Albanese defends govt on regional aviation

written by australianaviation.com.au | March 19, 2012
Federal Transport Minister Anthony Albanese has defended the carbon tax and other government policies that have come in for criticism from the regional aviaiton industry. .

Federal Infrastructure & Transport Minister Anthony Albanese has pushed back on suggestions that the carbon tax and other government policies unfairly hurt an already threatened regional aviation industry.

During remarks to a summit of industry leaders in Canberra on Monday, Albanese acknowledged “some real challenges” to regional aviation in Australia but said the industry as a whole remains strong, with passenger traffic at regional airports growing at a faster rate than at airports in major cities.

Albanese said the cost to airlines from the carbon tax could be passed along to passengers through modest surcharges and would remain a tiny portion of airlines’ operating expenses.

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“The carbon price on a regional airfare, depending on the flight length, would be around $1-2 per seat,” he said, citing plans by Virgin Australia and Qantas to impose an average surcharge of $3 and $3.50 to offset the cost of the tax. “I would ask you to recognise that these costs are only a small fraction of the fluctuations in oil prices that you have weathered over the last decade.”

Albanese also defended the government’s decision to let the Enroute Charges Payment Scheme expire on June 30. Established after the collapse of Ansett in 2001, the scheme reimburses regional carriers for the cost of some air traffic control services through Airservices Australia.

Albanese said the scheme, designed as a transitional measure after the Ansett collapse, had outlived its need and dismissed claims that lifting the scheme would make marginal routes unviable.

“The size of the subsidy per flight is on average about $2 per passenger,” he said. “I don’t believe this should affect the commercial viability of any route.”

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Regional carriers have stepped up their criticism of government policies in recent months, saying they compound the effects of high fuel prices and will force airlines to abandon less profitable regional routes in favour of routes servicing the natural resources sector.

Regional Express, Australia’s largest independent regional carrier, earlier this month said the federal government’s “draconian policies on regional aviation will no doubt succeed in wiping out regional air services to all but the biggest regional centres over the next few years.”

Albanese said those claims were overblown. “We will certainly not be reading an obituary on regional aviation in this country anytime soon,” he said.

Still, he acknowledged a series of challenges facing the industry. Both the number of regional airlines and regional airports has fallen by half since 1984, he said, while growth has come disproportionately from mining centres and popular tourist destinations such as Ballina and Port Macquarie.

But he said regional aviation as a whole was experiencing strong expansion, with passenger movements through regional airports jumping from 16.8 million in 2005 to 22.5 million in 2010, a 6.1 per cent growth rate that outpaced 5.7 per cent growth at major city airports.

Albanese also defended the government’s handling of the industry, saying the government had committed more than $48 million since 2009 to upgrades of regional airports and airport infrastructure. He announced a further $5.4 million in upgrades at 31 of the country’s most remote airstrips.

“This will keep standards up to scratch and ensure that services such as Australia Post and the Royal Flying Doctor can land and take off safely.”

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6 Comments

  • Ben

    says:

    I have no doubt regional airline services will suffer. The legislation is so loose, they have no real idea of how carbon will be priced. Business has to set a rate so that it can meet the costs of the tax, even though they are not really sure how much it will cost in the future. Novel idea. Lunacy in legislation.

  • Tom

    says:

    Albanese needs to get a reality check… I laughed when he claimed that the price of carbon would only be around $1-2 per seat. Yes while a carbon tax remains a fixed price for businesses it will probably have a value such as the one he mentioned however when it become a floating tax, one based on demand, it follows logically that the price for carbon would go up, with businesses with larger profits being able to buy more permits and leaving the little guy very little to choose from. So when an airline passes on the cost of the carbon tax to the consumer for about $3 or so per seat, it can be understood that this is a measure to protect themselves from the damage of the tax. In the case of Rex alone, its Saab 340 operate on average with 34 seats. Thats an additional $100 a flight to cover a floating carbon tax. When Rex makes approximately 675 flights a week, thats an additional $68,000 a week or $3.536 million a year to cover the cost of the tax. For an airline that made $24million profit in 2011, thats $3.5 million represents a sizeable chunk of the airlines money. It is only logical that the airline will pass this cost to its customers or make plans to reduce this number by removing routes and cutting maintenance costs to ensure that a neutral or positive profit it made. If not it will mix both to ensure the best outcome for its shareholders at the detriment of regional aviation routes. If the government doesn’t see this as being detrimental to regional aviation and the services it provides to remote Australia it is about time that the minister for Grayndler take a back seat and begin writing the obituary for regional aviation.

  • random

    says:

    As always it would appear that cumulative costs are being ignored, along with the likely mark-up factor that exists in business when new cost are implemented.

    If each business faces a (arbitrary) 7% rise in costs, there’s a bloody good chance they will make it 10% to cover themselves and hedge in a little extra profit margin from the exercise. If an airline has to use services or purchase services and equipment (particularly those that have several production steps – each time attracting the carbon tax) then their costs will spiral.

    Market factors won’t stop this because most businesses will be doing it, and the Government’s projection of ripple and cumulative effects are lazy and naive at best.

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