Money matters: what’s in the federal budget for aviation?

During the opening address at the 2026 Australian Aviation Summit, Transport Minister Catherine King said, in the wake of the budget, the federal government was “well underway” in the delivery of its 56 initiatives, as outlined in the White Paper.

“Australia is defined by its connections,” she said. “As a continent – where people, businesses and goods can be separated by sea, desert and distance – aviation is one of our most important connectors.” Minister King added that the sector “touches every part of the Australian economy”, directly contributing to around 1 per cent of our GDP, and that the government is focused on ensuring the sector remains “safe, competitive, resilient and capable of supporting future growth”.

Airservices injections

Putting the White Paper aside for now, the $600 million equity investment in Airservices certainly makes up the lion’s share of the federal government’s aviation spending for 2026–27. The cash investment is to “support continued provision of critical air navigation, air traffic control, and aviation fire and rescue services at major Australian Airports”, according to the Department of Infrastructure & Transport. While vague in its wording, essentially, the injection will support the agency to improve its current services and adapt to the new operating environment.

Currently, Airservices has several major projects up its sleeve, the largest being OneSky – a multibillion-dollar initiative to modernise Australia’s air traffic management system, and integrate it fully into Defence’s air traffic management for the first time. Completed in partnership with the Department of Defence and Thales, the OneSky project will ultimately deliver a complex Civil Military Air Traffic Management System (CMATS). It will tear down the veil between civil and military aerial flight paths, particularly above Australia’s major airports, provide efficiencies for air traffic flow, improve safety and visibility, and allow for exponential growth in Australia’s airspace – gearing up for uncrewed aircraft and drone operations.

Ahead of the OneSky project, Airservices is also pursuing its circa-$1 billion Enterprise Network Modernisation Program – a back-end technological overhaul focused on improving telecommunications, data, and network architecture across the nation’s airports. This network will serve as the backbone of Airservices Australia – and its future OneSky system – seamlessly connecting air traffic control towers, radar and surveillance stations, radio facilities, and emergency services.

Airservices Australia has previously sought to increase revenue to better support these future-focused projects. In June, the organisation floated a sale-and-leaseback proposal for vital aviation rescue firefighting (ARFF) equipment to free up some cash in the short term, though this was criticised by the industry at the time. Later, in July, Airservices revealed its plan to increase the fees it charges airlines to drive revenue and support necessary equipment upgrades within the agency. Specifically, it said the price increase – which would amount to an additional $1 to $1.50 per passenger annually on a one-way fare – would largely offset additional costs of maintaining adequate traffic management and ARFF capability.

Since it last revised its fees in 2015, Airservices says it has delivered a 24 per cent real-terms reduction in prices, adjusted for inflation, by extending the life of older assets and technologies. However, to take the agency into the next phase of growth and modernity, it’s looking to increase prices by a weighted average of 12 per cent per year in real terms over five years.

“The cost of providing our air traffic management services, Aviation Rescue Fire Fighting services and enabling services has increased considerably since our last long-term price agreement which ended in 2015-16,” Airservices chief executive Rob Sharp said. He noted that the industry is seeing “significant transformation”, with a view to doubling domestic and international passengers by 2050.

“We have a vital role to play in ensuring airports, airlines, and the travelling public realise the benefits of this investment,” he said.

Fuel in focus

Separate from the headline figure of $731 million, the aviation industry is set to benefit from several wider-scale fuel programs, as backed by the federal budget. First up is the Australian Fuel Security and Resilience package, a $10 billion program working to provide cost relief and fuel access reliability in the short- to medium-term. Minister King told the Australian Aviation Summit that the $10 billion package will establish a permanent government-owned Australian Fuel Security Reserve of around 1 billion litres of jet fuel and diesel.

“It will also lift the industry Minimum Stockholding Obligation by around 10 days for every fuel type, including jet fuel. I know a number of airports have expressed an interest in the program already,” she said.

