5
Impacts of aviation policy
The terms of reference require the Commission to report on ‘the impact of
international and domestic aviation policy on the Victorian tourism industry and
the broader economy, and any implications for policy positions that the
Victorian Government might adopt in its own right or present to the
Commonwealth Government’.
A number of participants considered that aviation policy will have an important
influence on the future growth of Victoria’s tourism industry. An important issue
is the need to ensure Australia’s international air services agreements are not
impeding airlines meeting the anticipated growth in international visitors from
countries such as China, India, Indonesia and other growing markets in the
Asia-Pacific region. This chapter considers how aviation policy affects the
number of international visitors to Victoria and the extent to which the Victorian
Government can pursue or advocate for changes that would benefit the
Victorian tourism industry.
Aviation policy covers international, domestic and regional aviation.
International policy includes issues that are largely outside the Victorian
Government’s control such as the arrangements that govern airlines’ access to
international passenger markets. Domestic aviation policy covers issues such as
Government investment in and regulation of airports as well as safety and
security regulations applying to international and domestic airlines operating in
Australia. In both of these areas, the Victorian Government’s role is largely
limited to making representations to the Commonwealth Government.
Recognising the broad scope of aviation policy and the Victorian Government’s
limited direct role, the Commission has focused on areas of potential constraints
raised by participants, including:



the capacity of airlines to fly to Australia, and to Melbourne in particular,
especially in markets that are forecast to experience rapid growth (section
5.3)
the development of additional airport infrastructure capacity in Melbourne
(section 5.4)
other issues relating to regional airport pricing and policy (section 5.5).
Before examining these issues in detail, the next two sections discuss the
importance of aviation to the Victorian tourism industry and outline key aspects
of the aviation policy framework.
IMPACTS OF AVIATION POLICY
125
5.1
Importance of aviation to Victoria’s tourism
industry
The capacity to meet the expected growth in international visitors to Victoria is
dependent on the availability of adequate airport infrastructure:




99 per cent of inbound tourists and 65 per cent of interstate tourists arrive
by air (DITRDLG 2009)
around 5.5 million international passengers travelled through Melbourne
airport in 2009–10, representing one-fifth of all international passenger
traffic through Australian airports (table 5.1)
passenger movements through Melbourne airport have been growing more
rapidly than Sydney and this trend is expected to continue, with movements
forecast to rise to 15.6 million by 2029 (table 5.1)
most of the forecast growth in passenger movements is predicted to come
from China and other emerging Asian markets (TRA 2010a, p. 18).
Table 5.1
International passenger traffic through Australian
international airports
Airport
Year ended June
2010 (million)
Share of total (%)
Forecast annual
average growth rate
(per cent)a
Sydney
11.1
43.4
4.7
Melbourne (excl. Avalon)
5.5
21.4
5.7
Brisbane
4.2
16.2
6.0
Perth
3.0
11.6
5.8
Gold Coast
0.73
2.8
-
Adelaide
0.52
2.0
4.9
Cairns
0.43
1.7
-
Darwin
0.21
0.8
4.6
a Annual average growth rate 2008-09 to 2029-30.
Source: DITRDLG 2010, p. 11, BITRE 2010.
Victoria is considered to be well served by airport capacity and has a number of
advantages as a destination compared to other major gateways. Unlike Sydney
airport, Melbourne airport does not have a curfew, has access to additional
runway capacity and currently has relatively low airport fees and charges. A
further advantage is that a substantial amount of general aviation traffic passes
through Essendon airport which allows a greater proportion of Melbourne
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UNLOCKING VICTORIAN TOURISM
airport’s capacity to be directed towards scheduled domestic and international
passenger flights.
Victoria’s second airport is Avalon which provides domestic aviation services to
around 1 million passengers each year; a figure that is expected to grow. Low
cost carriers such as Jetstar and Tiger Airways operate domestic flights from
Avalon, with international flights being a future priority for the airport (see
below).
Victoria has a number of regional airports catering mostly to business and local
travellers. Essendon and Moorabbin airports together with regional airports such
as Mildura, Portland and Hamilton provide domestic and regional airline services
(table 5.2). Mildura airport is the busiest regional airport in Victoria with Qantas,
Virgin Blue, Regional Express and Sharp Airlines providing scheduled passenger
services (Mildura airport 2010).
