Invitation for Competitive Bids for Sydney Airport Slot Management Positions Available after Rex and Bonza Failures

The Sydney Airport is getting ready for a significant shake-up to allow new airlines to secure slots for take-offs and landings. This move is part of the Albanese government’s slot system reforms announced in February.

The government has introduced a competitive tender, requiring slot managers to show how they will implement the reforms recommended by the Harris Review and the Australian Competition and Consumer Commission (ACCC).

Prospective managers must also demonstrate how they will transparently handle and mitigate conflicts of interest.

Already, concerns have been raised by market players and experts about slot management at Sydney Airport, with accusations of slot hoarding against some airlines.

Currently, Airport Coordination Australia, primarily owned by Qantas and Virgin Australia, is responsible for slot allocations at Sydney Airport.

“Our reforms to the slot system at Sydney Airport are crucial for improving competition and enhancing transparency,” said Catherine King, Minister for Infrastructure, Transport, Regional Development, and Local Government.

“We are committed to making long-term reforms to aviation in Australia, essential after a decade of neglect.”

The reforms will also mandate airlines to regularly report on slot usage.

Some recommendations have already been put into effect, including an independent audit of slot usage and the re-establishment of the Compliance Committee for Sydney Airport to oversee rule compliance.

The results of the independent audit will be made public upon completion.

Meanwhile, the Australian Airports Association (AAA) welcomed the competitive tender launch, emphasizing that removing barriers for new entrants will boost airline competition.

“Within just three months, we’ve seen two airlines from the domestic sector collapse, a clear indication that we urgently need to shift course and strengthen the competitiveness in Australian aviation,” said Natalie Heazlewood, AAA Head of Policy and Advocacy.

“Sydney Airport is vital for connecting communities and facilitating economic activity, and these enhancements will further enhance its capabilities.”

Rex Airlines Enters Voluntary Administration

The competitive tender follows the collapse of Rex Airlines into voluntary administration just a week prior.

AAA’s research indicated that Rex Airlines was making strides in the Sydney-Melbourne-Brisbane market, known as the Golden Triangle, with a 31% increase in seats sold from 2022 to 2023.

Rex Airlines is the second Australian carrier to enter administration, following Bonza in April.

“The lack of aviation competition policy from Labor has caused two airlines to go into administration in just four months, resulting in job losses, limited choice, and higher airfares for passengers,” stated Bridget McKenzie, Shadow Minister for Infrastructure, Transport, and Regional Development.

“The Albanese government has failed to address the challenges faced by smaller airlines trying to compete and the disruptions and rising costs for Australian travelers.”

New Slot Manager to Boost Competition Amid Duopoly

Previously, former ACCC chairperson Rod Sims highlighted that the airline industry is dominated by a duopoly led by Qantas and Virgin.

“If we aim to boost aviation competition, opening up slots is crucial. Therefore, it is concerning that the companies benefiting from the slots are the ones governing them,” Sims said.

The ACCC has been releasing reports on airline competition in Australia, but both Qantas and Virgin have expressed opposition to continuing the review.

Before their collapse, executives from both Rex Airlines and Bonza cited challenges in competition.

“If you were in charge of an airline like Qantas, would you deploy a $20 million aircraft, with crews and support services, on a route that had a monthly passenger count of 134, 210, or 417? In my view, that’s not a commercially sound decision, but that’s exactly what Qantas did, on routes they weren’t interested in until we announced our entry into the domestic airline market,” said John Sharp, chairman of Rex Airlines.

Bonza’s CEO, Tim Jordan, noted a lack of growth in low-cost travel options in the decade leading up to COVID-19.

“In 2010, Australia had 58 low-cost operated routes. In 2019, just before COVID, the number remained the same—58 low-cost operated routes in Australia,” he added.