'. In addition, the General Manager, Corporate Affairs at Perth Airport, Mr Brown, reported that 'there's no hoarding of slots', largely due to the shape of demand at that airport, though there had been issues in the past.
3.69The purpose of airport slots is explained by the International Air Transport Association (IATA) in a public fact sheet:
Airport slots are a solution to a lack of airport capacity. Pre-assigned take‑off and landing slots are required to avoid chaos at airports where the infrastructure cannot match demand. Allocating that capacity to airlines in a fair, neutral and transparent manner should be the role of an independent slot coordinator. This ensures the aviation industry can continue to grow and provide consumers the choice, destinations and connectivity they demand in a predictable way.
3.70The IATA further explains that this process is supported by guidelines:
The Worldwide Airport Slot Guidelines (WASG) has been developed by airlines, airports and slot coordinators to provide a practical solution that can be applied to any airport globally to allocate and manage slots each season. The WASG, however, must be applied consistently and in entirety for the benefits to be fully realized at congested airports.
3.71Mr Peter Curran, Chief Customer and External Relations Officer, Airservices Australia, confirmed that the Australian slot system operates within the IATA worldwide slot system. He also clarified that airport slots are distinct from air traffic control slots, which are 'organised for the next day'. Airport slots 'are determined strategically every six months between the airport, ACA—Airports Coordination Australia—and airlines'.
3.72Airport Coordination Australia advised that it is 'an Australian owned private company that provide[s] slot coordination services to airports in Australia and overseas'. Its CEO, Ms Petra Popovac, reported that '[t]here are differences between the Sydney Airport Demand Management Act and the Worldwide Airport Slot Guidelines' (WASG), and suggested it would benefit the Australian regulatory environment 'to move more towards the Worldwide Airport Slot Guidelines, which is the global set of rules that most of the other airports and coordinators use to allocate slots at congested airports'.
3.73Ms Popovac spoke about areas where Australia is not meeting the WASG:
The main one…is the new entrant rule—changing that. There has also been a change in the definition of the length of a new-entrant rule as well, which is important. Over the last five years the worldwide airport guidelines have changed quite dramatically. There is a more robust slot-monitoring section as well that can't be implemented because the Sydney Airport Demand Management Act overrides that.
3.74Ms Popovac also spoke about how the WASG can be implemented with some local rules as required:
With Perth and Brisbane the world airport slot guidelines are implemented with some local rules, so they're underpinned by the local rules. There needs to be local rules in Perth, for example, because of the heavy mining sector over there, and Brisbane is similar. Understanding that, in Sydney it's the same case where there's the regional ring fence, which is very different to anything in the world. Understanding that, that could be underpinned by adopting the world airport slot guidelines as they are and then having a local rule for regional services.
3.75Regarding the process for allocating airport slots—which is relevant to allegations of slot hoarding—Ms Popovac explained that at the beginning of the season, and an airline 'will ask for what I call their wish list, so everything they wish to operate in the season'. Airport Coordination Australia will then do an 'initial allocation', and two months later airlines will:
…send back all the cancellations of the slots they don't wish to operate to anymore. Then we have an operational schedule at that point in time. So, yes, there can be gaming of the system before that baseline date, but, after that baseline date, they need to operate 80 per cent of all of the slots they have to be able to get their slots back.
3.76This is known as the 80-20 rule, whereby as long as an airline doesn't cancel more than 20 per cent of its slots, it will get to keep its slots in accordance with the regulation. Ms Popovac reported that 'as a slot coordinator, we allocate the slots, and we cancel them when the airlines request it'. Airlines do not need to provide a reason for the cancellation. When asked, Ms Popovac suggested that there does not need to be change to the 80-20 rule:
I don't think so, because it's a global standard. It's 80-20 everywhere in the world except in one or two airports. The problem is that if you change that then it would become more onerous on international airlines to operate into Sydney when the flights in Haneda, Shanghai, Singapore or wherever it may be are on 80-20 and not on 90-10, for example.
