Regional realities

As such, the regional aviation banner includes a number of different operators and roles, from delivering essential supplies and services, to maintaining regular passenger services to other regional areas or major cities, as well as serving the tourism and pilot training market.

Despite the challenges of operating from regional centres and towns, the sector appears to have performed rather well in recent years.

While there has been considerable consolidation, the loss of some major operators (such as MacAir) and economic circumstances challenging, some services are starting to re-emerge, while new businesses are also taking hold.

At an industry level, there are a number of issues which the RAAA has been working on. One of the biggest is the collection of appropriate statistics to build the cases for increased private and government investment in the industry, particularly for airports. “The Australian Bureau of Statistics doesn’t collect infrastructure spending stats on aviation,” said Tyrrell. “At the moment, if you build a new runway or taxiway at an airport, it goes under road stats. How can we argue for aviation infrastructure if no stats are collected on it?”

Managing human resources is often a challenge for regional operators. In recent years, the sector was particularly short on pilots due to the rapid hiring from the larger airlines. However, with the airlines freezing recruitment, many regional operators are reporting that managing their pilot numbers has been less challenging.

“Things are certainly easier this year,” said Peter Collings, the managing director of Queensland operator West Wing Aviation. “We’re still having a bit of trouble finding experienced training crew for the Beechcraft 1900 because it’s been a while since there’s been a decent sized 1900 fleet in Australia.”

While the pilot shortage appears to have eased for the moment, engineers are still in high demand. “You don’t get these extreme peaks and troughs, and in my experience of talking with our members, good engineers are still in demand and avionics engineers are particularly in demand,” said Tyrrell.

Part of the challenge comes from the nature of operating in regional areas. “Our engineering is out in Mount Isa, so it’s hard to find experienced guys who want to live out there, and I think even the guys on the coast are having trouble,” said Collings.

That shortage of engineers has meant that some operators have been forced ferry their aircraft out to larger cities to complete checks. Collings notes that West Wing has to ferry a Cessna Caravan from Horn Island to Cairns for checks, which takes seven hours in total. “It’s a big expense.”

Added to that is the future challenge of replacing a number of the aircraft used in regional operations. Tyrrell has particular concerns for the current RPT and charter operators who rely on continually ageing aircraft under 20 seats, which appear to have few replacements.

“They’re doing a great work, but I have a worry about where we will find the aircraft in the next 20 years,” he said.

Collings echoes that concern, particularly as West Wing’s fleet of twin-engine Cessnas continue to age. “Ageing aircraft below nine seats are an issue for us. Cessna Caravans are a great aircraft, but there are just a lot of people that won’t fly in a single engine aircraft,” he said.

As such, Tyrrell has been calling on the Australian aircraft manufacturing industry to seize the opportunity to design and build passenger aircraft to replace many of the workhorses. He sees some potential in Gippsland Aeronautics’ plans to restart production of the Nomad, which could have a place in the regional industry. “I think on some of the routes, the Nomad would be quite good but that’s more for what we used to call the third tier routes, from regional centres out to smaller towns,” he said.

Another issue for the sector is the government flagging its intention to withdraw the enroute air subsidy scheme from 2012, which helped some operators maintain marginal services. “It’s such a small amount of money, and it often makes the difference between a route continuing or not,” said Tyrell.

Added to that are pressures to maintain aviation infrastructure in regional areas, with some councils reluctant to make significant investments in airports. “We’ve got a fantastic airstrip legacy in this country, so why would you ever want to lose that infrastructure?” said Tyrrell.

Tyrell also echoes the calls of other groups such as the Aircraft Owners and Pilots Association for the appointment of a Minister or Parliamentary Secretary for Aviation, primarily to ease the burden on the current Minister Anthony Albanese, and give aviation the appropriate focus needed by the government.

RPT

An important part of the regional aviation sector is the regional airlines which offer regular public transport to a number of regional and remote areas, which while overall declining, is showing signs or stability.

BITRE figures show that regional passenger numbers have increased in recent years, with the most recent data showing that 2.3 million passengers travelled on regional services during the 2008/09 financial year. However, the number of airports served has declined significantly from 278 in 1984 to 138 last year, as air services appeared to consolidate around larger regional centres.

Another reason for the consolidation is that many air services now are operated by higher capacity aircraft, such as the 34 seat Saab 340s of Regional Express and the 70 seat Bombardier Q400s which form the backbone of QantasLink’s fleet.

Tyrrell notes that the long term future of even some of aircraft smaller than the Q400 is a concern for the industry. “The Q400 is doing fantastic on the busier routes, but on the smaller routes you’re probably going to have to look at the smaller turboprops for a lot longer – like the Saabs and the Metros,” said Tyrrell.

The withdrawal of smaller RPT aircraft such as Piper Chieftans and Navajos which have long served the bush has also changed the dynamics of the regional route network. “Because Chieftains and Navajos have become uneconomical, and those milk-run routes all around Australia are gone now,” said Tyrrell.

Given the marginal nature of a number of regional routes, particularly on longer sectors a number of state governments have maintained services to regional communities through regulation and/or route subsidies, such as Queensland’s QConnect services, which serve western and far north Queensland. Collings says that without these subsidies, a number of towns would lose a vital link. “They’re very important. They’re essential services to the rural community and these have the right for essential services and without the subsidies they are not sustainable.”

