Comment: Australia's Aviation White Paper: Still the Cinderella, with no new funding


There had been limited expectations of substantial change in any area of Australian aviation activity and, in this, the Federal Government's White Paper has not disappointed. It is long on concept and the need for improved planning and coordination.

Meanwhile, although the government is sponsoring a multi-billion dollar federal "Economic Stimulus Plan", that is largely related to surface transport, schools and health services, there is a notable - and extremely disappointing - lack of any funding commitments for the aviation sector. This is a direct reflection on the inability of the industry to exercise political influence, continuing a weakness that has endured for decades.

The absence of serious financial support comes despite an explicit recognition in the White Paper of the value of the airline industry: "Australian aviation is a major economic driver, supporting more than half a million jobs and injecting nearly AUD6.3 billion into the economy. In the last financial year, domestic airlines carried more than 50 million passengers and 23 million aircraft journeys were made to and from Australia."

Otherwise, one value of the document is to reaffirm and formalise commitment to a liberal international policy, with various broad directional statements on other issues such as reinforcing the need to support regional aviation. That sector is suffering from the malaise of much of the regional economy; however, the very general statements in the White Paper will lend only limited comfort to regional centres. Funding coordination is to be improved, but, unless that measure is followed by substantive action, including (an unlikely) commitment of considerable additional funds, little will change once the rhetoric settles.

Similarly, while recognising the need to improve skills training, the accent is on "streamlining the process for aviation training organisations to access" (existing funding) and "expanding the role of Industry Skills Councils"; again, no hint of new dollars to be allocated.

Status quo for Qantas

Internationally, there is no effective change in the Qantas Sale Act, other than to increase the 25% maximum limit on ownership by other airlines and by individuals to 49%, a move which Qantas described unenthusiastically as "a good step forward". It will however reopen speculation that a foreign airline (such as a Middle East operator) may seek to take a substantial minority holding in the flag carrier.

Qantas has for years been seeking removal of the Act's 49% cap on foreign ownership, which it argues seriously constrains the company in tapping international equity markets. There is no movement in that regard.

Sydney's second airport quagmire

The policy document also ducked a key decision on a second airport for Sydney, although it did state definitively that the existing facility will not serve long term needs. It did not endorse the use of an existing military airport at Richmond in the city's north, as a secondary airport, as some had expected it might. The White Paper has instead passed decision making to a joint federal-state decision making group as part of an overall strategic transport plan - with the implication that there be joint funding of a new airport and of the surface infrastructure. The body is to reach some decisions in 2011, conveniently well after the next federal and state elections are due. In reality, the prospects of such a body reaching any workable decision within the next decade seem remote, especially given the parlous condition of the New South Wales economy.

On the environment, mostly motherhood wording has emerged, heavily compromised by political imperatives of not rocking the boat on airport noise issues. Thus for example there is no specific endorsement of continuous descent on approach to major airports, a procedure known to reduce fuel consumption considerably. There is however some relatively determined wording directed towards removing serious anomalies in coordination of military and civilian airspace. And, despite opposition from local entities, Brisbane is to remain a 24-hour a day operation. Domestic aviation is specifically to be included in the government's Carbon Pollution Reduction Scheme legislation to be reintroduced into Parliament in 2010; previous indications have been that there was to be no special treatment of the aviation sector.

It is easy to criticise a document of this sort for its lack of serious new directions, but it does at least bring together a whole range of different threads and seek to create a coherent overall strategy.

Nonetheless it falls seriously short in its failure to inject funding into key parts of the sector - notably regional aviation and skills training - even though there is a multi-billion dollar economic recovery programme under way, supporting seemingly everything but the aviation industry.

Background: National Aviation Policy White Paper

On 16-Dec-2009, the Australian Government released its National Aviation Policy White Paper, around one year after the release of its preliminary Green Paper in Dec-2008.

The Paper has maintained safety and security as the primary objectives of aviation policy, recognising that the aviation industry is a prime driver of broader economic prosperity for Australia, and has considered how to approach key questions relating to airport and operational planning, international air services arrangements, maintenance of a strong Australian-based aviation industry, personnel training and the future environmental effects of aircraft noise and emissions.

The paper has recognised that the cost of regulation should not place an unnecessary burden on industry, and in particular on the regional and general aviation sectors.

While looking to take a coordinated approach to airport planning and investment, The Paper has, predictably, failed to come up with any specific detail on where or when a second Sydney Airport might come into being.

Many of the proposed initiatives reflect those canvassed in the Green Paper, but the White Paper has refined these in some instances, with various specific commitments made to be actioned in a timely fashion.