3.77However, Ms Popovac also advised that a slot compliance committee—comprising 'airlines, the BARA, a representative from Sydney airport, a representative from Airservices and a representative from the department, and ACA are observers'—has not met since 2015. After issues were identified with Jetstar's approach to slots:
The department's [Department of Infrastructure, Regional Development, Communications and the Arts] legal team looked at whether they could actually fine Jetstar, and they found that they couldn't. So, at that point in time, the department said that they were going to take a break from the compliance committee to work out a better way of organising the committee.
3.78Several inquiry participants expressed concern about airport slot management. Professor Rod Sims AO highlighted the importance of interrogating the ownership of Airport Coordination Australia:
Slots at Sydney airport are clearly a very valuable property right. They're a public good, yet they're allocated by Airport Coordination Australia, which, to my understanding, is majority owned by Qantas and Virgin.
3.79The Chief Executive of the Australia Airports Association, Mr James Goodwin, submitted that '[i]t's clear that the system is no longer fit for purpose. There is a review by Peter Harris and we'd urge the government to instigate the recommendations of the review asap.' Mr Goodwin added that '[w]e would urge some immediate implementations—some small but effective changes that would improve reliability and the efficiency of the network'.
3.80In relation to claims of slot hoarding, Dr Tony Webber, Managing Director, Airline Intelligence and Research Pty Ltd, told the committee:
My analysis suggests that at least a part of it is because of commercial reasons. The term they use in the airline business is 'slow flying'. They use that on high-frequency routes such as Sydney to Melbourne, where during the peak times there is a flight every 15 minutes, or there was before COVID. For these really high-frequency routes they can take out a service and shift passengers to adjacent services, and that enables them to manipulate capacity over a short horizon. That, in turn, enables them to manipulate the airfare that they charge or yields.
3.81Dr Webber agreed that the current 80-20 rule can be used in an anticompetitive way by carriers. He stated that 'while the 80-20 rule exists there will continue to be strategic cancellations to improve profitability'. His view was that shifting from 80-20 to 90-10 should be considered to help support consumer rights.
3.82MrGraham Turner, CEO, Flight Centre Travel Group advocated that the 80-20 rule should be changed to 90 or 95 per cent. Mr Dean Long, CEO of the Australian Travel Industry Association, agreed and linked the question of slot management to consumer compensation for domestic flights, saying:
…they are two issues but have the same root cause. If you fix the slot management issue at Sydney airport, you will hopefully reduce the need for consumer compensation in that. The primary issues at the moment are the compliance mechanisms and the 80-20 rule, which isn't effectively operating as 80-20, because, when you take into consideration any cancellations by air services or any other weather delay, you can pretty much see that each slot operates at a 60-40. That's a suboptimal position. So greater enforcement of slots and moving that to a 90 to 95 arrangement will improve consumer outcomes.
3.83Mr Long suggested that 'we probably don't need to touch the international 80‑20 rule', which 'seems to be operating pretty well', but said '[d]omestically, there's no doubt that the 80-20 rule needs to change.' He submitted that the slot management 'was born in 1944 and hasn't changed'; at that time:
You had aircraft that were completely unreliable and you had navigation systems and airport infrastructures where 80-20 made a lot of sense. We were operating on an average, prior to the pandemic, of 2½ per cent cancellations. The idea that the aviation industry needs an additional 17 per cent above that is unreasonable, so they have to be changed domestically. That would have no impact on our international obligations.
3.84Mr Stephen Byron, CEO Canberra Airport submitted:
I think reforming the slot system urgently is an absolutely critical part of fixing the cancellations now. I also think it's a key part of improving competition in the marketplace for domestic aviation, which will lead to lower airfares for Australians.
3.85Canberra Airport submitted that it 'would also seem that Qantas is not properly using its slots into Sydney Airport from Canberra'. It's CEO, Mr Byron, elaborated on what he termed 'a misuse of slots':
My view is that Qantas have booked into the schedule more flights than they will ordinarily have, and what that does is take up a huge number of slots. For example, in the afternoon peak, so between 4 pm and 5.55 pm—that's an hour and 55 minutes—they have six flights. Amongst that time they have a flight at 4.40 pm and one at 4.45 pm, five minutes later. They have one at 5.40 pm and one at 5.55 pm, 15 minutes later. It's ridiculous to have flights five minutes apart. To be frank, in terms of a competitive access to Sydney airport, the two big airlines should not be allowed to have flights into Sydney airport from any city more than 30 or 45 minutes apart. They should give up those slots and make them available to a competitor who can use them.