In WA, the state government has committed to keeping its turboprop route protection licenses for at least another year, which had been tipped to be scrapped in favour of deregulation of these routes. “Securing air routes for regional communities, which may have lost their regular passenger services if deregulation was allowed to proceed, is the government’s main priority,” said WA’s Transport Minister Simon O’Brien in announcing the extension in May.

However, there are some positive signs, with operators such as Aeropelican, Regional Express and Sharp Airlines recently announcing new services in Queensland, New South Wales and Victoria. In the case of Sharp, this has included adding new links, such as its recently launched Portland-Adelaide service.

Charter

Charter is also a major part of the regional operations in Australia, with the fastest growth in recent years being those operators who service the mining industry, while it also plays a significant role in

However, with a number of mines cutting production and laying off staff in the light of the global economic crisis, some operators have been feeling the pinch, particularly in Queensland where operators such as Skytrans have been forced to cut back, although in that case it was able

For other operators, the fall in staff numbers at some mine sites has opened up new opportunities. “It’s no secret that the mining industry had to cut back numbers and that certainly affected the loads, so on some routes they needed a smaller aircraft, and we were there to offer that,” said West Wing Aviation’s managing director Peter Collings.

At the high end, there has been a rationalisation in the charter sector with the demise of SkyAirWorld and to a lesser extent OzJet, which has meant less competition for major fly in, fly out (FIFO) contracts. “I think there’s been a re-levelling with a big emphasis on reducing costs wherever possible and fortunately we’ve all survived and will move on,” said Skywest managing director Hugh Davin.

Many big mining projects are also starting to emerge again, particularly in Western Australia, which has buoyed the hopes of Skywest, Alliance Airlines and Cobham which have sizable operations there. “In WA now there are new projects starting to blossom from one end of the state to the other. A lot of them are some months away from turning into opportunity, but the horizon is bright,” said Davin.

For the other charter operators serving the government and business markets, times appear to be mixed. While ad hoc flying has generally been lower due to the cutbacks by a number of businesses on charter travel, few have reported any significant issues.

Tourism and Training

Aside from the large staples of charter and RPT, training and tourism are the other major sectors of the regional aviation industry, both of which are showing signs of growth.

Tourist operators have long been a part of the industry, but are being challenged in the current environment which has seen Australians take less holidays, or choose cheaper alternatives to some of the major hotspots. Nevertheless, new destinations such as Broome are gaining more attention from both domestic and overseas tourists, opening up new opportunities even during the current challenging environment.

Family-run Kimberley Aviation is one of those companies which has seized on the opportunity, and started offering tourist flights from Broome earlier this year, although the timing was not by choice. “We started the process probably about 2 years ago and the economy was quite healthy back then,” said chief pilot and founder Andrew Grace. “It took about 14 months to get things through CASA, and by that time the economy had taken a downturn. At that point we were past the point of no return, and we felt that if we can survive the next six to 12 months we should be OK.”

So far, things have been going well for the company, which currently operates a single GA-8 Airvan. “We’ve been skimming along quite well over the last three months so things are starting to look positive as far as tourism goes,” said Grace.

Grace notes that the tours he runs out of Broome give travellers new experiences compared to some other destinations. “I think the east coast is getting too touristy, and it’s a bit more of the ‘Wild West’ up here, which is what people are after,” he said.

While there are other sightseeing operators around Broome, Grace notes that a number of his clients value the unique experiences his business offers, even if that means paying for it. “The people that come to Broome tend to be pretty well heeled, so the cost isn’t the biggest factor up here – it’s more about what they’re getting for their money,” he said.

Training is also gaining greater focus on regional areas, driven mostly by the need to train large numbers of pilots for Asian carriers which are expected to take delivery of thousands of new airliners in coming years.

Still, like many sectors, this has faced its own challenges. “Training in general has slowed down, but I get a sense they’re still very focused on the overseas market, particularly training from the subcontinent and Asia-Pacific region,” said Tyrell. Although there is the first hints that those countries are building their own facilities, so it is going to take more to attract people.”

As such, a number of projects to establish training facilities in regional areas aimed primarily at the overseas market. “The great advantage of the regional areas is if you’ve got a huge capacity to do the ab initio training before moving them on to more advanced training at the city airports,” said Tyrrell.

As the regional airlines face the pressure to retain their staff, carriers such as Rex and Sharp Airlines have made the decisions to start their own training programs which are based in Wagga Wagga and Hamilton respectively, moves which Tyrell says show that the industry is committed to regional areas for the long term.

Outlook

While the larger airlines struggle with downturns in domestic and global air travel, most regional operators have been able to ride out the challenges which go with the territory and are have positioned themselves well in their respective niches.

Nevertheless, external challenges are starting to bear on the industry. Many operators are particularly susceptible to changes in the price of fuel which appears to be on the rise again as the gears of the world economy turn again.

Tyrrell is also keen to ensure that new technologies, such as ADS-B and GPS-guided approaches receive their proper priority from the authorities. “For an aircraft in a serious RPT or charter business, that is the infrastructure for them,” he said. “Our argument is it’s going to come anyway so let’s get some money on it and get on board.”

Overall, as a number of regional economies have continuine to grow, RPT services are once again on the rise, and new opportunities are emerging, the regional aviation sector is well placed to continue providing jobs and developing air services to serve Australia’s regional and remote areas.