Glossary

Purpose and structure of the Bill

According to the Explanatory Memorandum, the purpose of the Sydney Airport Demand Management Amendment Bill 2024 (the Bill) is to amend the Sydney Airport Demand Management Act 1997 (SADM Act) ‘to improve the efficiency and use of Sydney Airport, a significant piece of national infrastructure, while maintaining community protections’ (p. 4).

The amendments to the SADM Act are outlined in a single Schedule and are summarised as follows:

• Items 1 to 4 amend Part 1—Preliminary to amend the long title of the Act, clarify definitions, and amend the overview of the Act provided in section 4.
• Items 5 to 15 amend Part 2—The maximum aircraft movement limit at Sydney Airport to introduce the concept of a ‘recovery period’, provide for the Minister to make recovery period declarations, and to amend Airservices Australia’s obligation to monitor and report on compliance with maximum movement limits.
• Items 16 to 25 amend Part 3—Penalties for unauthorised gate movements (to be renamed Civil penalties for slot misuse) to repeal the existing civil penalty provisions and replace them with a range of new civil penalty provisions for slot misuse with lower maximum civil penalties.
• Items 26 to 31 amend Part 4—The Slot Management Scheme to provide for the Minister to make the Slot Management Scheme (SMS) as a legislative instrument, provide for the Slot Manager to make declared exemptions in relation to gate movements in accordance with the SMS.
• Item 32 repeals and replaces Part 5—The Compliance Scheme to align the compliance scheme with the Regulatory Powers (Standard Provisions) Act 2014, including by making available enforceable undertakings and injunctions.
• Items 33 to 42 make minor amendments to Part 6—The Slot Manager, including to allow the Slot Manager to charge fees.
• Item 43 repeals and replaces Part 7—The Compliance Committee to provide for establishment of a Compliance Committee, specify revised functions, and provide for the Minister to give the Committee directions of a general nature and request that the Committee inquire into particular matters.
• Item 44 introduces a new Part 7A— Information Management to allow the Minister to require information to be provided to the Minister or other persons, provide for recordkeeping and the publication and disclosure of information.
• Items 45 to 52 make minor amendments to Part 8—Miscellaneous, including to revise the Minister’s ability to delegate their functions or powers and provide for the Secretary to delegate their functions and powers.
• Items 53 to 66 amend the definitions in Schedule 1 of the SADM Act.

Background

The Sydney Airport demand management regulatory framework

Sydney Airport is a major passenger and cargo airport and a key component of Australia's economic and transport infrastructure. It is located amid densely populated urban areas and close to the city centre.

The SADM Act and associated legislative instruments establish a framework for the long-term management of air traffic demand at Sydney Airport.

The SADM Act, along with the Sydney Airport Demand Management Regulations 1998, Sydney Airport Compliance Scheme 2012 and the Sydney Airport Slot Management Scheme 2013 (together, the SADM framework), establish a limit of 80 aircraft movements an hour (known as the ‘movement cap’), provide for a slot management scheme (SMS), and guarantee access for New South Wales (NSW) regional services. Figure 1 shows a schematic of the SADM framework.

Figure 1 Schematic of the SADM framework

Source: Department of Infrastructure, Transport, Regional Development and Communications, Sydney Airport demand management: discussion paper, (working paper, Canberra, November 2020), 6.

According to the 2021 Review of the Sydney Airport demand management scheme (‘Harris review’), ‘the [SADM] framework was introduced largely to address community concerns about aircraft noise and manage capacity of the airport’ (p. 4).

According to the Harris review, the introduction of the legislation into Parliament in 1997 indicated the framework is meant to (p. 8):

The Sydney Airport Compliance Scheme 2012 (Compliance Scheme), made in accordance with Part 5 of the SADM Act, provides details of the compliance framework requiring airlines to adhere to the slots they are allocated. It specifies circumstances in which it may be appropriate to issue an infringement notice for the civil penalties provided in sections 12 and 13 of the SADM Act.

The Sydney Airport Slot Management Scheme 2013 (SMS), made in accordance with Part 4 of the SADM Act, establishes a system for the allocation of ‘slots’ (permission for aircraft landing and take-off movements) at Sydney Airport. A slot allocated under the SMS permits a specified aircraft movement at a specified time, on a specified day. All commercial and private aircraft require a slot to land or take-off at Sydney Airport.

