Counting the costs

RPT flights from regional, rural and remote airports allow those who work and live outside the major cities to access the specialist health, education, commercial and recreational facilities that are not economically available where they normally reside, allow travel by health professionals to regional communities, and enable regional residents to maintain and enjoy the pleasure of their relationships with distant families and friends.

Regional NSW has experienced the rapid development of the mining industry and regional airports play an increasing role in the economic development in these regions, as well as allowing the movement of labour between regions.

The AAA recently made a submission to the NSW Legislative Council’s Inquiry into the provision of aerial regular passenger transport (RPT) services to regional centres in NSW focusing on the important role of airports in the provision of these services and dispelling some of the myths about the operation of regional airports across NSW.

Airports are often thought to be ‘big business’ because they have large assets and some even suggest that they are a ‘cash cow’ used by their local government owners to cross-subsidise other municipal services. However this is absolutely not the case.

The cost of just keeping an established airport ‘ticking over’ is not inconsiderable, especially when viewed in the context of a local government budget. There are significant financial and regulatory burdens on regional airports due to the disproportionate burden that these airports carry for legislated costs such as terminal charges, aviation rescue and firefighting services, security and compliance.

Airport infrastructure is expensive and requires specialist expertise to maintain and operate. In relative terms these costs are significantly higher in regional NSW. Regulatory costs are also proportionately greater for regional airport operators.

Access to major funding for the majority of regional airports is difficult and expensive in a highly volatile and changing economic environment. But councils are still required to invest in aeronautical, safety and security infrastructure that is required by government and airline operators to enable RPT air services.

Operators of regional airports also assume considerable risk when investing in fixed airport infrastructure given that airlines make no guarantees to continue RPT services at current schedules or with current size aircraft. Indeed, in the case of the collapse of Brindabella Airlines, we understand that regional airport operators are owed close to a million dollars in unpaid airport charges which are unlikely to be recovered. This does not include the income lost into the future. These costs will ultimately be borne by local government authorities and ratepayers as the infrastructure could become “stranded” and lie idle for many years before the cost of investment has been recovered.

Regional airports are being targeted by major airlines demanding reductions in airport charges and levies to assist with their cost management issues. Local government and ratepayers are being asked to provide the airlines with discounts of airport fee rebates in order to maintain services. Over one-third of Australia’s regional council airports run at a loss and those that do make a profit reinvest the funds in infrastructure to support ongoing aviation services for their communities.

Regional airports do not just exist to service the commercial airline industry. They are also critical infrastructure for fire protection, freight, aeromedical, correctional services transfers and general aviation. Like every major airportinfrastructure needs continual improvement to ensure adherence to the safety and security regulations and enable efficient use of the airport.

The AAA has made the following recommendations to the inquiry to ensure the viability of airports across regional NSW. We have recommended that the requirement for airlines to pay all fees related to accessing the regional airports in a timely manner be included in the licence agreements terms of operation and that the NSW government commission the development of a NSW aviation strategy. The implementation of these recommendations would ensure that NSW regional aviation services stay on the right track to meet the future challenges that the growing demand on aviationpresents to this evolving and dynamic industry.

NSW’s regional airports are a unique community resource of enormous value and a vital component in the provision of aviation services. However, they are also economically fragile. Inappropriate decisions by government owners, government regulators and airlines can readily impede the capacity of a regional airport to provide the vital services its community requires.

Accordingly, an ongoing challenge for all airports is to ensure that the complexities and sensitivities of this situation are recognised and understood among the government owners, regulators and airlines, and among the broader community.