The Australian Competition and Consumer Commission (ACCC) has called for reforms to the Sydney airport slot allocation system. The consumer body says that the current system is “not working well” and is “not delivering the benefits that it should for consumers.”
In a report released last week, the ACCC said the current system is “based on historical use” and gives “incumbent airlines an unfair advantage.”
The consumer watchdog effectively found that the allocation policies were shutting down meaningful competition in the airline industry and allowing the duopoly between major carriers Qantas and Virgin Australia to develop.
It recommended that the government introduce a new system that would be based on merit and would give all airlines an equal chance of securing slots.
Rex and Bonza urge changes to Sydney slot system
The ACCC’s findings have been welcomed by regional airline Rex and low-cost carrier Bonza, who have now both called for an overhaul of the Sydney airport slot allocation system.
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Rex CEO Rob Sharp said the current system is “broken” and needs to be fixed. “The current system is designed to protect the interests of the two major airlines, Qantas and Virgin Australia,” Sharp said.
“It makes it very difficult for new airlines to get a start at Sydney airport, and it means that passengers are paying higher fares for less choice,” he added.
Bonza CEO Tim Joyce said that the new Australian start-up airline is planning to launch flights from Sydney airport later this year, but it is facing challenges in securing slots.
“We’re confident that there is a market for our services at Sydney airport, but we need the government to make it easier for us to get started,” Joyce said.
The government has not yet responded to the ACCC’s recommendations. In the meantime, Rex and Bonza are urging the government to act to make it easier for new airlines to compete at Sydney airport.
They say that doing so would benefit passengers by leading to lower fares and better service. The ACCC’s report is the latest in a series of calls for reform to the Sydney airport slot allocation system.
And “inefficient and unfair” system
In 2019, the Productivity Commission released a report that found the system was “inefficient” and “unfair.”
The commission recommended that the government introduce a new system that would be based on merit and would give all airlines an equal chance of securing slots. The government has not yet implemented the commission’s recommendations.
The ACCC’s report is a significant step forward in the campaign for reform to the Sydney airport slot allocation system.
The ACCC is a respected independent body, and its findings are likely to carry weight with the government. The onus is now placed on the Australian government to act on the ACCC’s recommendations and to introduce a new system that would be fairer to all airlines and would benefit passengers.
Summary
The ACCC acts to ensure that fair trade and competition prevails in the marketplace. Its primary concern is that airline competition has been stifled, and the duopoly dynamic involving major airlines Qantas and virgin Australia has been allowed to develop.
Here are some of the specific reforms that the ACCC has recommended:
- The introduction of a new system that would be based on merit and would give all airlines an equal chance of securing slots.
- The removal of the current cap on the number of slots available at Sydney airport.
- The introduction of a system of penalties for airlines that hoard slots and do not use them.
- The introduction of a system of incentives for airlines to release slots which they are not using.