The SMS contains specific measures to ensure regional access and new entrants gain an opportunity to access unallocated slots.

It is important to discuss the SMS in a little more detail because many of the proposed reforms to the SADM framework put forward by the Government will be provided in a new SMS to be made by the Minister as a legislative instrument.

Regional access under the Slot Management Scheme

The SMS reserves a number of slots in peak periods for NSW regional services.[1] This arrangement is known as the Sydney Airport ‘regional ring fence’. Outside of the peak periods, regional flights can be conducted using any available slot.

According to the Minister’s 21 February 2024 media release (p. 2):

To improve connectivity for regional communities, regional NSW services will be able to apply to use any slot during new peak period hours (changing from 6-11am/3-8pm to 7-11am/5-8pm), not just the slots that are already set aside for priority access by regional NSW services. The peak period is changing to help free up currently unused slots during 6-7am and 3-5pm so that the airport can better operate in the way it was always intended to.

In addition, when allocating slots to airlines, the Slot Manager will be required to consider giving priority to regional NSW airlines asking for peak period slots (7-11am/5-8pm) among the other priorities for slot allocation.

The Government’s Aviation White Paper also indicates that the revised SMS will allow other airlines to use slots that had been reserved for regional New South Wales flights but were not being used (p. 74).

Allocation priorities under the Slot Management Scheme

Achieving a balance between providing certainty of slots for incumbent airlines and encouraging competition from new entrants is a key challenge of the SMS.

The Sydney Airport Demand Management discussion paper (SADM discussion paper) states the concept of historical precedence is fundamental to the allocation of slots under the SMS (p. 25):

Historical precedence to a slot series is obtained if an operator satisfies the ‘use it or lose it’ test and any ‘size of aircraft’ test for slots series allocated in the previous equivalent scheduling season.[2]

These are the first slots allocated.

According to the SADM discussion paper (p. 25):

To satisfy the ‘use it or lose it’ test requires the relevant gate movements to have been conducted by the airline for at least 80 per cent of the slots allocated in the series. This is also referred to as to 80/20 rule. Reasons for not using the slots are considered in assessing satisfaction of the test.

To satisfy the ‘size of aircraft’ test, at least 80 per cent of the relevant gate movements in the series are required to have been conducted by the airline using an aircraft in the size category for which the slot was allocated.

In other words, an airline can keep a slot indefinitely as long as it operates the slot at least 80% of the time in an appropriate manner, a rule the former Rex deputy chairman John Sharp is reported to have called ‘too generous’.

The Minister confirmed in a press conference on 21 February 2024 that the 80/20 rule would not be changed (p. 4). Critics of the 80/20 rule had previously floated the idea of tightening slot cancellation limits (for example, moving to 90/10 or 95/5) because the 80/20 global standard was not fit for purpose for the slot-constrained Sydney airport.[3]

Following the collapse of Bonza and Rex, on 5 August 2024 the Shadow Minister for Infrastructure, Transport and Regional Development Senator Bridget McKenzie lamented the lack of government action on the 80/20 rule:

The Government should… have strengthened lax provisions in the ‘use-it-or-lose-it’ rules about slots that have allowed the big airlines like Qantas to lock smaller competitors like Rex and Bonza from getting access to precious slots at Sydney Airport at the times Australians want to travel.

Where an incumbent carrier seeks to move its historic slot or slots (SMS, section 19(2)), this requires that such changes be given next priority before new entrant carriers are given access to a pool. This is clearly a restriction on competition for new entrants who are trying to gain entry to the market.

The Harris review recommended that subparagraph 19(2)(c)(i) of the SMS be amended to remove the preference for changes to historic slots to rank ahead of new entrant slot allocation requests (see recommendation 3.3, p. 17). It is unclear if this specific section will be changed by the Government when the new SMS is finalised.

New entrants

A new entrant is defined in section 3 of the SMS as an operator with not more than 4 slots allocated for the day new slots are sought. This definition was consistent with the Worldwide Airport Slot Guidelines (WASG) when it was adopted. However, following a strategic review, the WASG now defines a new entrant as an airline requesting a series of slots at an airport on any day, where it would hold fewer than 7 slots at that airport on that day (p. 63).

