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Airports 'should get road funds' (Virgin)

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Old 23rd Sep 2004, 20:09
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Airports 'should get road funds' (Virgin)

Fri "The Australian"

Airports 'should get road funds'
Steve Creedy, Aviation writer
September 24, 2004

VIRGIN Blue has called for government funding from the multi-billion-dollar Auslink program to be diverted from land transport to improving terminal facilities and runways at regional airports.

With competition from Jetstar set to increase, as it expands its fleet, Virgin is keen to push the frontiers of high-capacity jet services to new destinations.

But it believes it is unfair for rural councils to shoulder the entire cost of improvements.

"Virgin Blue believes whichever government is elected should look at the possible use of some of the Auslink funds to work in partnership with state and local governments and invest in the development of key regional airports in order to allow low-fare jet services," Virgin spokesman David Huttner said. "Those we'd like to look at more closely include Albury, Wagga Wagga, Port Lincoln and Albany."

Auslink, released by the federal Government in June, committed $11.8 billion to land transport, including big upgrades of the nation's east coast rail and road systems.

Mr Huttner said Hervey Bay recently signed an agreement where Virgin committed itself to low-fare jet services if the terminal and runway were upgraded. He said there were many other communities that could do the same.

"If jointly funded, in most cases the Commonwealth contribution probably would be more than $10 million per airport to assist with runway extensions, terminal upgrades and installation of appropriate security infrastructure," he said. "The present system of neighbouring councils each maintaining numerous small regular public transport is not proving sustainable, if further low-fare expansion in the regional Australia is to occur."

Opposition transport spokesman Martin Ferguson said Labor favoured committing some of the funding from the $300 million a year "roads to recovery" program to help smaller regional airports maintain their runways. But he was cautious about providing money to open up new commercial opportunities for major airlines such as Virgin.

"I think there's got to be a more careful discussion, because Virgin itself might have to make a contribution, as potentially they are a big commercial winner," he said.

"The intention of the roads to recovery program was really to assist regional communities who were doing it a little bit tough under commonwealth-state financial relations."

A spokeswoman for Transport Minister John Anderson said the Virgin proposal was not part of its transport policy.

"Basically, the responsibility for the maintenance of things like that is up to the owners of the airport," she said.

In another rural aviation development, NSW Regional Development Minister David Campbell said yesterday he would refer Sydney Airport's treatment of Regional Express to the Australian Competition & Consumer Commission. "Sydney Airports Corp is showing arrogant disregard for regional communities in NSW," he said.

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Wirraway is offline  
Old 23rd Sep 2004, 22:19
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Is this DJ's way of diverting attention from a more contentious issue??
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Old 23rd Sep 2004, 23:00
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VB shoud stick to roads. Its the only way they'll be safe.
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Old 24th Sep 2004, 00:34
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Typical of VB to make it incumbent upon the tax payers to fund their expansion.

How many thousand killed on the roads last year people?
Now Godfrey and Huttner want some of that taken away for their own devices.

Hey Brett, why not try it again after there is a dual carriageway built between Sydney and Brisbane on the Pacific Highway and all of the Queensland highway network has butumen instead of dirt in certain areas.

These clowns dont give a stuff about how many lives that may save.
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Old 24th Sep 2004, 07:21
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Clever move by DJ. Just the start of their campaign I reckon. Might do aviation the world of good.

The airport ownership and funding model adopted in Australia is only one of several models that exist. Airport ownership can be:
- privately owned/leased (Hamilton Island, Sydney Airport),
- owned by local or regional government type bodies (local shire council, port authorities, etc),
- fully State owned.
Airport funding options include various mixes of general revenue (i.e. normal taxes or Auslink), airport specific charges (landing fees etc), and aviation general tax (fuel levy).

In Australia, we have a mix of private and local authority owned airports, and the funding is almost totally airport specific charges (landing fees etc). That works adequately for airports with more than 2 million passengers/annum, and works very well at the 10 million pax mark. For the many other airports with only a few hundred thousand pax, well frankly it’s a bugg#r.

What DJ are now bringing to Australia (from overseas, and I've predicted this is coming) is the low cost carrier (LCC) drive to innovative airport funding options. The European LCCs got tired of selling fares for 25 euros and having 35 euros charges put on top. They reckon the airports have to charge differently.

It seems like the Australian LCC(s) are waking up. Following the raft of LCC conferences overseas in the next two months where this will be discussed, watch for it to become a big issue.