“These measures are about keeping fuel flowing now, but they also recognise the larger strategic task before us,” Minister King said. “We cannot change our reliance on imported fuel, but these past few months have reinforced why we need to keep building long-term resilience, here at home.”

Which is where the $1.1 billion pledged to the Cleaner Fuels program comes in. Again, not strictly limited to aviation, the expansive initiative outlines a 10-year plan to prepare for and invest in sustainable fuel alternatives. Specifically, the initiative focuses on investing in and supporting the development of Australian-made low-carbon liquid fuels, including sustainable aviation fuels (SAF).

“We have all the ingredients to build a strong and competitive Australian low carbon liquid fuels industry,” Minister King said. “These Australian-grown projects will help increase the stability and security of our jet fuel market over time.”

White Paper provisions

The majority of the remaining funds dedicated to aviation in the 2026-27 budget responded directly to some of the 56 initiatives outlined in the 2024 Aviation White Paper, under the government’s “comprehensive plan” and vision for the aviation industry between now and 2050. The White Paper took a major stance on consumer protections, stating that the government intends to “hold the sector accountable for delivering on its obligations to customers”.

“The government will act to make airlines more accountable to customers for delivering flights as scheduled, remove barriers to competition and support efficient investment in airports to cater for growth,” it reads.

As such, $38.1 million of the federal budget over four years is dedicated to the establishment of the Aviation Consumer Protection Authority (ACPA), the Aviation Consumer Protection Bill 2026 framework, the independent Aircraft Noise Ombudsperson (ANO), and to implement new aviation-specific disability standards. The new authorities will essentially uncouple consumer complaints – over delays, cancellations or aircraft noise – directly from the airlines, airports and air traffic management providers. Instead, consumer complaints will be handled by the Department of Infrastructure and Transport, so that consumers can feel confident that their concerns will be addressed through independent dispute resolution methods. Ultimately, this new bill and associated schemes could see passengers guaranteed compensation for flight delays or cancellations when certain thresholds are met, as is the case in the European Union and the US.

“We are committed to a competitive and transparent sector – and public trust and stronger consumer rights is central to this,” Minister King said. “The objective is simple: passengers should get what they paid for, receive support during disruptions, and have clear avenues for complaints. Clear consumer rights build passenger trust – and passenger trust supports demand, growth and confidence across the sector.”​

A further $4.5 million over four years has been assigned to the Australian Competition and Consumer Commission (ACCC) to continue its ongoing monitoring of the domestic airline sector – including seat prices, capacity changes, and anti-competitive or predatory market behaviours – through until at least 2029. Simon Westaway, chief executive of the Australian Airports Association, said this extension helps to “support a transparent, efficient and competitive aviation system in Australia”, by identifying “emerging risks, cost pressures and areas where competition and consumer outcomes can be improved”.

Elsewhere in the White Paper, the government committed to ensuring that the aviation industry remains as accessible as possible for people with disabilities. “People with disability have been left stranded in airports without wheelchairs, have been denied boarding because of their assistance requirements and have been subject to dangerous or humiliating treatment during air travel,” the paper notes. At the 2026 Australian Aviation Summit, Minister King announced the release of a new consultation paper on aviation disability standards, which will be upheld via the Aviation Consumer Protections Charter.

“For too many Australians, air travel can still be harder than it should be,” she said. “That is why the government is working to improve accessibility across aviation – because every passenger should be able to travel with dignity, confidence and clear information.”

The regulatory piece

The budget includes $66.5 million in funding for the Civil Aviation Safety Authority over four years in order to support its usual safety and regulatory functions – with a key directive. To partially offset this investment, the government is looking to achieve a “modernisation” of the aviation regulator’s fee structure. This includes a review of fees and charges, to be “streamlined to improve administration and reflect”, as well as a move to introduce annual aircraft registration, as opposed to the current once-off system, which it claims will “improve regulatory compliance and safety outcomes”.​

The government also expects to drive revenue through the indexation of the commercial drone levy, in which operators flying commercial drones over 500g in weight must pay an annual fee in lieu of registration. Currently this fee sits at $40 per drone, per year. At the same time, the government scrapped an earlier plan to raise revenue by introducing a similar levy on recreational drones, as well as any current plans to introduce full aircraft registration requirements for light-to-medium RPAs.