The definition of a new entrant is relevant as following reallocation of slots based on historical precedence, the Slot Manager must ensure that as close as possible to the first 50% of slots applied for by both a new entrant and another operator are offered to the new entrant (subsection 16(2) of the SMS). This is a principle common to both the Australian SDAM framework and the WASG (p. 34).

According to the SADM discussion paper (p. 26), the broadened WASG definition of new entrant should have competition benefits if adopted in Australia. As discussed below, the Aviation White Paper indicates that the Government proposes to adopt the broadened definition of new entrant when the new SMS is finalised (p. 74).

The need for government action

The SADM framework has not kept pace with the increasing competition for slots by airlines, particularly during peak periods, since its commencement in 1997. Aviation industry stakeholders have been calling for reforms to better facilitate the efficient use of slots. Efficiency of airport operations is critical at Sydney Airport given the onerous ongoing legislated constraints of the airport curfew, the movement cap and the regional access regime.

There has also been growing frustration amongst Australian air commuters with delays and cancellations of flights and ongoing concern with the lack of competition, including allegations of anti-competitive behaviour (such as slot hoarding and other slot misuse) by some carriers within the aviation industry. These concerns have been exacerbated by an increasing awareness of the costs of regulatory restrictions on competition in domestic and international aviation markets. In particular, the impacts of the 2024 collapse of Bonza and Rex in the domestic market,[4] and the Government’s 2023 decision to reject additional international flights by Qatar Airways into Australian capital cities, reducing competition for some airlines.

Key issues

Competition benefits will mainly occur through Slot Management Scheme reforms facilitated by the Bill

On 21 February 2024 the Minister for Infrastructure, Transport, Regional Development and Local Government, Catherine King (the Minister), announced a major package of reforms to the SADM framework. The Minister stated:

These reforms…will deliver better efficiency, competition and consumer outcomes.

This package of reforms, as summarised in the Aviation White Paper (pp. 73–74), is provided below together with an annotation as to whether the reform is included in the Bill:

Scott Charlton, chief executive officer of Sydney Airport, writing in the Australian Financial Review, was upbeat about the impact of the package of reforms on competition:

On competition, the reforms will improve access to critical take-off and landing slots for new airlines and create new penalties to address slot misuse, putting downward pressure on prices while lifting the performance of airlines across the board.

However, as highlighted above, 5 out of the 8 reforms flagged in the Aviation White Paper are not part of the Bill but are expected to be included in the new SMS. It is important to note that reforms to the SMS, as identified by the 2021 Harris review (and to a lesser extent, the 2019 Productivity Commission inquiry), will create the most impetus for generating competition benefits for consumers (through lower prices and more choice) and efficiency benefits for airports and airlines. However, the quantum of these benefits will continue to be constrained by the existing curfew arrangements and the ongoing movement cap at Sydney Airport.

It is also difficult to understand what the magnitude of the net benefits are from the implementation of the package of reforms to the SADM framework because no (regulatory) Impact Analysis (IA) was undertaken for this specific suite of proposals.

The Explanatory Memorandum (p. 40) indicates the Department of Infrastructure, Transport, Regional Development, Communications and the Arts certified to the Office of Impact Analysis (OIA) that similar analysis had been prepared through a process equivalent to that required in the Australian Government Guide to Policy Impact Analysis (pp. 44–45) and had addressed all 7 Impact Analysis questions. In other words, the general analysis from the PC inquiry and the Harris review were relied on to support the changes to the SADM framework, rather than a more targeted, quantitative analysis focusing on the impact of the actual package of reforms being implemented by the government. The OIA assessed that the options analysed in this general analysis are ‘sufficiently relevant to the proposal’ to meet the government’s impact analysis requirements.

The Bill in isolation is only likely to have a minor impact on competition, through the stricter compliance regime and enhanced transparency requirements, aimed at reducing the potential for slot hoarding and slot misuse, at least until the SMS reforms are implemented.

