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The Regional Aviation Association of Australia has called for a new investment fund to support the sector.
In its submission to the Productivity Commission’s inquiry into regional airfares, the RAAA suggested that a new Regional Aviation Investment Fund could be funded in part through the international departure tax and would help offset costs that lead to high ticket prices.
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According to the RAAA, the RAIF would “provide real pathways for the regional aviation in Australia to maintain, invest, and grow air services across Australia”.
“The fund will provide a means to ensure that regional airfares are affordable, and vital regional connectivity is maintained today, tomorrow, next year and every year that follows,” the association’s submission read.
“The RAAA proposes that the Regional Aviation Investment Fund should be funded by redirecting a modest percentage of the revenue collected through existing aviation charges like the Passenger Movement Charge (PMC) – it will not require the introduction of a new charge or levy.
“Currently half of the over $1.1 billion in revenue collected through the PMC goes into consolidated government revenue and is not used for border security as intended, or other aviation related purposes.
“The Regional Aviation Investment Fund would provide a reliable and affordable funding stream generated through aviation business activity and could be accessed by all regional aviation operators to assist with investment, and to offset rising costs that are impacting regional airfare prices.”
According to the submission, the fund could be used for initiatives such as loans, grants or guarantees for fleet renewal; maintenance of existing fleets; “regulated and proportional” airport charging schemes; expansion of regional routes; training investments, including cadetships and apprenticeships; and subsidies to help airlines deal with rising costs.
“The regional aviation industry knows the challenges and risks ahead and is ready to tackle them. However, we need support to ensure success and, just like all sectors in the economy, we are looking to government to provide the right policy settings,” the RAAA said.
“The RAAA members believe that government and all political parties can make commitments to address these key issues. A bi-partisan commitment to a Regional Aviation Investment Fund would deliver a multitude of benefits across the sector and for the Australian community.”
According to Minister King and Treasurer Jim Chalmers, the Productivity Commission review – announced last year – is about “reliable air services at reasonable prices” for regional Australia, and will look at “competition, pricing practices and whether profits along the supply chain are fair”.
“We know that safe, affordable and reliable air services are vital for regional and remote communities, not just for travel, but for access to healthcare, education and jobs,” the ministers wrote in a joint statement in October.
“More accessible regional airfares can help drive local economies, support tourism and boost productivity in regional Australia.
“The Aviation White Paper found the average ticket price per kilometre was 52 per cent higher for flights involving regional airports than for flights between two capital cities.
“Despite overall growth in passenger numbers, the number of regional routes fell from 458 to 291 between 1989 and 2021 and the number of remote routes fell from 264 to 163 in the same period. Many routes are now serviced by only one airline.”
The Productivity Commission’s final report to the government on its findings is due on 27 April next year.
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says:Whilst I support the in-principal request for an additional funding source the first course of action just has to be a full investigation into the current level of “costs,levies,taxes and charges” imposed on current operators in regional areas, others too. Owners/operators of current regional airports have to be reminded/shown that their enterprise is not the pathway to financial heaven; – governments of all nature too are not beyond scrutiny either. The results of that investigation will most likely show why current operational costs are forcing higher than average airfares in those regions. Worthy of note here is, if the “PMC” is mostly just going into consolidated revenue as unallocated funds, why is it being charged in the first place ?