The high cost of Australia’s regional air services warranted a detailed investigation in a stand-alone public inquiry by the Productivity Commission, a Senate committee inquiry has found.
The Senate Rural and Regional Affairs and Transport Committee’s has recommended the federal government call on the Productivity Commission to conduct a detailed economic analysis and investigate the feasibility of increasing operational subsidies and introducing price control alternatives to address the situation of high regional fares and other related issues.
The committee made nine recommendations in its report on the operation, regulation and funding of air route service delivery to rural, regional and remote communities, which was released on Friday.
The matter was first referred to the committee in November 2017 but a report with the findings was extended three times, the latest until the end of June.
“The inquiry should consult with regional communities to determine whether additional routes should be subject to regulation,” the committee said in its 215-page report.
“The Productivity Commission should use its compulsory information-gathering powers to inform its investigations.”
The report also called on the Productivity Commission to consider the social and economic impacts on rural, regional and remote Australia of regional airfare pricing and air route supply as part of its terms of reference in any future studies on the economic regulation of airports.
It also recommended the government prioritise through financial analysis, the ongoing operational, maintenance and staffing costs of proposed passenger security screening enhancements at regional airports, as announced in the 2018/19 budget. Analysis should further consider ongoing regional airport security costs more broadly.
Further, the report also called on the government to consider providing ongoing financial assistance to regional airports identified as requiring passenger security screening enhancements.
It also backed the regional aviation access program and its component programs – the remote airstrip upgrade program, remote air services subsidy scheme and the remote aerodrome inspection program – and recommended the government review the level of funding to determine if financial support should be increased, and whether present grants programs were the best means of financial assistance.
Another recommendation was for state transport ministers to develop a nationally consistent framework for the tender process, implementation, operation and review of regulated routes. The report said the framework should focus on improving the overall transparency of the operation of regulated routes.
Australian Airports Association (AAA) chief executive Caroline Wilkie said the report highlighted “how difficult it is for communities to access affordable air services when the economies of scale do not exist to promote competition and choice for passengers”.
“We welcome the committee’s recommendations and support the need for an open and transparent approach to how regional airfares are determined,” Wilkie said in a statement on Tuesday.
“The AAA fully supports the committee’s call for a detailed financial analysis of the impact of changing government security requirements on regional airports.
“While the industry is absolutely committed to ensuring we continue to provide a safe and secure aviation network for the travelling public, we must acknowledge the significant financial strain changing requirements are placing on already struggling regional airports.”
The committee received 180 public submissions from airlines, individuals, authorities, companies and other organisations.
The full report can be read on the committee website.
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