Efficiency improvements from the Bill could have been greater

Efficiency improvements are likely to arise from implementing some measures in the Bill, most notably, the introduction of the ‘recovery period’. However, it appears another efficiency measure recommended by both the PC inquiry and Harris review, the change to movement cap measurement, will not be implemented through the Bill, thereby reducing the potential efficiency impact of the Bill.

Recovery period

Interruptions to airport operations are sometimes caused by severe storms, wind direction changes, emergency situations, security breaches and other (usually unforeseen) circumstances that can shut down airport operations and cause delays. Although Sydney Airport can absorb some delayed flights, it cannot absorb significant delays of multiple flights where to do so would result in a breach of the movement cap.

As the SADM discussion paper stated (p. 13):

…the movement cap, as it is currently implemented does not recognise or make any concession for recovery from such circumstances. In effect, unless it is possible to reschedule flights to a later time, movements that would otherwise have occurred must be cancelled, decreasing the overall productivity of the airport.

To improve efficiency, the Bill proposes some ‘modest changes’ to the movement cap to temporarily allow up to 85 movements per hour for a maximum of 2 hours on the same day following the disruption. This will allow the airport to ‘catch up’ when there is severe weather or other major disruptions, reducing the number of cancelled and delayed flights. However, the recovery period cannot extend over a curfew period—proposed subsection 9B(5) of the SADM Act, at item 15.

Scott Charlton, chief executive officer of Sydney Airport, writing in the Australian Financial Review, discussed the benefits of the recovery period for passengers and airlines:

This will give airlines more flexibility to roll a service over into the next scheduling hour rather than cancelling it, which will enable delayed flights to depart on the same day, so more passengers can get home sooner. It will also mean that aircraft that have been in a holding pattern waiting for storms to pass can land at Sydney, rather than diverting to another airport because of the constraints of the movement cap.

Following the Government’s announcement of the SADM reform package on 21 February 2024, the Shadow Minister for Infrastructure, Transport and Regional Development, Senator Bridget McKenzie, made the following comment on the recovery period:

A two-hour recovery period with maximum of five additional movements, while positive, will have minimal effect when there are disruptions that last several hours. Frustrated travellers will continue to be hampered by cancellations and delays across Australia because of the Minister’s inadequate response.

The Harris review, which proposed the adoption of a recovery period, suggested it was the largest single efficiency measure arising from the review (p. 44):

As a measure of the efficiency gains that can occur with the ability to move into Recovery Mode for a period of time, they are clearly material. It appears to the Review to be the largest single efficiency measure open to the Government at this time.

Proposed section 9A, at item 15, provides for the Minister to make a recovery period declaration, on the recommendation of Airservices Australia, in circumstances where aircraft movements at Sydney Airport are significantly disrupted. The declaration must be published on the department’s website, however, no time period is specified for publication (proposed subsection 9A(7)). While the Minister’s power to make a declaration may be delegated, given the time-critical nature of recovery periods, there is some risk that this process may be bureaucratically cumbersome.

Movement (or operations) cap measurement leads to inefficiency in aircraft movements

Actual aircraft movements are limited to 80 an hour during non-curfew times, as specified in section 6 of the Act (known as the ‘movement’ cap’ or ‘operations cap’). This limit is measured over a rolling hour every 15 minutes— effectively commencing 4 ‘regulated hours’ within any non-curfew 60-minute period—so that the number of movements does not exceed 80 in any 60-minute period.

Exceptions apply in emergencies, for safety or international relations reasons, or for certain aircraft used as part of defence force, military, customs or police services. Airservices Australia (ASA) manages air traffic and ensures that the actual number of movements is in line with the movement cap. According to the PC, ‘breaches of the movement cap are rare’ (p. 224).

In addition, the slot manager uses a ‘planning cap’ for the allocation of slots, consistent with the movement cap. Airport Coordination Australia (ACA) is responsible for allocating slots for scheduled (or planned) movements.

The movement cap administered by ASA was originally put in place to support the planning cap managed by ACA to prevent congestion at peak times. The Harris review assessed that the 15-minute rolling window in the movement cap has outlived its purpose (p. 41):

When the Scheme was first designed… [t]he 15-minute planning increments, it was felt, needed to be reinforced by an operations cap so that schedulers working for airlines would take it seriously. Airline resistance to the cap in the 1990s was common.

