Major change coming to landing slots at Sydney Airport after Rex collapse

A major change is coming to the time slot management at Sydney Airport, with the hope of making flights cheaper, and airline competition fairer following the collapse of regional airline Rex.

Airlines must compete for limited landing time slots at Sydney Airport, however the company in charge of managing those slots is majority-owned by Qantas and Virgin, an arrangement former Australian Competition and Consumer Commission chair Rod Sims called “unbelievable”, following the Rex collapse.

But the federal government will open management of landing time slots with a new competitive tender to be released on Monday to open up competition in the sector to make it easier for new airlines to obtain slots.

Prospective slot managers must prove how they will transparently mitigate conflicts of interest as part of the tender.

An audit of slot usage is also underway, and more slots will additionally be freed up when forthcoming legislation is passed to change the definition of a “new entrant” to make it easier for new airlines to obtain slots.

The government has faced renewed criticism amid the airline’s financial woes for not taking swift enough action to benefit competition in the aviation sector.

A 2021 review from former Productivity Commission chair Peter Harris noted the key duty of the manager was to allocate slots among competing carriers, but priority was given to incumbents over market entrants.

But Transport Minister Catherine King said Labor was getting on with the job of implementation, accusing the former Coalition government of showing little interest in responding to the Harris recommendations at the time of the review.

“The recommendations for change were handed to the previous government in February 2021,” King said.

“On coming to office, it was clear that the previous government had shown little interest in issuing a serious response to the findings.

“Our reforms to the slot system at Sydney Airport are an important part of improving competition and significantly increasing transparency.”

Fixing a system set ‘for failure’

There are 80 landing slots each hour at the busy airport, and the hurdle of limited landing opportunities was raised as a potential cause for the collapse of Rex last week.

“When (Rex) wants those key slots they must have, to be viable, they have to go and ask that from Qantas and Virgin,” Sims told ABC radio last week.

“The government sets this system up for failure, it sets this system up for a duopoly and therefore sets the system up for higher airline prices than Australians should be paying.”

Rex entered voluntary administration shortly after an attempt to compete with Qantas and Virgin in the metropolitan market.

Flights between Melbourne and Perth dropped by 40 per cent across airlines when Rex added 46,000 seats a year to the route, but those Rex seats were scrapped along with the airline’s other Boeing 737 metropolitan services last Tuesday.

Rex the second Australian airline to go into administration this year, after Queensland-based Bonza made the call in April.

- With AAP