16/07/2015 - 13:58

Deregulation of regional flights slowed

16/07/2015 - 13:58

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The state government has decided to maintain regulation of regional aviation at a higher level than had been recommended in a review last year.

Deregulation of regional flights slowed

The state government has decided to maintain regulation of regional aviation at a higher level than had been recommended in a review last year.

Today’s release of the Department of Transport’s final report on the review of regulated regular public transport (RPT) air routes contains changes from the department’s review position paper released last year.

Notably the Learmonth (Exmouth), Albany, Esperance, and Derby routes are to retain more state government regulation than the initial position paper had suggested.

Also mentioned was the continued discontent from mining companies regarding RPT routes into the northern Goldfields.

In the cases of the Albany, Esperance, and Derby routes, the department has opted to retain the existing level of regulation for the next five years rather than open up the routes to competition between two operators, as had previously been mooted by last year’s position paper.

The report contends that these routes are unlikely to support competition as they each have significantly fewer than the 100,000 passengers a year, which the government believes can reliably sustain a deregulated market.

The Exmouth route, with almost 90,000 passengers, has been partially deregulated since 2011.

Last year’s position paper had suggested that the route in February 2016 become fully deregulated, as the Perth-Geraldton route did in the year 2011.

After 2011 when the Exmouth route was opened to competition, the route was serviced by both QantasLink and Virgin Australia Regional Airlines, but this changed in October last year when Virgin ceased its flights to the town.

Under the new decision, instead of full deregulation, the route will only be subject to government control for as long as there is only a single operator of the route.

Unless there is competition in Perth-Exmouth flights, the state government will require a sole operator of the route to report key statistics, and will have oversight regarding the price of airfares.

This level of regulation is intended to head off community concerns that a sole operator may exploit its monopoly and raise ticket prices.

The release of the report accompanies the announcement by Transport Minister Dean Nalder the government would soon call for tenders from airlines to service the RPT routes after the existing arrangements come to an end in February next year.

The announcement was praised by Tourism Council WA, which welcomed the certainty that the announcement gave to the tourism industry and communities of Albany and Esperance.

Tourism WA chief executive Evan Hall called for the department to ensure the RPT routes would have discount fares for tourism packages and be listed on the global distribution service.

“This will bring price competitiveness into the distribution of fares and keep regional towns open for international and East Coast visitors,” he said.

Currently there are eight regulated RPT routes, each operated by one of three airlines – Skippers Aviation, QantasLink, or Virgin.

In a regulated RPT route, an airline is awarded the exclusive right to service public flights on that route for up to five years.

Chartered flights along the routes are also heavily restricted, and can require the charter operators to purchase of a number of seats on the corresponding RPT flight.

The tender process may also involve the RPT routes into the northern Goldfields being redrawn.

The three previously designated routes in the area are Perth-Laverton-Leonora, Perth-Mount Magnet-Meekatharra, and Perth-Wiluna-Leinster.

Given the removal of Leinster as a RPT destination, and the generally ‘thin’ nature of the routes, the department says it is open to suggestions from airlines as to new configurations and flight paths.

The three routes combined had fewer than 21,000 passengers in the 2013-14 financial year and are seen as only marginally viable, though the department is keen to point out that all three have been sustained without the need for government subsidies.

However, the department’s report does mention that several unnamed mining companies in the Northern Goldfields made submissions arguing that the special charter conditions imposed are tantamount to a subsidisation of RPT flights by the resources sector.

Those stakeholders, the report says, argue that RPT routes in that part of the state should be discontinued unless instead subsidised by the government.

RPT flights to Leinster have been suspended since September 2013 due to its status as a closed mining town and pressure from BHP keen to have the town solely serviced by chartered flights.

Wiluna has been serviced since then through the Meekatharra route.

The report also states that the route has been able to shift to twice weekly Perth-Meekatharra-Wiluna and Perth-Mount Magnet flights, with an additional weekly Perth-Mount Magnet-Meekatharra-Wiluna flight.

That change has been enabled in no small part by Ramelius Resources’ willingness to use direct Perth-Mount Magnet RPT flights rather than private charters.

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