Airline viability fight

THE aviation and tourism industries have a symbiotic relationship in most Australian States, with downturns in one sector inevitably affecting the other to some degree.

Western Australia presents a different business model, however, because this State’s aviation industry is primarily based on, and supported by, the resource sector.

Main WA airline carriers are Qantas Link (run through National Jet), Skywest Airlines, Skippers Aviation, Maroomba Airlines, Great Western Aviation and Network Aviation Australia.

Mining company tenders make up the bulk of the business profit for most of these airlines. In 2001, mining charters accounted for nearly 20 per cent of all passenger movements within WA and this figure could grow with increased reliance on fly-in fly-out mining operations.

Following the collapse of Ansett, the aviation industry has become highly regulated to ensure that regional communities remain linked on the airways to our State’s major centres. Last year the State Government stepped in to rule that Skywest had exclusive rights over operations into Geraldton, Albany and Esperance for a two-year period.

This timeframe is drawing to a close and moves are being made to slowly deregulate sections of the industry, with the semi-deregulation of air services into Geraldton now being assessed by the State Government.

One of the tenderers for the joint service to Geraldton is Skippers Aviation. Business development manager Tom Dalton said the introduction of competition into WA’s aviation industry has to be done in a staged and “softly softly” manner to ensure that the industry was viable in regional centres.

Mr Dalton said that, on two-airline routes, there would be a need to attract passengers from other forms of transport, rather than from the other airline carrier, to ensure both services remained sustainable.

However, he questioned whether the Government’s arbitrary figure of 55,000 residents was a true reflection of whether a community can sustain two airlines.

Most players in the industry appreciate the community desire to maintain access to air travel, however some believe that government regulation is too heavy handed and flies in the face of fair competition.

Great Western Aviation commercial manager Ron Scherpenzeel said that, while some regulation was needed, the pie needed to be shared around.

He said while regulation was good for remote towns it was not good for competition, suggesting such high levels of regulation would not be seen in any other industry.

Mr Scherpenzeel said Government moves to compel charter airlines to operate as a regular public transport service (RPT) in remote centres without regular airline links caused scheduling difficulties for both mining companies and airline charters.  

“Regulation has its place, however the way it’s happening in WA, I feel, contravenes fair competition,” he said.

Mr Scherpenzeel said it was often the case that other operators could provide a more regular and economic service to regional centres than Skywest because they used smaller more efficient planes than Skywest’s fleet of Fokker 50s.

“The only areas you can compete in is with jet operations into Broome, Kalgoorlie and Kununurra,” he said.

Broome is one regional centre that is having no problems attracting air carriers. 

Skywest will soon add Broome to its flight schedule, Qantas has linked Melbourne to Broome since March, and there are rumours that Virgin Blue is eying off a regular route from Perth to Broome, on top of its Adelaide to Broome flight.

However, despite this spike in airline carrier interest in the tourist town, according to industry pundits Broome, like most of WA, does not have the tourism infrastructure to drive any major growth in the aviation industry.

As one aviation operator pointed out, unlike other States WA does not have the major tourism developments that attract big numbers of visitors. As a result, tourism was a low-yielding market for the aviation industry.

WA Tourism Council chairman Ian Simmonds said the dilemma with Broome was that there was insufficient accomodation capacity to sustain the number of people being flown into the town.

Mr Simmonds said this problem was compounded by difficulties encountered by developers trying to get financial backing for tourism development, with even strata-titled tourism projects having difficulty attracting any more than 50 per cent backing.

“People don’t fly without accomodation,” he said.

And without investment in infrastructure it is hard to get growth in tourism and air traffic.

Mr Simmonds said the tourism industry often tended to leave it all up to the airline carriers to provide visitors for the market.

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