Table 5.2
Airport traffic at selected Victorian airports 200809
Airport
Inbound passengers –
major domestic airlines
Inbound passengers –
regional airlines
Total passengers – inbound
and outbound passengers
Avalon
Not publicly available
Not publicly available
Not publicly available
Essendon
0
7 394
14 545
Mildura
16 041
78 071
187 720
Moorabbin
0
6 347
12 684
Portland
0
5 740
11 612
Source: BITRE 2009.
5.2
Importance of international aviation policy
International aviation is regulated, amongst other things, by a series of
government to government (bilateral) air service agreements that determine the
levels of market access for countries’ respective airlines. The underlying
regulatory framework was established by the 1944 Convention on International
Civil Aviation (the Chicago Convention), and is given effect in Australia by the
Air Navigation Act 1920 (Cth).
Australia’s international aviation policy goal is:
An open and competitive international aviation market that serves the national
interest by benefiting tourism, trade and consumers, allows Australian and
overseas airlines to expand, and maintains a vibrant Australian-based aviation
industry. (DITRDLG 2009, p. 40)
IMPACTS OF AVIATION POLICY
127
Australia currently has 68 bilateral air service agreements. These agreements are
negotiated with other countries by the Australian Government and, in general,
set out the number of seats that the airlines of the two countries may provide,
the cities they may serve in each country and the rights to operate to third
countries. These agreements typically also include provisions on matters such as
airline ownership and control, competition law, safety and security (DITRDLG
2008, p. 99). Once an agreement is finalised, the capacity available to individual
Australian carriers on these routes is allocated by the Australian Government’s
International Air Services Commission. The issue for this inquiry is the current
and future capacity within ASA’s and how the capacity for international flights by
Australian and foreign airlines is allocated between Australian cities.
While the Victorian Government does not have any direct role in the negotiation
of these bilateral air service agreements, it has several avenues to influence the
Commonwealth Government’s position, the most important of which is through
Victoria’s membership of the Tourism Access Working Group (TAWG)
(previously the National Tourism and Aviation Advisory Committee (NTAAC).
5.3
Restrictions on international aviation capacity
Some participants considered that the system of negotiating international air
services agreements has the potential to impede the future development of
Victoria’s tourism industry. The specific concerns were that:
(1) the international system of bilateral air service agreements harms Victoria’s
interests by limiting capacity on some key routes
(2) that even where sufficient capacity exists in Australia’s air services
agreements, airlines prefer to operate flights through Sydney rather than
flying direct to Melbourne
(3) the process of negotiating these agreements is cumbersome, slow and
non-transparent so that capacity may not be able to respond rapidly enough
to increases in demand from particular countries.
5.3.1
Participants’ views
The Victorian Tourism Industry Council (VTIC), for example, considered that
the international system of negotiating bilateral air service agreements has the
potential to harm Victoria’s interests:
The existing international system of bilateral Air Service Agreements (ASA) is
fundamentally anti-competitive and inefficient, and harmful to the
competitiveness of air service users. (sub. 40, p. 52)
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UNLOCKING VICTORIAN TOURISM
Likewise, Tourism Victoria argued that:
… growth in services [to Melbourne] is constrained by the global regulatory
regime governing air access. Progress towards substantive liberalisation,
particularly in multilateral fora, remains slow. Bilateral agreements provide some
scope for progressive liberalisation, but with a focus on bartering commercial air
services rights. (sub. 48, p. 7)
According to the City of Melbourne, a lack of direct inbound flights to
Melbourne can increase travel costs and travel time for international visitors to
Victoria. It submitted that despite experiencing recent rapid growth in
international passenger numbers:
Passenger demand, however, continues to outstrip supply on key international
routes, with more than 600 000 people each year still flying between Melbourne
and Sydney solely to connect with international flights. (sub. 53, p. 12)
The Tourism and Transport Forum (TTF) also suggested that there is a lack of
capacity on international flights into Melbourne, but that this mainly reflects
airlines’ decisions to operate direct flights to Sydney:
Victoria and Melbourne have a lower share of international airline seat capacity
to Australia than their share of origin/destination international airline traffic.
