Mar 19, 2012

Speech to Regional Aviation Summit 2012

Parliament House

Of all the modes of transport that make up my portfolio, nothing compares with the stories that come from the early days of Australian aviation.

Being so far away from the big so-called centres of aviation and the fact that Australia is so vast, means the record books in this country have no shortage of extraordinary feats.

The first flight around Australia itself didn’t take place until 1924.

It took 44 days – almost half as long as the first flight from England a few years earlier – and happened in a Fairey seaplane.

The reason it took so long was apparently due to two factors – lack of suitable aircraft and inadequate ground facilities.

We’ve made up a lot of ground over the subsequent years.

These days, aviation lies at the heart of our economic activity as an island nation.

As set out in the Aviation White Paper, the Government’s aim is to provide policies that support investment and initiative while at the same time protecting safety and security.

We also support the freedom of operators to adapt and be innovative.

I know there are sometimes expectations that Governments can solve every hurdle before you.

And you will have noticed that my door is always open to hear your concerns. 

Recognition of the difficulties being experienced in regional aviation

While we are seeing adaption and renewal in many parts of regional Australia, the story is not consistent.

I know there have been some real challenges for your sector in recent years.

The number of regional airports hosting scheduled services, and airlines providing those services, have both halved since 1984.

At the same time, the number of Australians choosing to fly on regional airlines has grown by nearly 500 per cent.

Some of the big growth has been to major tourist areas like Ballina and Port Macquarie.

Unfortunately, services to smaller rural towns aren’t generating the same returns.

I know there’s also an issue about the increasing age of some regional aircraft and that replacing them is an extremely expensive business.

Let me address a couple of issues you have raised with me.

Enroute Charges Payment Scheme

One of them is the Enroute Charges Payment Scheme.

It was introduced as a transitional measure following the Ansett collapse in 2001 and was only intended to operate for a limited time.

In our first budget in 2008 we extended the scheme but determined that it would conclude on 30 June this year.

Some airlines have argued it should continue.

They say its removal makes some routes unviable.

I urge those who are concerned to see the subsidy in perspective.

Thanks to economic reforms undertaken by the Hawke-Keating Governments, flying is today FIVE TIMES more affordable than two decades ago.

The size of the subsidy per flight is on average around $2 per passenger.

I don’t believe this should affect the commercial viability of any route.

Of course, the full Enroute Scheme will continue for aeromedical operators.

Carbon Pricing

I know the impact of the carbon price is another issue for your sector.

The Government makes no apology for our commitment towards a clean energy future.

Pricing of carbon pollution is integral to that.

The Government understands there will be some impact on your costs and that you may need to pass these on to passengers.

Qantas has reported that this will add an average of $3.50 to ticket prices and Virgin, $3.

Passengers travelling from Brisbane to Rockhampton on Skywest for example will pay an extra $1.50.

The carbon price on a regional airfare, depending on the flight length, would be around $1-2 per seat.

I would ask you to recognise that these costs are only a small fraction of the fluctuations in oil prices that you have weathered over the last decade.

This increase in costs has been factored into our assistance package.

The carbon pricing package includes a fund to assist non-profit aviation organisations such as the Royal Flying Doctor Service.

Your summit program refers to the decline in both the number of operators servicing the general public and the number of communities that receive a regular air service.

These are clearly issues of concern, but I am reminded here of Mark Twain’s great line when he learned that his obituary had appeared somewhat prematurely in The New York Journal: “Reports of my death are greatly exaggerated”.

We will certainly not be reading an obituary on regional aviation in this country anytime soon.

Regional Aviation Security Funds

Let me turn now to security which remains this Government’s highest priority for the travelling public.

A year ago we announced the $200 million Strengthening Aviation Security Initiative designed to strengthen Australian aviation against emerging threats.

Out of that package, $32.9 million is specifically targeted for regional airports for basic screening equipment such as explosive trace detection machines, walk through metal detectors, hand wands, and x-ray baggage machines.

The Department has been and will continue to work with you all to make this process as easy as possible.

BITRE Figures

Today I am releasing a report by BITRE – the Bureau of Infrastructure, Transport and Regional Economics – on air transport trends in regional Australia.

The figures tell an interesting story.

The report finds that passenger movements at regional airports between 2005 and 2010 increased from 16.8 million to 22.5 million.

That is a growth of more than six per cent – ahead of the 5.7 per cent growth at our major city airports.

It’s an even stronger picture at our remote and very remote airports.

