Aviation white paper: Federal Government unveils major reforms to shake up industry and Qantas-Virgin duopoly

The Federal Government will crack down on slot hoarding at Sydney Airport, give new airlines a chance to take on the Qantas-Virgin duopoly, review its own travel purchasing policies, and improve the rights of passengers as part of a suite of measures to improve Australia’s airline industry.

The long-awaited aviation white paper, released on Monday, sets out a roadmap to 2050 through 56 different initiatives aimed at improving the experience of travellers, bolstering competition, and transitioning the industry to a more sustainable future.

“This is a plan for the net 20 years of aviation,” Transport Minister Catherine King said.

The paper acknowledged that Australian travellers paid more for airfares than many other countries, in part because Qantas and Virgin run the market, and referenced Treasury modelling that directly shows the significant impact competition can have on airfares.

Namely, when a route is serviced by a single airline, airfares are on average 40c/km. That falls 25 per cent to 30c/km for two airlines and continues to decline for every additional airline after.

The paper noted there had been “minimal interest” from overseas airlines and investors to establish new carriers - with the exception of Tiger and Bonza, both of which ultimately failed - and warned that without new entrants to the market, Qantas and Virgin “lack incentive to innovate and improve service”.

In an attempt to improve competition, Ms King said the Government would “lower the barrier” for newcomers to enter, by enforcing a “use it or lose it” approach to Sydney Airport slots, and make airlines’ and airports’ activities more transparent.

Airlines will also be required to “show cause” for delayed and cancelled flights, and could be forced to pay out customers for “unreasonable” cancellations or delays through a new aviation industry ombudsman, which will enforce a new charter of customer rights.

An interim ombudsman will be appointed as a priority to begin drafting the charter, and will be able to receive complaints from next year.

Meanwhile, a separate aircraft noise ombudsman will conduct investigations into complaints handling independent of air navigation provider Airservices Australia.

The watchdog will have the power to conduct independent investigations into the handling of aircraft noise complaints, publish reports, and make recommendations to the government.

New aviation-specific disability standards will be enforced, to be co-designed with people with disability.

Australia’s consumer watchdog will monitor the conduct of pricing negotiations between airlines and the Sydney, Brisbane, Melbourne, Perth and Western Sydney airports; and the government has tasked the Productivity Commission to inquire into the economic regulation of airports.

The Department of Finance will also review the government’s purchasing policies and will consider whether changing settings could better support competition.

Other policies concern supporting regional aviation, maximising the sector’s contribution to net zero, and increasing skills in the sector.

Ms King said the Government was committed to implementing “one of the most significant packages of reforms in aviation in over a decade”.

“It will also deliver a fairer deal for travellers who have a disability, creating new aviation-specific disability standards and reviewing industry compliance with those standards as well as requiring airlines and airports to coordinate their actions assisting people with a disability over air passenger journey,” she said.

Opposition Leader Peter Dutton responded to the white paper by criticising the government’s relationship with former Qantas chief executive Alan Joyce which “reduced competition”, referring to Labor’s decision to deny Qatar Airways expanded flight routes.

“Less competition means higher prices, and unfortunately, Australians are paying more and more for airfares, and we should have more competition,” Mr Dutton said.

“Consumers should be paying less for airfares, where there are more consumers wanting to purchase those airfares, than prices going up and up under the Albanese government.”

RMIT Aviation Academy director Lea Vesic meanwhile said the white paper had fallen short of outlining a “robust vision for the future”.

“Although attention has been rightly focused on market competition and consumer rights, there is much more to achieve in reforming the industry,” she said.

“Importantly, the government needs to meaningfully address skills demands by empowering training providers to meet industry needs in the long-term, rather than relying on industry to deliver short-term solutions.”

The release of the white paper came as Ms King confirmed Rex Airlines’ regional slots at Sydney airport would be protected until 2026, after the airline entered voluntary administration.

“I am also directing the slot manager at Sydney Airport to suspend the application of the use it or lose it test on Rex regional slot holdings for the current and upcoming scheduling season. This will protect Rex’s New South Wales regional slots at Sydney Airport until late March 2026,” Ms King said.

Ms King said her department was meeting daily with the administrators and was working to ensure regional communities remained connected.

“We do want to see Rex 2.0 or a version of that emerge out of this, and we certainly want to see those services provided to regional communities continue,” she said.

Rex has received an extension to find a buyer, but Ms King would not be drawn on whether one had come forward yet.