This reflects the historic bias of international airlines to first establish services to
Sydney, as well as the preference by Qantas for first servicing international
destinations from their Sydney base (sub. 44, p. 50)
The TTF provided data on capacity and visitation (table 5.3) suggesting that
around 30 per cent of international visitors to Victoria enter Australia through an
interstate gateway.1 This information is not definitive about whether this pattern
is determined by demand or by constraints on the number of flights to
Melbourne under air services agreements.
TTF considered that Melbourne’s share of inbound flights to Australia will increase in future due to the
growth in international services offered by Jetstar and as Qantas seeks to regain market share into and out of
Victoria (sub. 44, p. 50).
1
IMPACTS OF AVIATION POLICY
129
Table 5.3
Capacity, arrivals and departures for Victoria,
New South Wales and Queensland
Victoria
(per cent)
New South Wales
(per cent)
Queensland a
(per cent)
Share of seats to Australia (inbound)
20
44
21
Share of international visitorsb
29
52
38
Share of outbound travellers
25
35
18
a Queensland includes Brisbane, Gold Coast and Cairns. b International visitors commonly visit more
than one state/territory, with the average being 1.5 states/territories per trip.
Sources: Adapted from TTF (sub. 44, p. 50), based on Tourism Research Australia, International Visitor
Survey and National Visitor Survey; Airport Coordination Australia for international airline seats.
5.3.2
Is supply limited by air services agreements?
To examine whether there are overall capacity constraints, the Commission has
compared for major international tourism markets, current air service agreements
and the capacity limits under these agreements and the extent to which this
capacity is being used by foreign airlines flying to Australia. Airline capacity
utilisation for several important tourism export markets is shown in figure 5.1.
Figure 5.1
Capacity use by selected country airlines
100
Capacity use (%)
75
50
25
0
China
Hong Indonesia Malaysia Vietnam
Kong
Korea
Japan
United
Kingdom
India
United
States
New Singapore
Zealand
Note: New Zealand, Singapore, the United Kingdom, and the United States have open capacity
entitlements. No capacity is currently being utilised under the Indian air service agreements.
Source: Tourism Access Working Group, Mapping Tourism Access Priorities – Stage One.
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UNLOCKING VICTORIAN TOURISM
The capacity utilisation data presented above suggests that:


There are no capacity limits under Australia’s air services agreements with
several countries that are important sources of visitors to Victoria (the
United Kingdom, the United States, New Zealand and Singapore).
Capacity limits under current air service agreements are now evident for
several inbound tourism markets including China, Hong Kong, Indonesia
Malaysia and Vietnam.
This suggests that while Australia has ‘extremely liberalised aviation regulations’
(sub. 42, p. 6) this does not appear to extend to all inbound tourism markets,
especially those that are likely to play an important role in Australia’s future
tourism export growth.
In reviewing available capacity under Australia’s air services agreements and
arrangements the Commission understands that airlines have the flexibility to use
available capacity on inbound flights to Melbourne or other major gateways such
as Sydney, Brisbane and Perth. This suggests that in the majority of cases
commercial decisions rather than regulatory controls determine the likely entry
point for tourists.
The 10 Year Tourism and Events Industry Strategy (DIIRD 2006) identified
actions to encourage airlines to increase the number of inbound flights to
Melbourne from destinations such as China, the United Kingdom, the United
States and India. These actions focused on influencing the commercial decisions
of airlines, rather than the Australian Government negotiating position with
other countries. The Strategy, for example, identified opportunities to attract
more direct flights to Victoria by developing ‘Network Development
Agreements’ with high value carriers, and the goal of working with Jetstar
International to boost inbound passenger numbers from strategic destinations
(DIIRD 2006, p. 23). A subsequent progress report indicated that new airlines,
including AirAsia X, Etihad Airways, Qatar Airways, V Australia and Korean Air
had established direct flights to Melbourne. It also reported that additional
capacity had been added from carriers including Cathay Pacific, Emirates,
Singapore Airlines, Air China and China Southern.
The progress report also identified further actions aimed at influencing airlines
commercial decisions such as developing a new strategy to attract direct air
services from key inbound markets, building Melbourne as a connection hub
between other popular short haul tourist destinations and population centres,
and strengthening research, data collection and analysis capabilities to support
the development of aviation strategy (Tourism Victoria nd, p. 16).
IMPACTS OF AVIATION POLICY
131
5.3.3
Future regulatory constraints?
The available evidence suggests that the current pattern of direct flights to
Melbourne reflects the commercial decisions of individual airlines. It also
suggests that future growth in demand, especially from markets such as China,
Indonesia and Malaysia could be constrained by current air service agreements.