Qantas Sale Act Amendment

The Qantas Sale Act contains provisions that put Qantas in a separate category to any other Australian airline that wishes to operate international services from Australia. Any other airline is required to maintain 51% Australia equity, but has no restriction on the make up of the 49% foreign equity to which it is entitled. Qantas, on the other hand, also requires 51% local ownership, but its foreign equity share has an additional proviso allowing a maximum 35% ownership by foreign airlines, with a maximum 25% ownership by one foreign person.

The Government has now accepted Qantas' long-argued position that the Act should be amended to put it on an equal footing with others, which should add flexibility to the carrier's investment arrangements and assist with the cost of foreign capital borrowings.

Liberal International Treaties

The Government will continue to take a liberal approach to the negotiation of international air services rights while protecting the national interest and promoting expanded commercial opportunities for Australia's international airlines.

Traffic rights that other countries have to offer will remain an important consideration in Australia's air services negotiations, as will the maintenance of a strong Australian-based aviation industry. The Government will move to a new generation of liberalised air services agreements that will include open capacity, beyond and intermediate rights, safety, security, environment, competition and investment provisions.

Domestic and Regional Aviation

The Government will maintain its current domestic regime, including open investment in Australia's domestic airlines. The Paper expresses some concern for the state of regional Australian aviation, where there is a contrast between the solid growth rates to destinations such as Cairns, Sunshine Coast or Newcastle and static or falling demand on services to remote destinations such as Bourke where declining regional populations and competition from other modes of transport have had an adverse impact.

Assistance for regional and remote air services and airports is to be improved and better targeted. The Government will re-focus the assistance provided by the Payment Scheme for Airservices Enroute Charges onto more remote routes and will consolidate assistance provided by the Remote Air Services Subsidy (RASS) Scheme, the Remote Aerodrome Inspection (RAI) Program, the Remote Aerodrome Safety Program (RASP) and the Remote Aviation Infrastructure Fund (RAIF) into one overarching program and work with state and local governments to improve services through the RASS Scheme.

The Government will continue to protect regional airlines' access to capital city airports, particularly Sydney, where capacity is constrained, by retaining regional airlines' existing access slots and their current pricing arrangements.

General Aviation

The Government has confirmed its commitment to the continued operation and growth of secondary capital city leased federal airports, vital to general aviation, and will ensure airport master plans maintain a strong focus on aviation development at secondary airports and not allow non-aeronautical uses to compromise the future growth of aviation activity.

The Government will also address the direct burden of rising regulatory charges on the sector by capping overall direct regulatory service fees at current real levels for at least five years.

Industry skills and productivity

The Government recognises that development of a sufficient number of skilled people to meet aviation's needs is essential for the continued growth of the industry, and is strongly committed to building the skills base of Australia's industries and workforce. Skills Australia will provide expert and independent advice to the Government on Australia's current, emerging and future workforce skills and workforce development needs.

Beyond government initiatives, the industry has become more active and innovative in training and recruiting and is continuing to improve its workforce planning, recruitment and retention strategies. The Government recognises that sustained focus on recruitment, retention and training in the industry is vital for its future growth.

Consumer protection

The Government believes it is important to provide consumers with appropriate protections, without affecting the ability of airlines to set service levels in a competitive market, as deregulation has increased the variety of airline fares and services, especially with the growth of low-cost carriers. The Government is looking to airlines to develop corporate charters outlining how they will deal with complaints, and to establish an airline industry ombudsman to better manage complaints not resolved by airlines in the first instance.

The Australian Government has already made improvements to provide better compensation payments to air crash victims and their families, while also cutting red tape for industry through the implementation of the 1999 Montreal Convention. The Government will continue to improve carriers' liability arrangements, as well as strengthen the mandatory insurance arrangements for damage caused by aircraft to third parties on the ground.

The Government will work with industry and disability advocacy organisations to identify and implement means through which access to air services for people with disabilities can be improved. A dedicated government, industry and consumer working group has been established to consider a range of issues affecting disability access to aviation services, such as airport terminal facilities, cabin safety matters, and travelling with mobility aids. Airlines and airports will be encouraged to develop and publish Disability Access Facilitation Plans.

Air traffic management

Australia is responsible, through Airservices Australia, for communication, navigation and surveillance and air navigation services over an area which covers 11% of the earth's surface, with Airservices managing air traffic operations for more than four million flights carrying some 65 million passengers each year in the Australian flight information region.

The White Paper sets out strategic air traffic policy directions to provide a sound basis for planning and investment decisions by aviation agencies and industry. These policy directions include a strategy for the increased use of enhanced air traffic management infrastructure, including satellite technology, to further improve safety and meet future air traffic capacity demands.

The Government is at last moving towards greater harmonisation of civil and military air traffic management, with the objective of developing a joint operational concept to provide significant improvements in safety, efficiency and capacity.

Airspace reform will continue, with a focus on ensuring that Australia's airspace administration moves towards closer alignment with the International Civil Aviation Organisation's (ICAO) airspace system and adoption of proven international best practice.

