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Air Transport in New South Wales

Regional airlines deliver all-important air links to rural and regional centres across NSW. States and Territories have the power to regulate business arrangements on their intrastate air services, but not safety, security or operational requirements, which are all federal powers. The NSW Government regulates intrastate air routes by limiting competition on low volume routes and licensing these routes on a one-route one-licence basis. Higher volume routes are deregulated (unlicensed), which allows open competition. These arrangements recognise that higher volume routes can operate competitively, while low volume routes may not be as robust and are protected from competition to provide greater stability and encourage route development.

Air Regulation Policy

New South Wales intrastate air routes (to/from Sydney Kingsford Smith Airport) are regulated unless declared deregulated by the Minister. The following policy currently applies:

• The threshold for a route being allocated to one operator only by licensing is that the route operates at or below 50,000 passengers per annum
• The 50,000 threshold was adopted in October 2002
• Five-year licences (March 2008 - March 2013) currently apply
• Where regulated routes now exceed the 50,000 level, the five-year commitment takes precedence over deregulating the routes
• Regulated route licences will run their full term, subject to licence conditions

Routes with an annual passenger volume above 50,000, which account for some 75% of all intrastate passengers in NSW, are deregulated, as are any intrastate air routes not linked to Sydney Kingsford Smith Airport.

Issues such as aviation security, safety and airworthiness of aircraft, competence of the flight crew, maintenance systems and operations management, are covered by Commonwealth Government regulations. State Government regulation of intrastate air services applies only to route-operator allocation and does not cover issues of safety.

Before the threshold policy decision was made in 2002, the Government had considered work undertaken by airline Administrators, following the collapse of Ansett and its regional subsidiaries, on the viability of regional air services. Outcomes of this work can be summarised as follows:

• In terms of providing a commercial return to operators, it was considered that there was scope for two airlines only on routes with a volume in excess of approximately 100,000 passengers per annum
• In the range 100,000 to 65,000, the analysis considered that these ports would be capable of supporting one carrier with full time aircraft and another with partly committed aircraft
• Between 65,000 and 35,000 the view was that only one operator using 36 seat aircraft full time would be commercially viable
• Towns generating passenger volumes between 35,000 and 6,000 could support one carrier using 19 seat aircraft on a full time or part time basis
• Below 6,000 passengers per annum, it is thought that only small 9-12 seat aircraft would be viable, generally feeding into larger regional centres and having on line booking arrangements with one or more of the principal carriers

Current experience in NSW is that airlines compete on routes in excess of about 100,000 passengers per annum, with competition also occurring on the Sydney-Williamtown route, at approximately 50,000 passengers per annum.

There are currently three deregulated routes, operating between approximately 50,000 and 100,000 passengers per annum, without competition.

VIEW AIR PASSENGER STATISTICS FOR NSW