For example Chinese and Indonesian airlines are utilising close to 100 per cent of
their current seat capacity entitlements (figure 5.1), suggesting there may shortly
be an excess demand for seats into Australia.
A failure to expand the limits on capacity in air services agreements in line with
growth in demand could have adverse consequences for the Victorian tourism
industry. According to the Tourism and Transport Forum (TTF):
Victoria has a strong interest in the Australian Government negotiating bilateral
agreements with seat capacity set well ahead of current traffic levels. If the
bilaterals offered limited unutilized seat capacity, Melbourne’s opportunities for
growth in seat capacity will be severely affected. (sub. 44, p. 50)
Several participants therefore supported further liberalisation of international
aviation markets. VTIC submitted that:
In order to enhance tourism industry competitiveness, there must be further
liberalisation of international air access arrangements. Priority must be given to
increasing direct inbound services to Melbourne, including low-cost carrier
services. Priority should be given to key routes, high-yield inbound destinations,
and growth areas including China and India. In addition, Victoria must support
policies to increase direct flights into all Australian airports, and recognise the
significant benefits of the tourism industry nationally. (sub. 40, p. 52)
The Commission understands the Australian Government is likely to continue
air services negotiations with China in 2011 aimed at concluding an ‘open skies’
agreement, removing most if not all of the existing limitations on Australian and
Chinese airlines operating between the two countries.
There are two additional ways of responding to potential capacity constraints:
(4) The Australian Government could unilaterally open up its skies with those
countries where there is excess demand for seats into Australia.
(5) The Australian Government could designate Avalon airport as a regional
international gateway, thereby effectively allowing international carriers to
operate an unlimited number of flights to and from Avalon airport (section
5.4.1).
The Australian Government’s position is that it will seek to enter into ‘open
skies’ agreements on a bilateral basis, where possible, and otherwise ensure that
capacity available to foreign and Australian airlines under the bilateral agreements
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UNLOCKING VICTORIAN TOURISM
grows ahead of demand. This position was set out in a recent White Paper on
aviation policy in which the Australian Government stated that it:
… will continue to pursue liberalisation of the international aviation market,
including ‘open skies’ style agreements, where these are assessed to be in the
national interest.
In all cases the Australian Government will seek to ensure capacity available
under our bilateral agreements remains ahead of demand so that airlines are free
to make commercial decisions about the frequency and types of services they
operate. Such an approach provides airlines with the regulatory certainty to
enable them to commit to long-term growth plans in the Australian market.
(DITRDLG 2009, p. 41)
Some participants supported the current policy stance of the Australian
Government. Qantas stated that:
The Federal Government’s policy on air services liberalisation strikes an
important balance in that it seeks to promote further liberalisation of air services
whilst also recognising the need to support a strong local aviation industry.
(sub. 42, p. 5)
Qantas also suggested that any decision to move from the current policy stance
of the Australian Government would require careful consideration of a number
of matters including:




Australia already has extremely liberalised aviation regulations
foreign carriers currently enjoy a high level of access to the Australian
market
there is surplus capacity for foreign airlines in major [origin/destination]
markets that is not being utilised
Qantas and Jetstar are major contributors of inbound tourism into Australia
and Victoria. (sub. 42, p. 5-6)
The Commission’s view
With forecast growth in the number of tourists wishing to travel to Australia
over the coming years it is important that there is sufficient unutilised capacity in
the air service agreements to ensure that demand is not unnecessarily
constrained–which would negatively impact on the tourism industry. Capacity
constraints may lead to higher airfares than would otherwise be the case, and can
be viewed as a ‘tax’ on the export of Australian tourism products. Inbound
tourism may be deterred as a result, leading to net costs to the Australian tourism
sector, from reduced growth in international tourism. A simple analysis of
forecast Victorian tourist numbers and total inbound economic value (TIEV)
illustrates that a small reduction (for example 5 per cent) in tourist numbers from
IMPACTS OF AVIATION POLICY
133
China and Indonesia over the next 5 years may lead to large reductions in income
for the Victorian economy, in the order of $500 million2.
Recent forecasts by the Tourism Forecasting Committee suggest that China,
India and Indonesia will be significant sources of growth in inbound tourism to
Australia in the coming decade, with more modest growth also coming from a
number of other regions and countries (figure 5.2).