They grew 6.5 and 9.7 per cent respectively.

This is an impressive turnaround from the preceding five years from 2000 to 2005 when numbers went backwards.

Last year  – 2011 – was particularly good – passenger numbers jumped by just over ten percent.

Passenger kilometres and the number of flights were also well up.

Some of the fastest growing markets are Perth to Newman – up 25 percent, Brisbane to Mackay – 15 per cent, and Perth to Karratha and Port Hedland – which both grew by more than ten per cent.

The growth is not contained to the resource centres – there are also strong numbers between Sydney and Port Macquarie, Sydney and Albury, Adelaide to Port Lincoln and Melbourne to Mildura, to name just a few.

Regional Airline of the Year – QantasLink

It’s appropriate here that I add my congratulation to QantasLink for recently being named Regional Airline of the Year for 2012 by the international industry journal Air Transport World.

QantasLink has come a long way since it began life in 1949 serving farming communities in New South Wales and Queensland.

Congratulations also to Virgin Australia for its big investment in regional Australia through its alliance with Skywest.

Virgin is planning new aircraft and more frequent flights to service regional destinations over coming months – great news for travellers.

I note Virgin has recently posted a 34 per cent increase in profit in its half yearly results and Skywest a 16 per cent growth.

Good news also for Rex with a 51 per cent increase in your half year pre-tax profit; up to $18.5 million.

Let’s hope these strategies continue to pay off for regional consumers. 

Funding for Regional Airports and Airlines

Let me assure you that this Government is absolutely committed to making sure regional Australians have the best possible access to air services.

Since 2009, we have committed more than $48 million to a vast range of projects – such as:

  • $19 million for new and upgraded infrastructure at Port Macquarie, Kempsey and Taree Airports;
  • nearly $10 million to expand Ballina, Griffith and Port Lincoln Airports;
  • an $8.7 million partnership between Federal, State and Local Government which funded improvements to Kununurra Airport in the Kimberley;
  • A contribution of $5.5 million for the upgrade of the terminal at Gladstone Airport;
  • There’s also a renovated terminal building at Horsham Airport and a resealed runway at Kingaroy Airport .

The Government funding airfield and terminal upgrades in this way means these costs are not borne by regional airlines and passengers.

Many of the more remote routes will never be commercially viable, but are nonetheless essential to the economic and social wellbeing of the communities they serve.

This Government has allocated $145 million for remote facilities and services over the six years from 2008 until 2014.

This includes $61 million for subsidised remote community flights – where services cannot be operated commercially.

Compare that to the former Government’s $16 million over the preceding six years.

I am very pleased today to announce we are investing $5.4 million for 31 of our most remote airstrips – this is part of the $28 million we announced in the last budget, so there will be more announcements to come.

This will keep standards up to scratch and ensure that services such as Australia Post and the Royal Flying Doctor can land and take off safely.

The aviation needs of the Sydney Region

Before I close today, let me bring you up to date on a few matters concerning our nation’s biggest airport – Sydney.

As you know, the joint NSW and Federal Government Steering Committee’s report into future aviation needs for Sydney was released recently.

The Federal Government is now considering the Committee’s recommendations.

Let me very clear that kicking regional airlines out of Kingsford Smith will not  be part of the solution under the Government.

But as business operators who all share the ‘problem’ of Sydney airport, I would ask that you work with us constructively as we find a solution.

The fact is that Sydney’s capacity is limited.

There are already no slots left for new regional services in the morning peak.

The number of slots in other periods is fast diminishing.

I began this address with news from BITRE that regional flights are growing faster than other domestic flights.

This therefore places you right in the firing line when it comes to the impact of this dilemma.

One quarter of regional passengers travelling to and from cities are travelling to Sydney.

Sydney’s problems are only going to get worse for you and for every other airline that flies into and out of it.

This is a public document – I released it the day it was presented to me.

Please read it closely and – as I said a moment ago – be prepared to be part of this most important national discussion.

Doing nothing is no longer the answer.

Doing nothing is code for regional airline services getting ‘done over’ some time in the future.

CONCLUSION

Whatever the challenges facing many in the regional aviation sector, the outlook is bright.

As I have outlined, your sector of aviation is growing.

Our economy is strong and Australians are voting with their feet by taking to the skies in record numbers.

Even international airlines are getting in on the act.

You can now buy a single ticket with British Airways from London to Wagga Wagga.

The strength of your sector is testament to your determination and adaptability.

Your vital signs are in good shape.