Chapter 1Introduction
1.1On 5 September 2023, the Senate established the Select Committee on Commonwealth Bilateral Air Service Agreements (the committee). On 7September2023, the Senate amended the resolution establishing the committee. The committee was charged with inquiring into and reporting on the following matters by 9 October 2023:
All Federal Government decisions relating to any proposals since 2016 for additional services to Australia's airports, with particular reference to:
(a)the impacts of any such decisions on competition in the Australian aviation sector and the cost of living pressures on families and business;
(b)the impacts experienced in other countries associated with such decisions;
(c)the impact on the Australian economy, including on Australian travellers, the tourism and hospitality sectors and movement of freight;
(d)the rights of airlines or other bodies to appeal decisions regarding bilateral air services agreements made by the responsible minister; and
(e)any other related matters.
Details of the inquiry were made available on the committee's webpage and the committee invited organisations, key stakeholders and individuals to provide submissions.
1.2The committee received 147 submissions, which are listed at Appendix1 of this report. Among these submissions are over 100 from individuals published as 'name withheld' raising issues in relation to the Qantas Frequent Flyer Program and other matters.
1.3The committee held five public hearings for the inquiry:
19 September 2023 in Sydney;
22 September 2023 in Perth;
26 September 2023 in Brisbane;
27 September 2023 in Canberra; and
28 September 2023 in Canberra.
1.4A list of the organisations and individuals who gave evidence at these public hearings can be found in Appendix 2. The public submissions, additional information received and Hansard transcripts are available on the committee's website.
Acknowledgement
1.5The committee thanks all those who contributed to the inquiry by making submissions, appearing at public hearings or providing additional information, particularly in light of the short timeframe for this inquiry.
Note on references
1.6References to the Committee Hansard are references to a proof (uncorrected) committee transcript. Page numbers may differ between proof and official transcripts.
Structure of this report
1.7The Senate established this inquiry following widespread public interest in a decision of the federal government to refuse a request to grant additional routes under the air service agreement between Australia and Qatar. Much of the evidence received during this inquiry focussed on that decision, but also encompassed broader commentary about challenges and opportunities for the future of aviation in Australia.
1.8Considering the substantial volume of evidence received in this inquiry, and its short timeframe, this report does not exhaustively cite all written and oral submissions. The report reviews key evidence via the following four chapters:
This chapter outlines the conduct of the inquiry and provides brief background information.
Chapter 2 discusses key evidence about Australia's approach to air service agreements and the recent decision regarding Australia's agreement with Qatar.
Chapter 3 examines broader issues relating to Australia's aviation industry.
Chapter 4 provides the committee's comment and recommendations.
Background on air service agreements
1.9The Department of Infrastructure, Transport, Regional Development, Communications and the Arts (DITRDCA) submitted that the Chicago Convention of 1944, which 'sets up the framework for international civil aviation', also 'enshrines the principle of sovereignty over the airspace above the state's territory'. It explained the purpose of air service agreements:
Markets for international air services are closed until and unless governments agree between them to open the market, through bilateral air services agreements. Even then, this exists only to the extent the governments agree to open the market.
Bilateral air services agreements are treaty level, legally binding and enforceable agreements that allow for scheduled international air services between countries.
1.10DITRDCA publishes a list of 'all Australia air services agreements' on its website, with copies of the treaty text available on the Department of Foreign Affairs and Trade Treaties Database. The agreements:
…set the overarching legal framework for services between two countries. Key provisions include designation of airlines, application of national laws, airlines' rights to establish offices, deploy staff, remit currency, customs duties, safety and security frameworks, and the routes that may be operated.
1.11DITRDCA provided further explanation about air service agreements:
In order to enter into force, Air Services Agreements are required to undergo Australia's treaty making process, including approval of Ministers, Federal Executive Council approval, tabling in the Parliament and consideration by Joint Standing Committee on Treaties.
Supporting Memorandum of Understanding (MOU) are used to outline detailed commercial opportunities between countries. In the lead up to consideration of MOU aeronautical authorities of both countries seek their respective Minister's approval for their respective negotiating mandates.
MOU's are generally signed between 'aeronautical authorities' and can include, capacity entitlements (number of seats or frequency of services), code share rights and traffic rights for airlines of both countries.
MOUs are not made public as they can contain confidential commercial information, however the key aspects of our MOU's (i.e. the capacity entitlements) are made available to stakeholders as required.
1.12Regarding the process for negotiating bilateral agreements, DITRDCA advised:
Bilateral agreements are negotiated between Governments by Government officials.
Requests for updated or new air services arrangements are put forward by the aviation authority of one country to another – this could be through a formal letter or informal discussions.
The Department seeks agreement from the Minister for Infrastructure, Transport, Regional Development and Local Government on negotiating positions for future bilateral talks.
Markets are prioritised factoring in a range of factors including, but not limited to, stakeholder support and whether provisions in current agreements remain appropriate.
1.13DITRDCA reported that Australia has agreements with over 100 countries. Most of these agreements include capacity limits, though Australia has 'open capacity access arrangements with our seven current biggest international arrival markets: New Zealand, China, US, UK, Japan (excluding Haneda), India and Singapore'. Open capacity access arrangements, also known as 'open skies' agreements, refer to agreements that do not include capacity limits (such as limits on the routes, frequency of flights, or number of passengers that airlines may service).
1.14Since 2016 'a number of major open access agreements have been put in place, including with China and India, as well as significant capacity increases to a number of markets including the United Arab Emirates, Malaysia, Philippines, South Korea and Vietnam'. However:
Challenges remain in progressing Australia's international bilateral aviation policy, for example previous attempts by Australia to achieve a more open access type agreement with the EU have not progressed, while talks with some countries since 2016 did not always lead to updated or increased air services arrangements.
1.15The Australian Government has 'a bilateral air services forward negotiating program to deliver on the Government's policy agenda for international aviation'. The program is not publicly available. DITRDCA said the department:
…consults widely with Australian stakeholders including airlines, airports, tourism bodies, state governments and other departments in developing advice to the Minister on the proposed program.
1.16In speaking about the length of time bilateral agreement negotiations can take, DITRDCA noted that a previous request by Qatar Airways was submitted in 2018 and the then Government's decision was made in December 2021. DITRDCA added that there is a level of complexity as it is an international negotiation and therefore negotiations can take many years. In this example, COVID-19 was a contributing factor in relation to the length of time taken.