The Australian Competition and Consumer Commission (ACCC) has aired its concerns in its latest Airline Competition in Australia report that budget start-up Bonza has been locked out of Sydney Airport.
The report said that tight control of the gateway’s landing slots could be stifling new carriers and there could be “potential harm to consumers and competition from the lack of regulatory oversight of the large monopoly airports.”
ACCC’s report also said that Rex Airlines challenging incumbent airlines Qantas, Jetstar, and Virgin on nine major city routes means that travellers are getting cheaper flights.
Bonza will give consumers more options when it begins operating in the middle of this year, but it is not flying in or out of Sydney due to limited availability and time of landing slots and high fees.
Rex, a traditionally regional airline that launched services between capital cities last year, has not secured permanent slots at Sydney either, despite operating at reduced capacity due to the pandemic.
According to the Sydney Morning Herald, ACCC chair Rod Sims called on Australia to make it easier for new airlines to get started, with access to Sydney Airport slots being a barrier to competition.
“It’s really sad when an airline is wanting to offer services, but it can’t get slots it needs for any reason,” Sims said.
“We cannot use slots as a protection mechanism for existing players – that would just be an appalling outcome. It has to be fixed.”
Slots are allocated at Sydney Airport by the Airport Coordination Australia, an independent body that aims to best utilise services under the airport’s movement cap take-offs or landings per hour.
A Sydney Airport spokesperson told Travel Weekly that while slots were scarce during peak times, off-peak time incentive offers for slots were not taken up by Bonza when offered to them.
The federal government previously had a ‘use it or lose it’ rule over Sydney Airport’s slots, however, this now means that international airlines can retain these slots despite not flying during the pandemic.
The ACCC said it’s working on reforming how airline capacity is managed at the airport with the federal government.
Sims told the Herald failure to improve the system could cause a “permanent duopoly” in Australian aviation.
Bonza announced last month that it plans to launch in the middle of this year with 25 routes and 16 destinations, including the Gold Coast and Melbourne.
The budget airline, backed by US private equity group 777 Partners, is avoiding the Sydney-Melbourne-Brisbane triangle and focusing on providing for un-serviced routes, by connecting regional towns and popular holiday destinations.