Great expectations?

Some may say this is a commercial reality, but airports are often local monopolies with an ability to force operators and tenants to be price takers.

Airport privatisation (technically, long-term leases) is unlikely to be overturned, but strengthening monopolies was never the policy goal of any government of any persuasion.

Commercial aviation has many vital facets including RPT, fly-in/fly-out, freight, charter, medevac and training.

It is part of a complex but highly organised system that purportedly includes access to quality airports on fair and reasonable terms. An efficient aviation system is overwhelmingly in Australia’s national interest, providing a commercial and transport edge, both domestically and internationally.

If a particular part of our aviation system enjoys too much power it harms the system as a whole and opportunities are lost for the industry to grow and prosper. An extreme example is the industrial pressure air traffic controllers may exert around the time of their enterprise bargaining negotiations.

They have the power, even though they may choose not to exercise it, to bring the system to a standstill or at least disrupt it substantially.

Airports, due to their largely monopoly positions, can exert similar if less spectacular pressure. It is stating the obvious, but aircraft need good airports from which to operate. In a strange twist, the converse is not necessarily true of airports. They can seek to maximise their returns through non-aviation activities, even though aviation is ostensibly the primary purpose of an airport. It is access to land and its non-aviation uses that may be a significant profit focus for an airport owner.

It is vital that somebody is analysing the aviation industry and system as a whole. For better or worse, that role falls to government. The current light handed approach to airport regulation is not working and is affecting the industry’s ability to reach its quite significant potential. New and smaller players should be encouraged and not thwarted by the excessive barriers to entry and a lack of countervailing power.

The industry pays hefty fees to government through fuel excise, Airservices charges and company taxes. The industry supports large bureaucracies that should be providing clear industry analysis and policy direction. It is important to note that the average salaries paid by government aviation entities to its staff, through the fees supplied by the industry, are far in excess of the salaries paid across the industry itself. This is particularly true of regional aviation.

The industry is now asking, given what it pays to government, will it see some action on the airport regulation front? Will a better regulatory balance be struck between airports and operators? These are not idle questions, but an attempt to rebalance a system that is heavily weighted towards airports and government bureaucracies and away from the operators, that is, those who actually provide the aviation services.

As with the Aviation White Paper, the Productivity Commission inquiry is being treated very seriously by the aviation industry. Expectations are high that a new regulatory system will be introduced for airports, and that operators will again be treated as valued business partners, rather than as price taking tenants.

Australian Aviation is proud to be the official supporting journal of the Regional Aviation Association of Australia. The views in this column are those of the RAAA, and not necessarily Australian Aviation’s.