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Former ACCC chair Rod Sims has condemned what he calls a “failure of public policy” that led to the downfall of Rex.
Speaking on ABC Radio National on Thursday morning, Sims insisted that the Australian aviation market can sustain more competition, but said this is being held back by poor policy settings around slot management at Sydney Airport.
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The federal government this year decided against changing the “80/20 rule”, which allows airlines to keep a take-off slot indefinitely provided they operate it at least 80 per cent of the time.
“We certainly can have more than two airlines on these capital cities routes, certainly on the Melbourne-Sydney route. But public policy is simply stopping that happening, and I don’t know why,” Sims said.
“All evidence shows that when you have three airlines flying a route, the prices are much lower. It’s just unquestionable that that’s the case. So why the government doesn’t change the policy levers to bring that about, I really do not understand.”
Sims in particular pointed the finger at Airport Coordination Australia (ACA), the company responsible for slot management at Sydney Airport, which is run by Qantas, Virgin, the Regional Aviation Association of Australia, and the airport itself.
“The government outsources the management of the slots at Sydney Airport to a company that’s majority owned by Qantas and Virgin. I mean, it is just unbelievable,” he said.
“So when Rex – or indeed Bonza, who also wanted extra slots at Sydney Airport – want those key slots that they must have to be viable, they have to go and essentially ask for them from Qantas and Virgin. And of course, they’ve also got to put their business plans before them.
“So the government sets this system up for failure, it sets this system up for a duopoly and therefore sets the system up for higher airline prices that Australians shouldn’t be paying.”
According to Sims, Australia will not see more competition without slot reform.
“Rex, and I have to say Bonza as well, were constantly tapping on my door complaining about the fact that they could not get the slots they need,” he said.
“Now should they have anticipated that the system was so rigged against them that they were doomed to fail? Well, you can argue they should, but let’s identify the real public policy issue here.
“You cannot have Qantas and Virgin controlling slots of Sydney Airport – that cements the duopoly and cements higher prices for Australians. We have to fix that. You can’t say this is a natural duopoly when you’ve got this situation occurring.”
Speaking at a press conference on Thursday, Transport Minister Catherine King said the government is working to reform the slot management process at Sydney Airport.
“The response to the Harris Review, which the Government has announced back in February, is underway. The work to get that done is important. There have been no reforms to slots at Sydney Airport for over 27 years. The Albanese Labor Government is doing that,” she said.
Qantas says the ownership structure of ACA is not unusual in global aviation, and that it is working with the federal government on potential changes. It has consistently denied accusations of “slot hoarding”, saying it is not gaming the system.
In its response to last year’s Aviation Green Paper, the Flying Kangaroo said only 75 per cent of Sydney’s available slots are allocated.
“In 2021, Regional Express commenced domestic jet operations out of Sydney, including during peak periods,” the airline said.
“In both Summer and Winter 2023, Regional Express was awarded the majority of additional peak slots it sought — 108 additional slots in total. Bonza did not participate in the seasonal slot process in Summer or Winter 2023 and so did not obtain any slots.”
Bonza, which collapsed earlier this year, was – alongside Rex – a critic of Sydney’s slot management system, with CEO Tim Jordan last year telling a Senate committee that being shut out of Sydney was “making a hard execution harder” for the low-cost carrier.
“The aviation segment market sector is a hard thing to make work at the best of times. Being the third operator, the fourth operator, in a market like Australia, it’s going to be hard. We know that. We all got into this knowing that,” he said.
“But what we shouldn’t do is make it harder, knowingly so. That, unfortunately, is what we do with the current infrastructure restrictions which are placed on us. I don’t think that is beneficial for anybody in the country.”