Ad hoc evidence of poor practice by a handful of carriers notwithstanding…, the outcome over the past twenty years is that airlines have generally adjusted to the planning cap and most now accept its objectives.

Following the announcement of the Government’s reforms in February 2024, then Rex deputy chairman John Sharp said that he was disappointed that the measurement of the movement cap in 15 minute blocks was not scrapped as ‘it is no longer necessary or useful’.

The PC inquiry found there is a case for reform to the measurement of the movement cap (p. 30). The PC suggested that changing the way the movement cap is measured could be done without changing the limit on the actual number of movements and would make it more likely that the intended 80 movements an hour is achieved. The PC said this reform provides the potential to improve airport efficiency without exceeding the movement cap (p. 251):

A reform that requires ASA to measure the cap on actual movements only once (rather than four times) an hour would allow ASA to process movements more smoothly and less conservatively and reduce its compliance costs. This reform would also reduce any necessary delays to departing aircraft that are caused by the movement cap, both during regular peak periods and after disruptive events, benefiting airlines and their passengers. The cap would ensure that the number of actual movements within a 60-minute period starting on the hour does not exceed 80.

The PC indicated that ‘removing the 15-minute rolling hour for actual movements would not affect the ability for ACA to continue its approach of using a 15-minute rolling hour to schedule movements at Sydney Airport’ (p. 251).

The PC assessed that there would be an efficiency benefit to the community by measuring the number of actual movements only once an hour and made the following recommendation:

Source: PC, Economic Regulation of Airports, Inquiry report, 92, (Canberra: PC, 2019), 251.

The Harris review also supported this reform (see recommendation 6.2, p. 42) and stated (p. 40):

Replication of the 15-minute planning tool in the operational cap appears to the Review to be an unnecessary replication of the planning cap. Removing it would mean that the 80 movements cap would still be applied by Airservices Australia, but numbers of movements could flex up until the last few minutes of each hour.

The 15-minute rolling window is unnecessary because applying a planning standard to actual operations cannot deliver the principal element of the objectives of the Scheme. By the time operations are in the air, the opportunity to deliver congestion prevention that comes with effective planning is over.

According to theSADM discussion paper, this reform would improve Sydney Airport’s ability to recover from short interruptions (p. 13):

The PC’s proposal to remove the rolling hour from the definition of a regulated hour could provide an improved ability to recover from short interruptions.

However, despite the PC inquiry and Harris review both recommending this reform, the Bill does not include this measure. It is not clear why the Government rejected this recommendation. While this reform is of less significance than implementing the recovery period, it would still have some efficiency gains if it generated more aircraft movements per hour than there would be otherwise. The Harris review suggested it could add ‘perhaps a couple of movements in each of the peaks’ (p. 41). It would also come at no cost to aircraft noise, as it preserves the community expectation of 80 movements per hour.

New penalties and changed reporting requirements

The Bill introduces a range of new civil penalties and reporting requirements to deter slot use practices that are considered inefficient or that could act as a barrier to competition.

Civil penalties for slot misuse

The Bill introduces new penalties in an attempt to combat the alleged problem of ‘slot hoarding’. As discussed above, slots at airports are allocated based on historical precedence and the ‘use it or lose it’ test requires airlines to use at least 80% of a series of allocated slots. If airlines fail this test they may lose their historical precedence.

There have been suggestions, including by Sydney Airport, that Australia’s two major airlines, Qantas Group and Virgin, have applied for and been allocated more slots than they intend to use in an effort to block other airlines accessing Sydney Airport. The airlines are alleged to have spread flight cancellations across slots to ensure that each slot is used at least 80% of the time and their historical precedence is maintained. In 2023, the then deputy chairman of Rex Airlines John Sharp stated that ‘it’s as plain as the nose on your face that Qantas is hoarding slots by cancelling sufficient flights to remain within the 80/20 rule’. Both Virgin and Qantas have denied that they have been deliberately misusing the slot allocation system.

