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A WA Government program to cap the cost of regional airfares has cost close to three times its initial budget in the first year of operation.
The Regional Airfare Zone Cap (RAZC) scheme, which was budgeted for $6.2 million in its first year, cost the state government $17 million in FY23. According to industry insiders cited by the Financial Review, most of this went to Qantas, which operates around 65 per cent of regional flights in WA.
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Run by the WA Government in partnership with Airnorth, Nexus, Qantas, Regional Express (Rex), Skippers Aviation and Virgin, RAZC caps regional fares to and from Perth at either $199 or $299. The government pays airlines part of the difference in the fares, though exact amounts are commercial in confidence.
Approximately $22.2 million has been budgeted for the second year of the program, with no allocation as yet for the third year. Tourism and Transport Minister Rita Saffioti, who is also the state’s Treasurer, told the AFR the WA Government is committed to the three-year pilot scheme.
“Whilst $19 million was initially committed, being a pilot program, we anticipated additional funding may be required,” she said.
“At a time when cost of living is impacting households everywhere, this program is saving regional residents thousands of dollars on air travel, which for many families and individuals is not a choice.”
WA government data released last month showed that 151,181 capped airfares were flown in first 12 months of the scheme, with Karratha, Kalgoorlie, and Port Hedland the most popular destinations.
Perth Airport has seen a surge in regional passenger numbers this year, carrying the airport to almost 100 per cent of its pre-pandemic capacity in FY23.
In a press release, Minister Saffioti pointed to the “Australian first” scheme’s popularity as evidence it is “alleviat[ing] what was once a significant cost for regional residents”.
“This scheme is the first of its kind in the country and is one of the key reasons we’ve seen strong growth in regional aviation activity over the past 12 months,” she said.
“By introducing year-round accessible and affordable capped airfares, our government has put air travel to Perth for personal reasons such specialist appointments and family reunions, within the reach of hundreds of thousands of regional Western Australians and delivered enormous benefits to regional communities.
“On average, people are saving around $100 for every capped airfare booked – that’s more money in their pockets at a time when we know cost living pressures are having an impact.”
The scheme is slated to expire in 2025.