Figure 5.2
Forecast growth rates of visitor arrivals to
Australia- selected markets
10
Forecast Annual Growth Rate (%)
9
8
7
6
5
4
3
2
1
0
India
China
Indo nesia Thailand M alaysia
So uth Singapo re United
Ko rea
States
Ho ng
Ko ng
Taiwan Germany
New
United
Zealand Kingdo m
Japan
Growth rate 2009-2020
Source: TRA 2010a, p. 19
The information available to the Commission suggests that there are capacity
constraints within several existing agreements (China, Hong Kong, Indonesia
and Malaysia). Given future forecast tourism growth, particularly with respect to
China and Indonesia, it is important that additional capacity is provided for these
markets to ensure that inbound tourism is not unnecessarily constrained.
Current Australian Government policy is to attempt to negotiate extra capacity
with China ahead of this demand. Clearly, an open skies agreement with China
would remove any regulatory impediment to airlines adding the necessary
capacity to meet future demand growth. For this to happen, however, the
This estimate has been developed for illustrative purposes only and is based on (International visitor
forecast (Vic.) x TIEV) for 2011 to 2015. For each year this amount has been reduced by 5 per cent to arrive
at a total for China and Indonesia. Data source Tourism Forecasting Committee 2010a, pp. 26-29 and
Tourism Victoria 2010b.
2
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Chinese Government must be willing to enter into such an agreement with
Australia.
The Victorian Government can play a constructive role in this process by
arguing for an open skies agreement with China and other countries. Recognising
that current Australian Government policy seeks to consider, among other
things, the impact of such agreements on the domestic aviation industry, the
Victorian Government should also argue for transparency in the way that the
Australian Government evaluates the industry impacts of air service agreements
(particularly on tourism) in arriving at an assessment of the national interest.
Draft recommendation 5.1
The Victorian Government seek agreement from the Commonwealth
Government that, in the lead-up to future air service negotiations, the
Commonwealth would develop estimates of the potential costs and
benefits of potential outcomes and test these in discussions with
stakeholders (including state governments) through existing consultation
mechanisms. This would ensure that negotiations for more liberalised air
services are driven by a full understanding of the relative net benefits of
preferred negotiated outcomes.
5.4
Other impediments to the development of
additional airport capacity in Victoria
Ensuring that the system of international air services agreements is flexible
enough to accommodate current and future demand for travel to Victoria is
clearly important for the future of Victoria’s tourism industry. But it is also
important that the infrastructure to support interstate and international visitation
is provided efficiently and competitively.
As noted, Melbourne airport is the principal gateway to Victoria for interstate
and international visitors. Avalon airport has emerged recently as the second
domestic airport. While participants considered that Victoria is well placed to
accommodate growth in international and domestic tourism there are some
issues requiring attention.
Charges for parking at Melbourne airport were identified as a negative factor by
some participants. VTIC, for example, argued that measures are needed to
encourage greater competition in the provision of car parking facilities at airports
(sub. 40, p. 9). While this is clearly an important issue, the Commission notes
that the Productivity Commission (Cwlth) has recently commenced an inquiry
into the economic regulation of airport services which includes a review of
current arrangements for monitoring airport car parking charges.
IMPACTS OF AVIATION POLICY
135
Participants also considered that there is scope to build on Victoria’s strengths by
investing in additional airport infrastructure. While there were a number of
suggestions for public and private investment in areas such as transport and air
traffic control systems (see chapter 6), the focus in this section is on two
potential regulatory issues:
(1) The process of obtaining approval for Avalon to become a second
international airport in Victoria.
(2) The need for efficient planning controls to address land-use conflicts in
proximity to the airport.
In addition the TTF also raised a number of Commonwealth and international
policy issues that it considers impact on the sector, including:






fast tracking implementation of Required Navigation Performance (RNP) at
Melbourne Airport and other Australian airports
endorsing the ICAO resolution calling for a global aviation industry solution
to deliver emission reductions rather than inclusion of aviation in individual
countries approaches to pricing carbon
incentives for airlines to introduce more fuel efficient aircraft through
changes to depreciation through the 2011 review of Australia’s taxation
system
providing a concessional excise tax treatment for second generation bio-fuel
for airline use in aircraft on domestic routes, similar to the approach applied
to the taxing of Ethanol for use in motor vehicles
arguing against other governments introducing aviation specific carbon
taxation, as this will particularly impact Australia as a commonly long haul
destination
establishing a research and development fund to develop second generation
bio-fuels in partnership with the major Australian airlines and Boeing (sub.