The Act currently prohibits aircraft movements that occur without a slot (a no-slot movement, section 12) or outside allocated timeslots (an off-slot movement, section 13), while cancellations are only constrained by the 80/20 rule provisions in the SMS. As part of comprehensive reforms to Parts 3 and 5 of the Act, proposed Division 4 of Part 3 (at item 21) retains and revises the current prohibitions and introduces new civil penalty provisions for slot misuse, which include:

• Failure to use an allocated slot (proposed section 15), where an aircraft operator has been allocated a slot but does not engage in an aircraft movement.
• Flight operations not in accordance with slot requirements (proposed section 18), for example flights using a different size of aircraft or with a different destination to that allocated (see Explanatory Memorandum, p 17).
• Airlines applying for slots they have no reasonable prospects of using (proposed section 19). The Explanatory Memorandum (p. 18) states evidence of contravention of this provision could include applying for slots despite having insufficient aircraft, staff, or landing permissions to service these slots. Proposed subsection 19(4) provides that a court may consider an airline’s past behaviour relating to slot application and use when assessing whether it had reasonable prospects of using a slot.
• Failure to return or transfer unused slots (proposed subsection 20) aims to ensure that airlines return slots they decide they will be unable to use.

With the exception of proposed section 20, each of the proposed sections provides exemptions for which the defendant would bear the evidential burden.

The Bill also lowers the standard of proof required to penalise aircraft operators for slot misuse. Currently, the prohibitions on no-slot and off-slot flights require that aircraft operators be shown to have acted knowingly or recklessly (sections 12 and 13). The Explanatory Memorandum notes that the penalties for slot misuse are broadly based on the Worldwide Airport Slot Guidelines (WASG), however, ‘the fault elements have not been included having regard to the nature of the conduct being regulated as well as the difficulty in establishing fault for these types of conduct’ (p. 15).[5]

While section 14 of the Act sets out substantial maximum pecuniary penalties for contraventions of existing sections 12 (maximum penalty of 2,000 penalty units for a body corporate and 400 penalty units for an individual) and 13 (maximum penalty of 1,000 penalty units for a body corporate and 200 penalty units for an individual), the proposed new civil penalties will be subject to a maximum penalty of 60 penalty units (with a corporate multiplier).[6]

The Act currently provides for the Compliance Committee to direct the Slot Manager to issue an infringement notice where it believes a person has committed a civil contravention and that it is appropriate to issue an infringement notice, taking into account the matters set out in sections 5 and 6 of the Sydney Airport Compliance Scheme 2012 (section 19). A tiered penalty scheme is provided in the Compliance Scheme made under section 49. However, the Bill repeals these provisions and aligns the issue of infringement notices with the Regulatory Powers Act (proposed section 53 at item 32). That is, the power to issue infringement notices will rest with the Minister and departmental officials.

Proposed section 54 introduces provisions for enforceable undertakings, providing another enforcement option for inappropriate slot use practices.

Information gathering, reporting and transparency

The Bill introduces new information gathering and record keeping requirements relating to the allocation and use of slots and associated civil penalty provisions (proposed Part 7A, at item 44).

The Bill provides the Minister with a wide-ranging power to require a person to provide the Minister with information relevant to the allocation or use of slots, gate movements, compliance with the Act, administering or enforcing a civil penalty provision, investigating an offence, or performing the Minister’s functions and powers under the Act (proposed subsection 70C(1)).

The Bill also provides for the regulations to specify the keeping and treatment of records in relation to the allocation and use of slots, and compliance with the Act (proposed section 70D). It also provides for the regulations to specify that certain types of information are to be published (proposed subsection 70E).

The Statement of Compatibility with Human Rights provided in the Explanatory Memorandum states that the information provisions are ‘intended to increase transparency of the management and allocation of Sydney Airport slots’ and that the information collected will be used to ‘determine patterns in the use of slots, and to identify recurring patterns of slot misuse’ (p. 7). The privilege against self-incrimination is also upheld.

In her Second Reading Speech, the Minister stated that the Slot Manager will be required to ‘regularly publish information about how slots are issued to airlines, how the airlines use them (such as information about cancellations and delays), and information about airlines that lose slots when they break the rules on slot misuse’. As noted above, this information will be specified in regulations, which will be the subject of further industry consultation (Explanatory Memorandum, p. 32).

The Bill states that the regulations may require ASA to publish information  on compliance with the maximum movement limit (proposed subsection 9(4), at item 14). This is a weaker provision than in the current Act, which requires ASA to report this information to the Minister, who must table it in Parliament (existing section 9).

