Fiercely contested take-off and landing spots at Sydney Airport which are currently dominated by Qantas Group and Virgin Australia are a key battleground that could unlock cheaper airfares and better travel options.
Bonza chief executive Tim Jordan told 9news.com.au the current arrangement at Sydney Airport was “sub-optimal in many different ways”, resulting in higher airfares and cutting off air travel to regional cities and towns.
The take-off and landing system at Sydney Airport, the country’s busiest, primarily allows airlines to retain every spot they currently hold, putting legacy carriers in control.
That, Jordan said, makes it “very, very difficult” for new entrants like Bonza to grow into the market and offer more competition, a view the ACCC echoes.
According to the most recent data, Jetstar cancelled eight per cent of flights nationwide in April but it still gets to retain all of its Sydney flights.
Airport Coordination Australia allocates the spots at Sydney Airport and is responsible for ensuring carriers adhere to an hourly cap of 80 take-offs or landings.
“Unfortunately,” Jordan said, “the largest majority of arrival and departure slots in Sydney are controlled by the two airline groups which cover 94 per cent of the domestic aviation market in Australia.”
Over the last two decades, more than 90 per cent of domestic passengers flew with Qantas Group or Virgin Australia.
In April, the two carriers flew 94 per cent of all domestic passengers.
Jordan said Bonza had 20 routes mapped out of Sydney if his airline wasn’t locked out to destinations such as Tamworth, Port Macquarie, Bundaberg Gladstone, Rockhampton and Toowoomba.
“Of those 20 destinations, very importantly 90 per cent of them currently do not have low-cost fares offered on those routes,” he said.
“Nearly half of the destinations have no service at all, to and from Sydney. So these are markets which are currently unserviced.”
ACCC Chair Gina Cass-Gottlieb called the domestic sector “one of the most concentrated industries” in Australia, barring natural monopolies like electricity and rail.
She said reforming Sydney Airport’s slot allocation scheme would be the best way to promote competition.
Bonza’s launch, backed by US private equity group 777 Partners, and Rex’s expansion onto major intercity routes were positive developments for competition, she said.
“But their share of the market is small and there are barriers to growth.”
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A Qantas spokesperson disagreed, telling 9news.com.au that Australia was “one of the most open and competitive aviation markets in the world”, with four carriers competing in the domestic market.
Bonza boss Jordan said Sydney was in desperate need of a second airport.
Melbourne, with two airports, and Brisbane with its multiple runways did not have “the same slot impediments”.
A federal government-led review is assessing several possible reforms to better manage demand at Sydney Airport.
9news.com.au has contacted Virgin Australia for comment.