View Full Version : No cash bailout for regional airlines

2nd Jan 2004, 05:43
Fri "The Australian"

No cash bailout for regional airlines
By Steve Creedy and John Kerin
January 02, 2004

Acting Prime Minister John Anderson yesterday moved to dampen expectations of a bailout for regional airlines, despite warnings the nation's small operators face extinction unless they get help battling rising costs and falling revenues.

An investigation by a parliamentary committee on transport and regional services has recommended subsidies for regional airports and tax breaks to replace ageing aircraft as ways of helping regional carriers finding it harder to survive.

Mr Anderson is still considering the report, but said yesterday he did not want to raise false hopes and the Government was unlikely to plump for massive subsidies.

He also hosed down suggestions the federal Government should resume ownership of some smaller airports.

"I am reluctant to support any move which would shift the costs back to the federal Government," he said.

But Mr Anderson acknowledged there were problems with the distribution and availability of regional air services and said he would look at other recommendations.

The volatility of the sector is underscored by figures showing more than 73 domestic airlines have disappeared in the past two decades through liquidations, bankruptcy, receivership merger or takeover.

And almost 100 country airports have lost regional airline service over the past 15 years. Last year, 31 regional airlines flew to 156 airports, down from 251 in 1986-87. While a number of routes receive state government support and there has been some relief from the federal Government, the committee concluded more needed to be done to ensure affordable regional aviation services.

It found regional airlines were hampered by poor connections, the financial difficulties facing some country airports, the aviation regulatory process, and poorly co-ordinated government policies that created "potentially difficult business environment conditions". "The economics of regional aviation services are posing a threat to their existence," the committee said.

The committee recommended a review of tax arrangements for replacing aircraft and the possibility of assistance or incentives to help operators upgrade equipment.

Other recommendations included the creation of an industry ombudsman and changes for the regulator, a new airport ownership subsidy scheme to help finance ongoing capital works and essential maintenance for communities with less than 30,000 people.

Outgoing Regional Airlines of Australia Association chief executive Bob Mason said the crisis had been exacerbated by a lack of co-ordination between state and federal governments.

While the RAAA has yet to formally respond to the report, Mr Mason said small operators were not looking for handouts.

"What they want is a playing field within which they can survive," he said.