3.86Regarding the application of the 80-20 rule domestically and internationally, MrByron advanced that the rule:
…is ridiculous for domestic flights. The 80-20 rule might be right for international flights, but for domestic flights it should be 95 per cent versus five per cent. If they're not using it five per cent of the time, it's a very poor misuse of critical infrastructure and it's probably a result of anticompetitive behaviour.
3.87Mr Tim Jordan, Chief Executive Officer of Bonza advised that the airline is prepared and willing to increase services into Sydney in 2024. If given the opportunity to do so, Bonza would be able to deliver routes to approximately sixteen new destinations to and from Sydney, with those destinations servicing two million regional Australians. However, Mr Jordan emphasized the challenges of accessing new slots at Sydney Airport:
With access to just four daily morning peak and four daily evening peak slot pairs at Sydney, Bonza could base four aircraft initially in Sydney and consequently make a very significant economic and social impact across many parts of the country. These required slots would represent comfortably less than 10 per cent of the available seasonal slots that are either cancelled on a daily basis or allocated and then unused by incumbents. Or they are ring fenced for regional services but go unused.
3.88Sydney Airport highlighted that it 'has been advocating for reform to the slot and demand management schemes since 2017' and submitted:
Fundamentally, the way the current rules are written incentivises incumbent airlines to perpetually over-file and hold too many slots. Slot filing data demonstrates that this has been allowed to go untempered for many years, and unless there's a change to the rules, we do not see a scenario where behaviours will change or competition can increase.
3.89Sydney Airport's CEO, Mr Culbert, reported that '[w]e're seeing filings [for slots] over 100per cent of pre-COVID capacity, but we're seeing actual flights taken at only about 90 per cent, so we're seeing 10 per cent of the slots going to waste.' He advanced that this is
…a material productivity drain on the country. We've got Australia's largest infrastructure asset—Sydney airport—not operating at its proper capacity, and it drives significant reliability issues. Ultimately, it's the travelling public who pay as a consequence of delays, cancellations and a lack of certainty.
3.90The most recent monitoring report published by the ACCC drew attention to the slot management system at Sydney Airport and observed:
Access to take-off and landing slots during peak times at Sydney Airport is critical for airlines seeking to build an intercity network. The most effective way that the Australian Government could enhance airline competition for the benefit of consumers would be to implement reforms to the way Sydney Airport slots are allocated to airlines.
3.91The Chair of the ACCC, Ms Cass-Gottlieb, advised that the ACCC sees slot reform at Sydney Airport as a priority issue and has engaged with government on the matter. Ms Brakey, ACCC Commissioner, also made a distinction between the domestic and international markets, saying that slot reform 'will have a more direct and more immediate impact on the competitiveness of the domestic market' and '[w]e see the domestic market being less competitive than the international market'. Ms Brakey also advised that the ACCC supports:
Peter Harris's recommendations about having a robust compliance enforcement arrangement around slot management. We think that if you can get better utilisation of slots, and that if any slots which are freed up can promote new entry or expansion of the smaller airlines, that will bring about more competition.
3.92Qantas indicated that it ‘broadly supports the recommendations for the Harris Review on the basis they will increase transparency and efficiency and make the Sydney Airport Demand Management Scheme more consistent with the Worldwide Airport Slot Guidelines’. Qantas advised that in relation to Sydney Airport:
Qantas is operating more than 90 per cent of its allocated slots – well above threshold levels administered by the Worldwide Airports Slots Board, of which Sydney Airport is a member. Indeed, 99 per cent of Qantas’ slots were returned in the most recently completed season.
3.93Qantas added:
Sydney Airport is not full. Only 75 per cent of its available slots are allocated. In 2023, numerous new entrants have commenced international services into Sydney. In 2021, Rex commenced domestic jet operations out of Sydney, including during peak periods. In both 2023 scheduling seasons Rex was awarded the majority of additional peak slots it sought – 108 additional slots in total. Bonza did not participate in the seasonal slot process in Summer or Winter 23 and so did not obtain any slots.
