NSW businesses need regional aviation reform, peak body says

“Regional airports are economic lifelines for small and medium businesses. They connect local businesses to markets, workers and supply chains. When those links weaken, SMEs are hit first and hardest,” said Business NSW chief executive Daniel Hunter.

“The collapse of Bonza and challenges facing Rex showed how quickly regional communities can lose critical services. For SMEs, that can mean disrupted supply chains, lost customers, delayed freight and higher operating costs almost overnight.”

According to Business NSW, about 60 per cent of regional and remote air routes are serviced by a single airline, which limits competition and drives up prices.

In the foreword to the policy paper, Hunter wrote that the state needs “a clear NSW aviation agenda to shape and leverage forthcoming national reforms on airfares, competition, security costs and service reliability”.

“Business NSW believes it’s time for a new framework for NSW regional aviation – a framework that secures reliable services, strengthens airport infrastructure and ensures regional airports continue to serve as gateways to opportunity,” he wrote.

“This requires federal, state and local governments working in genuine partnership with business and airlines, supported by targeted funding, regulatory reform and a commitment to regional equity.

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“Regional airports are not optional extras. They are vital to keeping regional economies and communities connected and thriving. They deserve the same policy attention as any other piece of critical infrastructure.

“To secure the future of regional NSW, policymakers must invest in a resilient, affordable and competitive aviation network that supports business and communities for generations to come.”

Hunter also noted that the opening of Western Sydney International (WSI) this year could be a “game changer for regional NSW” amid capacity constraints at Sydney Kingsford Smith.

“By opening new slots and opportunities for regional airlines, it can drive greater competition, more choice and better connections for regional businesses, exporters and travellers,” he said.

The policy paper follows an Australian Airports Association (AAA) report earlier this year, which found that more than half of regional airports in Australia are losing money, with a median loss of around $192,000 for the 2025 financial year.

“The typical regional airport is losing around $200,000 a year just to keep aircraft moving and runways open. These airports are essential infrastructure supporting healthcare access, tourism, emergency services and regional economies,” said AAA chief executive Simon Westaway in March.

“Regional aviation operates in very thin markets, where passenger volumes are small and airline capacity decisions largely sit outside the airport’s control.

“These findings also reinforce the need for a permanent and sustainable funding mechanism to support regional airport infrastructure and ensure regional communities remain connected.”

“Encouraging sustainable airline competition and new entrants is one of the most effective ways to put downward pressure on airfares over the long term.”

In its submission to the Productivity Commission’s inquiry into regional airfares, the AAA noted that regional airports have an average operating cost of $23.31 per passenger, higher than the average $14.30 per passenger at major metropolitan airports.