44, p. 8).
The issues raised by TTF are part of the much broader issue of ‘climate change’
and potential solutions that are specific to the aviation sector. Given this broader
perspective, which raises a number of Commonwealth and international policy
issues, the Commission considers that these issues are not in the scope of its
current inquiry.
5.4.1
International airport status for Avalon airport
Several participants supported measures that would allow Avalon airport to cater
for the expected growth in international visitors. Victoria University, for
example, stated that:
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UNLOCKING VICTORIAN TOURISM
With regard to aviation policy, we support the expansion of airport capacity to
accommodate the growth in international tourism across business, leisure and
[Visiting Friends and Relatives] markets. We also believe that the granting of
‘Regional Package’ status to Avalon airport is pivotal to increasing capacity for
international airlines in accommodating this growth. This will provide improved
access to regional areas increasingly sought by international visitors. Avalon
airport is strategically located as a gateway to the Great Ocean Road and other
regions that are linked through regional touring routes such as the Great
Southern Touring Route. (sub. 51, p. 6)
Tourism Victoria noted that in the past the Victorian Government has argued
for:
… the Commonwealth [Government] to support the development of Avalon as
an international airport by identifying it as a ‘Regional Package’ airport. This
outcome would place Avalon on equal footing with other gateways which have
internationally capable regional airports which complement capital city airports.
(sub. 48, p. 8)
The TTF was, however, sceptical about the benefits of expanding capacity at
Avalon as a means for overcoming any barriers arising from restrictive bilateral
air service agreements:
Victoria’s second airport at Avalon could gain international services if it is
classed as a regional airport and also if there is a shortage of negotiated capacity
in bilateral agreements. However, Victoria is better served as a State by having
Australia negotiate seat capacity well ahead of demand rather than a third best
alternative of hoping that tight capacity will encourage international carriers to
use Avalon as a regional airport (if the Australian Government allows Avalon as
a regional airport). In reality the regional package has not led to significant new
international airline services to ‘regional’ airports as international carriers much
prefer to go to the major airports like Melbourne which have existing large
traffic flow. (sub. 44, p. 51)
VTIC also supported Avalon airport becoming Victoria’s second international
airport (sub. 40, p. 52).
The Commission’s view
Avalon is currently a domestic only airport, with Jetstar, Tiger Airways and Sharp
Airlines operating services to destinations including Sydney, Brisbane, Gold
Coast, Adelaide, Perth, Alice Springs, Mackay, and Portland.
The Australian Government offers foreign airlines unlimited access to airports
other than Brisbane, Sydney, Melbourne and Perth. This policy, often referred
to as the ‘regional package’ is designed to spread the benefits of international
tourism more broadly across Australia, and in particular to regional centres
(DITRDLG 2008, p. 8). The designation of Avalon as a regional international
IMPACTS OF AVIATION POLICY
137
airport would allow foreign airlines to access Victoria without being constrained
by capacity agreements with Australia.
The Commission acknowledges a number of benefits may flow from Avalon
being granted ‘regional package’ status, including:




Greater access to those markets where air service agreements are
constraining tourism access to Australia (e.g. China)
Increased tourism and airport related activity in the region
Competitive pressure on Melbourne airport (landing, car parking fees etc)
and greater choice for consumers
Reduced risk of airport capacity in Victoria being constrained in the future.
These benefits significantly rely on the extent to which international airlines
seriously consider choosing Avalon airport over Melbourne airport. Some
organisations, such as the TTF, are sceptical about the level of demand from
international airlines to land at Avalon. The potential gains would also be
affected if ‘open sky’ arrangements were negotiated with China and other
countries where demand is constrained by current capacity restrictions.
While there may be benefits to Avalon being granted ‘regional package’ status
there are also potentially significant costs of upgrading Avalon to accommodate
international traffic including:



costs of planning and other approval processes
private and public infrastructure upgrades (for example runways, refuelling
facilities, terminals, roads, and transport facilities)
provision of Commonwealth Government required security, customs and
other services.