Brisbane Airport demand management
3.94In September 2023 Ms Elizabeth Watson-Brown MP from the Australian Greens announced plans to introduce a bill to federal parliament to introduce flights caps and a curfew on Brisbane Airport to address residents impacted by flight noise. The flight caps would limit the number of arrivals and departures to just 45 per hour, which is less than when Brisbane operated a single runway.
3.95In responding to this proposal Mr Adam Rowe, Chief Commercial Officer, Queensland Airports Ltd stated:
From our point of view, we are aware of the proposal and we are strongly against it. Speaking on behalf of the Longreach-Mount Isa council there are services running into the evening or early morning. Inevitably…there would be a prioritisation from airlines as to what could be run if there were a curfew or a movement cap. A smaller regional service is always going to be de-prioritised compared to a large international or a larger domestic service. In terms of investment certainty, our colleagues at Brisbane Airport, as is well known, have invested significant sums of money in building capacity ahead of demand to ensure they're there to enable growth throughout Queensland and overseas; that includes three of the four airports in our portfolio. Speaking on behalf of Gold Coast, we've done a similar thing; we invested half a billion dollars in the expansion of the airport in order to facilitate growth and facilitate that economic benefit. Changing those settings when there has been certainty for decades creates a level of uncertainty around any future investments, and we would not want to see those conditions arise.
Air cabotage arrangements
3.96Cabotage is the right to operate a domestic flight within the borders of a country by an aircraft registered outside that country, ie the right for foreign carriers to operate domestically. In its final report in June 2023 on airline competition in Australia the Australian Competition and Consumer Commission (ACCC) flagged that removing these restrictions could potentially promote competition:
Australia prevents foreign airlines from picking up domestic passengers on a domestic leg of an international flight, which is known as air cabotage. Removing these restrictions could potentially promote competition on some domestic routes.
3.97Noting that the ACCC has not explored the issue in great depth, Mr David Cranston, Director, Merger Investigations, ACCC, told the committee that the issue is worthy of government consideration:
We can see some appeal to removing the cabotage restrictions. We recognise that the Harper competition review back in 2015 recommended that those restrictions be removed as that could improve competition on domestic routes. But we haven't done in-depth analysis of what particular routes might benefit or the value of those restrictions being removed. We do recognise that there might be some practical challenges to international airlines carrying domestic passengers on their flights. Like I said, it's not something we've explored in detail.
3.98Professor Rod Sims AO was of the view that air cabotage changes should be considered on either a case by case or route by route basis to promote competition:
Certainly I'm aware that some airlines have the ability to pick up passengers in Sydney and take them to Auckland and other airlines don't. That seems an anomaly. So to me it would be a case-by-case issue. I think we've got to bring competition to our bilateral air service agreements. We've got to bring competition thoughts to those. We've got to do a lot more open-skies agreements, as other countries do. And, given the nature of Australia's geography, cabotage has to play a role on some routes. It absolutely has to. Having empty planes flying sometimes can be justified, but I suspect that on many occasions it cannot. So it has to be on the table, I think.
3.99Mr Anthony Edmondstone, Chief Executive Officer, Airport Development Group stated:
More narrowly, if I think about Darwin airport and other bits and pieces, we are a subscale high-cost difficult market to serve. The ability for international airlines to carry domestic passengers, in our mind, is suitable for regional Australia and a potential game changer for regional Australia regarding liveability and airfare competition, but it may not necessarily work through Australia as a whole.
3.100Reform of cabotage arrangements was also supported by Mr Stephen Byron, CEO, Canberra Airport:
I think we would support that because it allows more flights at cheaper airfares for Australian consumers. Cabotage is a process and an availability that helps consumers get lower airfares, and the fact that last time it was mentioned there was such resistance to action on it, with lobbying by Qantas of the federal government and particularly of the then minister, Andrew Robb, tells you that it must be good for consumers and would allow people to fly on cheaper tickets.
3.101It was pointed out that cabotage restrictions significantly undermine and restrict enhanced tourism opportunities across the Kimberley part of Western Australia and that freight opportunities are also being lost.
