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Monday, 29 November 2004
Page: 80

Mr ANDREN (5:11 PM) —I rise today to grieve for the future of regional air services in this country and specifically the treatment of our biggest regional airline, Regional Express, in its efforts to secure fair, reasonable and competitive access to facilities at Sydney's monopoly-owned Kingsford Smith airport. I know my concerns are shared by others in this place, especially my colleagues from regional and rural electorates.

In early November this year, the Regional Air Summit 2004 was held in Canberra. The summit was attended by interested parties from business, government, the airlines and the airports. I was not able to attend the summit, but I did make a submission for its consideration delivered by my senior staffer as an observer, largely based on the inquiry by the House of Representatives Standing Committee on Transport and Regional Services, of which I was a member, into regional air services in this country.

The committee's report, Regional aviation and island transport services: making ends meet, was tabled in October-November last year. At recommendation 22, the committee urged the Commonwealth government to retain its current measures to ensure regional airlines have access to Sydney airport and other capital city airports. I stated in my submission that, on reflection of industry trends since the tabling of the Making ends meetreport, it might have been advisable for the committee to have qualified this recommendation to ensure fully competitive access to Sydney and other capital city airports.

Smooth connections and adequate facilities are important for business travellers and tourists alike. My colleague the member for Riverina emphasised the importance of access for regional carriers to the major airports in her address to the summit, describing Sydney airport as a gateway to her electorate and rural Australia as a whole, which indeed it is. The summit, chaired by former Minister for Transport and Regional Development John Sharp, resolved:

Provision should be made in legislation for fair, reasonable and competitive access of airlines to landing, airside terminal and landside facilities in all Australian Airports.

The summit also resolved that, in the event of an access dispute, there should be a legislated independent mechanism for review and resolution.

Certainly, Regional Express, our largest regional carrier, could benefit from such legislation. Rex, as the airline is known, has been served notice to vacate its gate, gate 39, by 30 November—that is tomorrow. To further complicate this situation, the business lounge at gate 39 that Rex has used since it began operations has been leased to a competitor airline for 17 years. This is despite public comment by Sydney Airports Corporation CEO Max Moore-Wilton to central west New South Wales's local ABC that Rex could keep its lounge if it wanted to. Rex has occupied gate 39 and its lounge since the collapse of Ansett on a nominal lease of $1 per annum to maintain regional air services in what was then a difficult environment for all airlines, let alone a new regional carrier.

Rex has grown into a commercially viable airline, turning an operating profit of just over $1 million last year. It carries half a million passengers a year on some 80 flights a day and has almost 2,000 lounge members and corporate clients making use of its facilities for business travellers. Regional Express was more than willing and able to enter into a commercial lease arrangement to retain the facilities that have been an integral part of its growth to date and are very much part of its business plan for the future.

As events transpired, Rex did not get the opportunity to put in a tender to retain those facilities. Despite its efforts to negotiate equivalent facilities since February this year, Rex has only managed to achieve some certainty about its gate and lounge facilities this morning, after a lot of heartache, negotiation and, indeed, stonewalling at times by the Sydney Airports Corporation, which has offered Rex exclusive use of gate 47. Rex has also successfully come to an arrangement with Virgin Blue and the SACL to extend its use of the gate 39 business lounge for three months while a new lounge is being constructed.

While all this is a welcome development, coming late in the day, Rex has only been offered a three-year tenure on its new gate and lounge at this stage. The uncertainty surrounding access arrangements that Rex has endured since February is not something the airline wants to go through every few years. The downgrading of Rex's gate and facilities would have had a negative impact on the airline's operations, with increased congestion from a shared gate, the need to bus all its passengers to aircraft, and increased staffing costs due to the need to operate on two levels of the terminal with a lounge 400 metres away from the departure gate. Further, if Rex had not reached a satisfactory arrangement today for continued use of the lounge, it would not have been able to meet its contractual obligations to its lounge members and corporate clients. According to the airline, this would have resulted in the withdrawal of the Canberra-Sydney service at the very least.

These are real risks for all regional airlines and underline the need for a close regulatory watch on the domestic airline industry and the new airport ownership regime. The key regional player, with an operating profit of over $1 million and showing every sign of healthy growth into the future, was at risk of being severely marginalised—and, I would suggest, is still at risk of long-term marginalisation—by the apparent unwillingness of the owners of Sydney airport to negotiate a lease for it to retain its facilities on a long-term basis. With Australia's largest regional airline under such pressure, I cannot emphasise enough the importance of the Commonwealth government adopting the recommendations of the Regional Air Summit 2004 in regard to access to capital city airports. I also stress the recommendation of that parliamentary report adding that there must be fully competitive access, not just access, to ensure we do not have the emergence of a dominant two in the domestic airline industry in this country, with the rest pushed to the fringes with no capacity to grow or take on the larger airlines at some point.

The summit resolved that there must a legislative solution to the access issue and an immediate review of what constitutes fair, reasonable and competitive access. Professor Warren Pengilley argued very forcibly that there is a case for legislation to guarantee fair and competitive access to not only Sydney airport but other capital city airports. One issue he raised was that section 46 of the Trade Practices Act, dealing with misuse of market power, does not apply to access situations, because the airlines and the airports are not actually competitors. Further, guaranteeing fair access in legislation could well be regarded not as anticompetitive but as having procompetitive benefits encouraging regional players and delivering considerable benefits to regional and rural areas.

This was supported by a paper delivered to the summit by National Economics, which found regional aviation to be vital for the social and economic wellbeing of regional communities. Indeed, communities with regular air services enjoy economic growth almost double that of those communities without such services. These regional services would also be served by the establishment of an aviation ombudsman, as recommended by the summit. The ombudsman would be charged to investigate and mediate in disputes between aviation industry players. In a complex regulatory environment which is becoming increasingly cutthroat, I can only agree with the summit that an ombudsman similar to the office created for the telecommunications industry is a commonsense and proactive measure for the aviation industry. The recommendations of the summit provide what would be a working framework to improve the viability of regional services for rural and regional Australia, and I urge the Minister for Transport and Regional Services to support their adoption by the parliament under the guidance of the government.