The 2026–27 budget papers outline other clear expectations of the safety regulator, including several key answers to the Aviation White Paper initiative, mostly driven around the regulation of uncrewed or semi-autonomous aircraft crowding the airspace. Notably, CASA will support the development and implementation of the Australian Future Airspace Framework – which will address the concerns raised by increasing novel users in the airspace – and ultimately, of Australia’s inaugural Uncrewed Traffic Management (UTM) ecosystem. Other CASA priorities, as noted in the budget, include its work with Geoscience Australia and Airservices Australia to implement satellite-based augmentation systems in the aviation environment, as well as the streamlining of training, licensing and accreditation pathways for future pilots.

​Elsewhere, the Department of Home Affairs is to receive $14.3 million over four years, plus $2.5 million per year ongoing, to set up and support cargo operations at Western Sydney International (Nancy-Bird Walton) Airport. The funds will be used towards the fit-out and provision of border security and cargo monitoring, overseen by the Australian Border Force, ahead of WSI’s grand opening to commercial passengers later this year. The new airport has already opened its state-of-the-art cargo precinct and is currently catering to 24-hour freight operations, ahead of its full opening in October. Additionally, the Department of Infrastructure & Transport receives $1.7 million to continue servicing regional communities via the Remote Air Services Subsidy Scheme.

Tourism and trade

Despite going hand-in-hand with aviation, the tourism industry is notably less favoured in the 2026–2027 budget. $2 million has been allocated to support small-to-medium sized businesses in the tourism sector via the Australian Tourism Industry Council’s Quality Tourism Framework, though that’s largely where the good news ends.

The government has opted to increase the Passenger Movement Charge – a tax charged against all departing airfares to cover the cost of managing the border – by 14 per cent from $70 to $80 per passenger, per flight. The increase is set to come into effect as of 1 January 2027, unless tickets have already been purchased for after this date prior to the announcement. The new policy is said to increase revenue by $755 million over five years, and will cost around $700,000 to implement.

The decision to increase the Passenger Movement Charge has been criticised by industry, including the Australian Airports Association (AAA) and The Tourism & Transport Forum (TTF), which both argued that raising consumer ticket prices amid high inflation and cost of living pressures will result in fewer people travelling. Both groups also raised concerns surrounding the modernisation of Australian border controls, which have not yet been announced in alignment with the budget announcement.

“The Government talks constantly about supporting tourism and growing visitation, yet [the] Budget makes Australia more expensive to visit and more expensive for Australians to travel,” said TTF chief executive Margy Osmond. “For a family of four, that’s $320 they’ll soon have to pay in tax as part of their airfare. Given how much uncertainty the industry is already facing, this could really be the straw that breaks the camel’s back.”

Meanwhile, AAA Chief Simon Westaway said it’s essential that the additional revenue raised is “reinvested in tangible border upgrades”, such as the ongoing digitalisation project of the Incoming Passenger Card, and additional SmartGates.

“Ultimately, we need to be proactive on border modernisation ahead of the 2032 Brisbane Olympic and Paralympic Games, with greater use of biometrics, digital declarations and seamless travel technology,” he added.

The bottom line

If your dinner table operates anything like mine, then there’ll be as many fierce debates over increased fees and airfares as there are about investment tax reform. Ultimately, though, the 2026–27 federal budget made it clear that a strong, healthy aviation industry remains a priority for the government, and that the 2024 Aviation White Paper initiatives have not been swept under the rug. Yes, airlines and passengers can both expect to see slightly higher costs off the back of price increases by Airservices Australia and the Passenger Movement Charge, but the trade-off – in theory at least – is greater passenger rights, resilient fuel pipelines, safer skies, and a sector that is best-placed to usher in the new era of flight.