There is a range of benefits and costs that may be incurred through the process
of Avalon becoming an international airport and being granted ‘regional package’
status. These costs and benefits would need to be explored by the private sector
to ensure that expansion activities to cater for international air services are
commercially viable. Following the development of a business case and
preparedness of a private sector operator to invest in required airport upgrades,
the Victorian Government should again advocate for regional status for Avalon.
5.4.2
Planning controls
Melbourne airport has a curfew-free status that ‘plays a vital role in boosting
airline services in the state, including passenger and freight services’
(sub. 40 p. 52), and also provides Melbourne Airport with a competitive
advantage relative to Sydney.
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UNLOCKING VICTORIAN TOURISM
Several submissions pointed to the importance of ensuring that Melbourne
retains this advantage and has the ability to expand its capacity as demand for
services increase. VTIC commented that:
There should be coordination between the leased federal airports and privatised
airports, to ensure the long-term requirements for infrastructure are met,
including the provision of safe and reliable services. There must be consultation
with state and local authorities and the community to ensure a coordinated and
considerate approach to investment and development. (sub. 40, p. 52)
Qantas also identified the importance of long-term and coordinated planning for
the expansion of Melbourne airport and supported recent Australian
Government measures to implement such an approach (sub. 42, p. 3). In relation
to State Governments, Qantas noted:
It is essential that State Governments adopt a similar collaborative approach to
ensure that critical economic and tourism benefits provided by aviation and
airports are not undermined by inappropriate developments in and around
airports. This is an area where the Victorian Government could take a leading
role in Australia in ensuring the benefits of Melbourne airport’s current curfew
free status is not threatened by residential creep towards the airport or other
inappropriate development. (sub. 42, p. 4)
The Commission’s view
In the past, recognition of the importance of Melbourne Airport’s competitive
advantages and the interaction of planning regulation has been a feature of State
planning policy.
Melbourne Airport, as the State’s premier, curfew free airport and the country’s
second international gateway, is protected under State planning legislation,
through the Melbourne Airport Environs Strategy Plan and Melbourne Airport
Environs Overlay planning scheme provisions. These provisions provide
certainty to land use and development around the airport. (Victorian
Government 2009, p. 4)
The National Aviation White Paper also established a framework to support
better-integrated planning outcomes, including through the establishment of:
… planning coordination forums for each primary capital city airport to enable
airports and governments to more effectively engage on strategic planning
issues. (DITRDLG 2009, p. 170)
The Commission acknowledges that the curfew-free status of Melbourne airport
and its ability to invest in additional capacity is an important issue for the tourism
and broader Victorian economy, and for the communities close to the airport. At
this stage, in the absence of submissions indicating a significant issue, the
Commission is of the view that airport planning related issues are sufficiently
IMPACTS OF AVIATION POLICY
139
addressed by current and future initiatives outlined in the National Aviation
White Paper, together with current State planning regulations.
5.5
Other issues raised
Several other issues were raised by stakeholders relating to:



regional airport pricing
flights over national parks
regional aviation policy.
5.5.1
Regional airport pricing
The majority of regional airports are operated by or on behalf of local
government and some are not obligated or required to provide transparency in
pricing. Qantas suggested that:
Mildura airport has recently increased its passenger charges without any
reasonable and transparent explanation having been provided to justify the
increase. The increase does not appear to be linked to investment in the airport
or improvements in infrastructure that deliver benefits to the travelling public.
(sub. 42, p. 4)
The Commission acknowledges that airport pricing is an important issue,
particularly for airline operators. Unjustified or excessive additional airport
charges can increase the cost of travel and hamper the growth of both business
and tourism markets. Unreasonable increases in charges imposed by regional
airport operators can lead to fare increases and lower passenger volumes in price
sensitive market segments. However, the Commission has not been presented
with sufficient evidence to suggest that the issue between Qantas and Mildura
airport is likely to significantly impact on the broader Victorian tourism market.
Information request 5.1
Is the issue of airport pricing (fees and charges levied on airline operators) at Mildura airport
likely to significantly impact on tourism? If so, what evidence is available to support this view?
5.5.2
Flights over national parks
Current regulations, made under s. 48 of the National Parks Act 1975 prohibit the
landing of a helicopter or other aircraft in a park except in an emergency or if a
permit has been granted. Mansfield Council argued that permits are not provided
and appropriately licensed helicopter landings should be permitted in the Alpine
National Park.