Safety and security

The Government has set in place new governance arrangements for the Civil Aviation Safety Authority (CASA) and the Australian Transport Safety Bureau (ATSB). Key tasks for the new CASA Board are to build cooperation between safety agencies and improve ways in which industry has input into CASA's strategies. The Government will be looking to the CASA Board to refocus the organisation on its core function of regulating safety and to expedite completion of its regulatory reform program.

The Government's decision to establish the ATSB as a Commission will provide it with a greater degree of independence and complement the creation of a CASA Board in improving inter-agency cooperation.

The Government has determined long-term funding principles for CASA. These include a commitment to maintain Budget funding for basic enforcement and regulatory functions but will require CASA to cap its direct regulatory service fees at real present levels for at least five years. As the industry grows, CASA's resourcing base will be secured through industry cost recovery arrangements. The Government already ensures funds raised through the current aviation fuel levy are returned to CASA for safety regulation and this will continue to be the case.

Increased investment in air traffic management facilities and services will continue to address identified and emerging risks in Australia's airspace and meet future demand both at our major capital city and regional airports. Real threats remain to aviation security and the Government will continue to enhance the security measures in place to reduce the risk to travellers and the general public from these threats. The White Paper contains a set of initiatives to strengthen aviation security arrangements, with reform of some existing measures in the light of experience over recent years. The security system will continue to be flexible, taking account of contemporary risks and threats, while being responsive to future changes.

Airport infrastructure

Australia's airports handled over 120 million passenger movements in 2008-09, generating hundreds of thousands of jobs, both directly and indirectly. The Government believes it is essential airports can continue investing and developing as demand for air travel and on-airport services grow.

The Government plans to strengthen airport planning arrangements in several ways. Airport Master Plans will be required to provide better transparency about future land use at airports, including for non-aeronautical purposes. New Planning Coordination Forums will improve planning coordination between major airports and all levels of government, including the implications of developments for local traffic and public transport.

Major airports will be required to establish Community Aviation Consultation Groups to give local residents and businesses a better say in airport planning and operations. The Government has already introduced regulations to ensure that certain categories of development on airports which are likely to be incompatible with airport operations - such as schools and residential developments - are subject to thorough community consultation and assessment.

The Government will introduce a tiered approach to price and service quality monitoring, recognising varying degrees of market power. The existing airport pricing regime will be maintained, including price monitoring by the Australian Competition and Consumer Commission (ACCC) of aeronautical services at the five major airports, with a self-administered, scaled-down monitoring arrangement to apply to Canberra, Darwin, Hobart and Gold Coast airports.

Price monitoring of car parking at Australia's five major airports by the ACCC will continue.

A second Sydney Airport?

Sydney's Kingsford Smith Airport is Australia's busiest airport, handling over 32 million passengers in 2008-09 and is a major economic hub generating approximately AUD8 billion in annual economic activity and supporting more than 200,000 jobs.

However, the Government noted in approving the airport's Master Plan, that it does not accept that the airport can, nor should, handle projected long-term growth in the region. A second airport will be required.

For the first time, the Federal and New South Wales Governments have undertaken to work in partnership to plan for the Sydney region's future airport infrastructure, including how it links to Sydney's growth centres and its road and rail transport systems. This is the first time that the Australian and NSW

Governments have agreed to align their planning and investment strategies. An Aviation Strategic Plan is due to be completed in 2011 and will be developed as part of an integrated transport strategy. Development of the Plan will be oversighted by a Steering Committee which includes experts in aviation, planning and investment.

Badgerys Creek is no longer an option as a second airport site, as it has been overtaken by urban growth.

The Paper points out that the Government will not be speculating about other locations or sites for a second airport at this time. These locations will be developed as part of the work overseen by the Steering Committee, and undertaken by Australian Government and NSW officials.

Environmental impacts

Although aviation is responsible for only 2% of global carbon dioxide emissions, that proportion is growing, and the Government believes minimising the impacts needs to be a focus of industry and governments. The Government proposes to continue to work through ICAO to establish a framework for the treatment of international aviation emissions that can reduce emissions without unfairly disadvantaging Australia's international airlines.

The Government will also pursue a range of measures to manage aircraft noise. These include maintaining existing curfews and aircraft movement caps, and phasing out the operation of older, noisy aircraft. The Government has reinforced through recent airport master planning processes the ongoing importance of effective noise management strategies, including the need for a periodic review of the need for a curfew at Brisbane.

The Government will also strengthen Airservices Australia's approach to managing noise complaints and distributing noise information through the establishment of a noise information and complaints ombudsman. Through these measures, as well as better coordination of planning on and around airports and more effective community engagement, the Government will work with the aviation industry and local communities to better deal with the impacts of aircraft noise.

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