3.102While noting he is not an expert in cabotage, Dr Tony Webber, Managing Director, Airline Intelligence and Research mentioned some possible commercial considerations:
…I think it's difficult for them to do that [an international carrier to offer a domestic service to pick up and set down passengers domestically] because typically they're flying big aircraft over a long range and, when they finally land in Australia, the use of that equipment for a shorter journey comes at too high a unit cost and is not commercially viable. You do see some carriers. I think United's an example. They fly from Los Angeles into Sydney, and then they fly a dead leg from Sydney to Melbourne where they're not picking up passengers or setting them off. They're just flying a leg down to Melbourne. It's not an empty aircraft. They fly down to Melbourne, and then they might fly back to Los Angeles, so they run that short domestic leg. It's very costly for a big aircraft to fly that short sector, just because of the way unit costs are determined in aviation…
3.103Mr Jim Parashos, Acting CEO, Melbourne Airport didn’t necessarily see cabotage as a solution for greater access to regional airports and explained:
It's [cabotage] been raised in the context of regional airports and greater access. To my knowledge there is not an example around the world where cabotage has actually worked. Again, it does come as part of the bilateral process, where we are giving something up that will not necessarily be reciprocated at the other end. So that does hit a sticking point. If cabotage is being looked at in the context of regional Australia, what I would suggest is in the next two to three years—and we're already seeing in northern Australia that there are smaller aircraft that can fly longer distances, such as the 737 MAX and the A321XLR. That will be good for Cairns. That will be good for the Gold Coast. That will be great for Adelaide because you're filling a smaller aircraft to fly over the longer distances. As Ryan pointed out, it's really the airline economics that come into play for regional access, so I think the next five to 10 years is really exciting for regional ports in Australia with the new aircraft technology that's being brought into the market. I don't see cabotage as a solution.
3.104Ms Vanessa Hudson, CEO and Managing Director, Qantas Group did not support changes to cabotage arrangements:
No, we don't support cabotage. We have maintained this position, as have many others who have appeared before this Senate committee. And, if we look around other markets that have large domestic aviation markets, like Canada, the US and China, none of those markets support cabotage either. We think it could distort the market. We think that that would result in importing foreign labour rates into the domestic market. We think that there are significant implications to consider, including impacting route dynamics, impacting job losses, impacting growth and compromising investment, and we don't think that that is in the best interest of a healthy Australian aviation market.
Regional security screening
3.105Queensland Airports Limited submitted that:
Australia is a vast country with great distances between its urban centres, necessitating the need for reliable and affordable air travel - both for passengers and freight - particularly given the lack of viable transport alternatives such as high-speed rail.
3.106Queensland Airports Limited also noted that '[i]ncreased aviation capacity to any region has a profound effect on local economies, with tourism dollars stimulating economic activity broadly across many sectors.' It said that it 'will continue to work closely with its partners – the State Government, City Councils and peak tourism bodies to continue to encourage the introduction of new international connections'.
3.107Broome International Airport highlighted that it is seeking an increase in international services to and from Broome.
3.108The Regional Aviation Association of Australia (RAAA) raised the issue of enhanced regional security screening calling on support to ‘maintain enhanced security screening requirement at regional airports’. The RAAA believes:
the implementation of enhanced screening requirements at regional airports has created a financial and personnel burden that some smaller airports are struggling to maintain. Whilst we welcomed the tiered system to alleviate this burden on some regional airports, there are still a large number that fall within the requirements.
3.109The RAAA emphasised that:
Suitable assessment of set up and ongoing costs of these screening systems was non-existent when introduced and now, with funding disappearing, small airports will struggle to be able to afford these systems. It was left to the Department of Infrastructure, Transport and Regional Development to do the cost analysis of screening regulations that were implemented by Home Affairs, that is a farcical situation that highlights the mess we are in today.
3.110The RAAA saw two options: the government to continue to fund screening systems at regional airports; or apply a national levy on all domestic air tickets to pay for the national security system. The RAAA argued:
At the end of the day all air travellers benefit from screening at regional ports as those passengers could likely end up on a connecting domestic service. The costs though to be screened regionally is upwards of $20-40 per passenger, whereas in the capital cities, as low as a few cents per passenger.