Turnbull on flights: We'll follow up

Written on the 7 August 2017

Turnbull on flights: We'll follow up

The Broome Chamber took the opportunity to present its case to the Prime Minister about the cost of flights to Broome as identified in its recent submission to the State Government.

Recruiting young spokesperson Tom McBride of Broome North Primary School (son of CEO Jael Napper), the Chamber was given audience with the PM to briefly discuss the issue of flights which affect livability and tourism potential in Broome. 

Relevance of this issue sits with the federal government on regulation surrounding 'cabotage', the right for foreign carriers to operate domestically.

In 2015 the federal Cabinet considered whether to allow foreign air carriers to fly domestic Australian routes in Northern Australia following the recommendation of the Harper Review which recommended:. 

The current air cabotage restrictions should be removed for all air cargo as well as passenger services to specific geographic areas, such as island territories and on poorly served routes, unless it can be demonstrated that the benefits of the restrictions to the community as a whole outweigh the costs, and the objectives of the restrictions can only be achieved by restricting competition. Introducing an air cabotage permit system would be one way of regulating air cabotage services more effectively where necessary.

The topic was very quickly quashed by Virgin and Qantas who were concerned about effects on their profitability through increasing competition.

In the Federal Government's recent inquiry into the effect of red tape on cabotage (April 2017), a submission from Qantas stated:  

"With no evidence to suggest that capacity and connectivity are constrained , the introduction of cabotage would undermine these jobs as was highlighted in the Government's response to the Harper Competition Policy review in 2015, whereby cabotage was proposed for the Northern Australia market." 

In Broome, the Chamber argues that there is certain evidence that suggests capacity and connectivity is constrained.

In response to the same inquiry, Virgin Australia stated their concern being 'marginal revenue' of the international airline, and that the injection of volume would drive down the average fare:

"The grant of consecutive cabotage rights, even on a limited basis for specific routes or regions, could be expected to have far-reaching consequences for the long-term sustainability of the Australian aviation industry. Operating alongside Australian airlines, these foreign airlines would earn marginal revenue while incurring marginal cost from an aircraft that would otherwise have remained idle in the intervening time period between international services. Domestic carriers would be severely impacted as a result, with foreign carriers potentially injecting a significant volume of additional capacity onto these routes at airfares which may be lower than the average cost faced by domestic airlines in operating such services."

In consultation with an aviation route specialist, the Broome Chamber was advised that there is little that anyone can do with regard to the duopoly that controls pricing on the Perth to Broome leg.  Rather, the best way to increase competitiveness of this route would be to invite Air Asia to do a Singapore Broome Melbourne leg which would disrupt the market and it would be likely that the current Perth Broome leg would be positively affected. 

Air Asia only recently expressed interest in Broome as a destination (http://www.broomechamber.com.au/articles/broome-on-the-cards-for-air-asia.html?preview=1).

The Prime Minister seemed unaware of this issue for Broome when initially approached by the Chamber, however in an interview with ABC Kimberley pledged to follow up the matter with Melissa Price. 

Largely felt by the local community that the cost of flights is the number one negative about living in, and traveling to Broome, the Broome Chamber will ensure that the conversation continues so every opportunity for a fairer price is explored.  It will present to state government in two weeks alongside selected Members at a public hearing for the current inquiry into the cost of airfares in regional WA.

(Image: Broome Advertiser)

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