Helicopter operators cannot obtain Parks Victoria permission to land within the
Alpine National Park unless it is an emergency, engaged in management
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operations (i.e. fire suppression, spraying weeds, feral animal control, etc) or a
one-off special event e.g. media access. Permission for each and every request is
handed down from the Secretary of National Parks.
Council argues that appropriately licensed helicopter landings should be
permitted to support high yield product development providing low impact ease
and speed of access, transport logistics and supply transfer. (sub. 47, p. 10)
Access to national parks by commercial operators, which would include
helicopter operations, is considered more broadly in section 4.1 (restrictions on
private development in national parks) of this draft report. Draft
recommendation 4.1 proposes a response to these issues.
5.5.3
Regional aviation
Victoria has around 200 airports and airstrips including regional airports such as
Portland, Mildura, Hamilton, Swan Hill, Sale, Bairnsdale, Yarrawonga,
Warrnambool, Geelong, Shepparton, Albury-Wodonga, Mt Hotham, Ballarat and
Bendigo.
As previously mentioned, regional airports are generally operated by or on behalf
of local government. A Victorian infrastructure audit conducted in 2008 reported
that:
Many local councils are faced with high ongoing maintenance costs for their
airport facilities and, with the exception of high revenue-generating airports such
as Albury-Wodonga and Mildura, they face significant annual operating losses at
these facilities. As Victoria is compact in comparison with other States, with a
higher population density and well developed road and rail infrastructure,
regional airports face difficulties competing for freight and passenger traffic.
The Victorian Government is investing in upgrades to regional airports via the
Regional Infrastructure Development Fund (RDIF, which has a $20 million subprogram for capital works projects delivered in partnership with regional
councils. (Victorian Government 2008, p. 50)
While some funding is available for capital works projects, East Gippsland Shire
argued environmental regulations were impeding airport expansion:
Vegetation management at Mallacoota Aerodrome, which is surrounded by State
Forest and a National Park, has become an issue with large areas of trees
growing into its Obstacle Limitation Surfaces…This has resulted in the
shortening of one of the two runways. (sub. 11, p. 7)
The lack of emphasis on direct air services was also raised by East Gippsland
Shire:
Current Victorian Government transport policy is geared towards improvement
in surface travel with little emphasis on direct air services. In May 2007 the Shire
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engaged qualified consultants to undertake a report into the feasibility of an air
service for the East Gippsland region. The report found a number of issues
currently inhibiting the likelihood of an air service being viable, including the
lack of a Victorian regional aviation policy. (sub. 11, p. 8)
Central Goldfields Shire stated that:
Small Regional airports and aerodromes offer some underdeveloped potential
for tourism. Connectivity with other transport services is critical. (sub. 30, p. 3)
The VTIC advocated for a more integrated approach to aviation policy in
Victoria, based on a view that regional aviation is important to encourage
dispersal and the further developments of Victoria’s tourism industry:
In order to achieve industry growth, there needs to be a coordinated approach
to aviation policy, which gives appropriate consideration to the long-term vision
for tourism development. It is important that regulations affecting air transport
encourage industry growth by providing more direct international flights to
Melbourne, as well as support greater regional air access.
[And] Any aviation policies must take into account broader tourism objectives.
There is a need for greater alignment between aviation, transportation and
tourism policies. (sub. 40, pp. 51-52)
The Commission notes that the purpose of the Transport Integration Act 2010(Vic)
is to create a new framework for the provision of an integrated and sustainable
transport system3 in Victoria. The Act provides for integrated land use and
transport planning decision making which is a key component of developing
planned tourism, including access to tourism products.
It is unclear to what extent a specific regional aviation policy would assist in the
dispersal of tourists throughout regional areas, particularly given the geographic
characteristics of Victoria, and the availability of alternative transport modes.
Based on the information received, the Commission does not consider it likely
that regulatory impediments are constraining airport development in regional
areas. It may be that commercial considerations are the key obstacle to further
developing regional airports and attracting scheduled flights. In considering
future funding for further development of regional airports the Victorian
Government should carefully evaluate the commercial costs and benefits and
also any broader benefits and costs to the local community.
The Transport Integration Act 2010 defines the transport system as all the components which make up the
system for the movement of persons and goods, including airports.
3
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