15/04/2010 - 00:00

Regional airline planning takes off

15/04/2010 - 00:00

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A move to change the state’s framework for air services is causing concern for some airline operators. Russell Quinn reports.

Regional airline planning takes off

The state government has called for proposals from the airline industry after floating the potential deregulation of aviation services in the state’s Mid West and South West.

The Department of Transport outlined the new framework for intrastate air services across WA to industry members last week.

Under the framework, Geraldton will become deregulated while services to Albany and Esperance, which currently are regulated Regular Public Transport air services destinations, will be put out to tender through a ‘request for proposal’ process.

A spokesperson for Transport Minister Simon O’Brien says the government is seeking feedback from the aviation sector regarding potential changes to a number of routes, including Geraldton, after briefing the aviation sector on its proposed approach.

“It is important to note that, since 1960, 43 WA-based passenger airlines services have collapsed,” he says.

“What we need to do is ensure that we get the balance right between the viability of routes and operators and the needs of the community.”

In March, Mr O’Brien said the wholesale deregulation of WA’s regional aviation sector was “off the table” (after rejecting the recommendations of a report commissioned by the previous Labor government in 2008) stating the government wanted to ensure the long-term development of intrastate air services under a system of minimal government intervention, limited direct subsidies and increased competition.

Historically, the department has facilitated RPT air services in WA with the current system operating under a combination of deregulated and regulated services.

There are eight deregulated RPT routes in WA where competition is permitted (the ninth deregulated route to Ravensthorpe was cancelled with the closure of the BHP mine), while there are three types of regulated air services that don’t allow competition – networks, protected routes and subsidised air service.

There is one protected route between Perth and Derby, operated by Strategic Airlines Group’s subsidiary, Ozjet.

Golden Eagle Airlines operates the Kimberley subsidised air service (between Broome, Fitzroy Crossing and Halls Creek), which is subsidised by the state government under a shortfall subsidy arrangement.

And Skippers Aviation operates the northern Goldfields network (including Laverton, Leinster, Leonora, Meekatharra, Mt Magnet and Wiluna) while Skywest Airlines operates the coastal network (including Albany, Carnarvon, Esperance, Geraldton, Kalbarri, Learmonth (Exmouth) and Monkey Mia).

The department’s presentation indicated advertising the ‘request for proposals’ will start early next month, and close at the end of June, when all existing licence agreements in place for the current regulated air services expire.

New contracts will be awarded in August-September and the new system is expected to start in December.

This tight timeline is worrying for one of the state’s integral regional airline industry members, Skywest Airlines.

“My concern is whether there is enough time to implement the new system,” Skywest Airlines CEO, Mark Shelton says.

“Let’s say the system changes completely, we don’t have a long time to implement it.”

Although pleased to hear the government’s latest position, Mr Shelton raised further concerns about the proposal.

“If you deregulate Geraldton, those routes north of Geraldton may be of a concern as those routes would be uneconomical,” he says.

“If you’re not flying to Geraldton it would be uneconomical to fly to Monkey Mia.

“If you take the meat out of the pie then you haven’t got much left, and Geraldton might be the meat in that pie.”

That’s not good news for the Coral Coast’s tourism centres such as Exmouth where operators have been calling out for deregulation, including Novotel Ningaloo general manager Darren Cossill.

“We’re a little bit hamstrung here by the lack of competition in the airlines to Exmouth, being a regulated route, while Broome, where there’s competition, the fares are down by $200 or less,” Mr Cossill says.

Exmouth Escape Resort manger David Gillespie agreed, suggesting there’s a big push from local accommodation providers and tourism operators for deregulation due to high flight costs stifling business.

Tourism Council WA president Paul King says he is concerned about any reduction in services to places such as Kalbarri, and particularly Monkey Mia and Exmouth, as a consequence of changes to the current system.

Although quick to reassure Skywest passengers that any changes will be fast-tracked allowing services to continue uninterrupted, Mr Shelton emphasised the system is far from being finalised.

“This is quite a big issue and there will be quite a lot of twists and turns before its finished,” he says.

 

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