Peak Period Pricing Damaging Regional Airlines

Peak Period Pricing Having a Significant Impact on Regional Airlines

On 25 July 1990, Senator Collins, Minister for Shipping and Aviation Support, issued a media release stating, inter alia, that a new peak period surcharge (PPS) regime would be introduced at Sydney Airport on all aircraft.

The rate and timing of the charges was to be determined by the FAC and would be maintained at a level which will ensure the efficient operation of the Airport. Senator Collins also stated that it was not the intention in introducing a new peak period surcharge regime to deny users access to Sydney Airport. Rather, it would encourage hubbing and triangulation of country services using larger aircraft. Smaller aircraft carrying few passengers could also choose alternative arrival times, thereby reducing congestion and delays.

Reaction by Regional Airlines

Following the Minister’s announcement, most New South Wales regional airlines and their representative groups objected to the introduction of peak period surcharges on the grounds that time was needed to assess the effect of initiatives that the Civil Aviation Authority (CA A) had undertaken to increase the capacity of Sydney Airport. In addition they argued that a fixed price surcharge: • is discriminatory, • could disadvantage regional airlines where they compete with domestic airlines on the same route, • imposes an additional cost burden onto the intrastate air traveller which would be significantly higher that those imposed on interstate and international passengers, • could deny a regional airline operator access to Sydney Airport during peak periods, which, in turn, would reduce passenger demand for services and cause the operator to either change to smaller aircraft or to foreclose their business, • would stifle decentralisation and business initiatives, • would cause prospective regional airline passengers to seek other forms of travel to and from Sydney, and • would force regional airlines to operate against the principle that on most routes, passenger demand determines the time and frequency of the services.

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