A level playing field?

The regional market has been affected by a slowdown in the resources industry and an emerging drought in many parts of Australia. This economic and climatic double whammy is starting to bite and only the best run companies will continue to prosper. But ironicallyRegionsthis is also a fundamental strength of the regional sector. Droughts and economic contraction are part and parcel of regional aviation. People who own regional aviation companies or work for them know how to cut their cloth accordingly.

All regional operators are significantly smaller than the Qantas and Virgin groups, are not union dominated, and are tactically flexible enough to adjust to emerging operational and economic conditions.

They have to stay in the black to survive and do so by displaying the aforementioned qualities.

Australia is now waking up to the reality that if its companies do not rein in costs and wages it will be internationally uncompetitive. It is no different in the aviation industry. Better to have a smaller, long-term profitable enterprise employing people than a bloated, constricted one heading for large lay-offs or even closure. This principle does not just apply to Qantas and Virgin but to every serious company in Australia. It is a principle that every successful regional operator lives by.

Australia needs efficient and regular regional aviation services more than ever. For all the demographic reasons outlined many times in this column the regional aviation industry is an essential part of Australia’s economic fabric and its well-being. We need to encourage this important part of the aviation industry and not be unnecessarily

All regional operators are not union dominated and are tactically flexible enough to adjust to emerging conditions.

distracted by mainline aviation stoushes. The Qantas and Virgin Groups must return to profit eventually or they will fail – it’s as simple as that. All other operators live by this concept and analyse costs forensically on every route to ensure each route remains profitable. If they don’t regional operators simply do not survive.

The Abbott government is right to resist rent seekers. The billions poured into the car industry have largely been wasted and only forestalled that industry’s untimely demise. Large amounts of taxpayer life support for business is not business at all, and simply encourages recidivist behaviour.

In saying that, small seeding money across all players in an industry can sometimes help but governments must always resist trying to pick winners. For example, the soon-to-be revived en route scheme will encourage the maintenance of the more marginal regional routes and will be applied across the whole regional industry, albeit somewhat less generously than its original form.

Qantas and Virgin are dominating the headlines but the regional operators are quietly getting on with the business of servicing regional communities, flying the freight, transporting patients, and ensuring that our fundamentally important resources industry continues to prosper. The big end of town could learn a lot from regional aviation.