Ministerial control and responsibility

There have been concerns raised about the influence of the major airlines over the slot allocation process. The current Slot Manager, ACA, is majority owned by Qantas and Virgin, and questions have been raised about a potential conflict of interest. The former Australian Competition and Consumer Commission Chair Rod Sims stated that airlines should be excluded from bidding for slot management contracts to ensure allocation was ‘arms-length from all the players’. There have, however, been no legal findings of inappropriate dealings between ACA and its shareholder companies. ACA also strongly asserts that its slot allocation decisions are made independently of its board members (which include representatives of Qantas and Virgin).

In August 2024, the Government announced an open tender for the Slot Manager at Sydney Airport (the tender closed in September 2024). The Government stated that it will require ‘prospective tenderers to demonstrate how they manage and mitigate conflicts of interest in a transparent way’.

The Bill seeks to increase Ministerial control over the SMS and compliance and enforcement of slot misuse.

Under the existing SADM Act, the Slot Manager develops the SMS (section 38) for approval by the Minister (section 40). The Bill moves responsibility for developing the SMS, which will continue to be a legislative instrument, to the Minister (proposed section 34, at item 26).

The Slot Manager retains the power to declare exemptions (currently called dispensations) to enable aircraft movements outside of allocated slots (proposed sections 47 and 48, at item 31); these exemptions will not be legislative instruments (proposed subsection 49(6)). The circumstances under which the Slot Manager will be able to make a declared exemption will be provided in the SMS (proposed subsection 49(1)).

The Bill makes changes to the membership and function of the Compliance Committee. In 2023, a Senate Select Committee noted that the Compliance Committee had not met since 2015, apparently following the Government becoming aware that the Compliance Committee had no powers to fine Jetstar for its practices relating to slot use (p. 72).

The Bill removes the current requirement for the Compliance Committee to include at least 3 airline members and requires that the Chair is independent (proposed section 66). One of the Committee’s key current powers is the development of the Compliance Scheme (paragraph 66(2)(a)). This power is removed by item 43, with the Explanatory Memorandum noting the current Compliance Scheme will be repealed and its functions dealt with in the SADM Act and other subordinate legislation (p. 23).

Item 30 removes the Committee’s powers relating to recommendations for varying or cancelling slot allocations. The Committee’s new role will involve inquiring into, and reporting on, issues relating to slot allocation and use (proposed subsection 66(6)). It may inquire into these issues at its own discretion or in accordance with a request of the Minister.

Concluding comments

The Bill aims to improve outcomes for airline passengers and increase efficiency at Sydney Airport. However, the foreshadowed benefits will not be fully realised until related subordinate legislation (such as the Sydney Airport Slot Management Scheme 2013 and the Sydney Airport Demand Management Regulations 1998) is reformed.

As discussed, there is some way to go to implement the whole package of reforms outlined by the Minister on 21 February 2024. This is evidenced by 5 out of the 8 reforms flagged in the Aviation White Paper being absent from the Bill. However, these are expected to be included in the new SMS.

The introduction of a recovery period should generate efficiency benefits for airlines and airports and will be welcomed by passengers if it materially reduces delays and cancellations at Sydney Airport. The Harris review called it ‘the largest single efficiency measure open to Government’ (p. 44). On a separate efficiency issue, it is not clear why the Government has not pursued reform of movement cap measurement as recommended by both the PC inquiry and the Harris review in the Bill, or a tightening of the slot cancellation limits in the SMS.

There have been concerns about the potential for conflicts of interest in the slot allocation process at Sydney Airport. The Bill reduces the powers of the Slot Manager in relation to slot allocation but is silent on the issue of the ownership of the Slot Manager by the airlines.

The Bill introduces a greater range of prohibitions against slot misuse, particularly relating to cancellations and applying for excessive slots. The Bill also introduces new information gathering, reporting and publication requirements that aim to increase transparency regarding how slots are allocated and used.

Although many of the major competition benefits will require reforms to subordinate legislation, the new prohibitions and reporting requirements should at least create a disincentive to some of the alleged anti-competitive practices relating to slot hoarding and misuse.