One of the best examples of what can be done is Charleroi (Brussels/RyanAir). In 2001, the Walloon regional authorities and Brussels South Charleroi Airport (BSCA), the airport management company in which the Walloon region has a 100% stake, awarded Ryanair a 50% reduction in landing fees and set a fee of EUR 1 per passenger for ground-handling assistance (10% of the airport’s basic rate). Ryanair has also received from BSCA substantial start-up benefits such as a contribution to accommodation costs, subsistence, and the recruitment and training of pilots and cabin crew. In addition, BSCA pays EUR 4 per passenger by way of contributing to Ryanair’s advertising costs and to reductions in ticket prices. For its part, the company has promised to base between two and four planes at the airport, and to have at least three flights per plane leaving Charleroi every day.

Ryanair now services 12 destinations from Charleroi, generating traffic of 2 million passengers a year. RyanAir previously estimated that its operation in Charleroi has led to the creation of 200 direct jobs. I've been there and I can tell you that this is a gross understatement - the true effect of the deal on the region is absolutely massive.

Just park your car in the long term car park (located way over the other side of the airport) and watch out the window of the bus as it carries you over to the terminal. The investment, development, office parks have a surreal Heathrow-like feel about them. The region is booming, and the airport is driving it. Whatever the Walloon regional authorities pay into the airport and Ryanair, they are getting it back many times over in rates and taxes.

Unfortunately for Oz, this sort of model is going to work at only a small handful of airports. There are still over 200 airports, which are too small, too quiet, and without the population or industry base to do much more than survive. DJ are saying "use a general tax (Auslink) to help these airports move forward". That's one good option. Another funding model for Oz is a fuel levy (possibly on all transportation fuels, from petrol to Jet A1).

This could be used to reduce charges at the smaller airports to some national 'standard level', pay for the huge security impost, and even be a way of addressing the problems that exist for Airservices and their control tower charges at the less busy airports. AA face exactly the same problem as the airports - at smaller places, there is just not enough traffic to make the tower fundable on a location specific basis.

Not a bad thought. When the total transportation picture is considered, from road to rail to ship to air, it is quite reasonable to look at some national funding for the air transport arena. As I said at the start - it might do Oz aviation the world of good.
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Old 24th Sep 2004, 08:15
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It seems there are quite a few people who have had something to say in regards to RyanAirs deal with the airport used as an example in the previous post.


From BBC Business news
Ryanair slates Charleroi ruling


Ryanair has been warning it may cut services at Charleroi
Budget airline Ryanair has said a ruling that it received illegal incentives to use a small Belgian airport is a "disaster".
The Irish airline was given discounts on landing fees and other perks to use Charleroi airport, south of Brussels.

The European Commission has now said that amounted to an illegal subsidy from the Walloon authorities.

The Commission said Ryanair would have to repay a "reasonable" sum, which it implied would be about 4m euros.

But Michael O'Leary, chief executive of Ryanair, said: "We consider this decision to be a disaster for consumers, and for low-cost air fares all over Europe.

"And it is a disaster for publicly-owned airports which can no longer compete with [private] airports all over Europe."

He said the decision interfered with the free market, and that the subsidies were "not illegal".

Incompatible

EU transport commissioner Loyola de Palacio had earlier said: "This decision means that we are going to declare as incompatible a large part of the elements of the arrangement between Ryanair and Charleroi."

Some of the rebates for Ryanair were permissible as part of regional development support for the airport.


But some of the subsidies will have to be returned, the Commission said, because it was "incompatible with the proper functioning of the internal market".

She said the ruling would bring "greater transparency into contractual relations between airlines and airports, especially regional airports".

Other budget carriers have downplayed the impact on them if the ruling is extended to all state-owned airports offering "sweeteners" to airlines.

Arrangements 'clarified'

Ryanair is by far the most reliant on deals it has struck with regional authorities across Europe, although some other low-cost carriers have cut their own deals.

An Easyjet spokesman said: "We welcome today's comments by the European Commission clarifying the relationship between airlines and publicly-owned airports.

"While the terms of today's ruling refer specifically to Ryanair's arrangements with Charleroi Airport, it is supportive of the low-cost airline industry."

They said Easyjet had a different business model to Ryanair, and welcomed the Commission's intention to use the ruling as a basis for uniform guidelines on airport landing charges and tariffs across the EU.


Some profitable flights may now become unprofitable ones, and prices on those may have to rise

Henk Potts, Barclays Stockbrokers

"This will help clarify arrangements between airports and airlines - be they low cost, national flag carriers or charter."

Exeter-based Flybe, which like Ryanair flies to a number of small, state-owned French airports, said its own deals with airports appeared unaffected by Charleroi ruling.

It said the Commission's recognition of the need for discount deals on airport charges was "a huge win" for passengers.

Meanwhile, Belgium's Wallonia regional government will examine the situation "without delay," according to economy minister Serge Kubla.

"My recommendation will certainly be in the direction" of an appeal, he said.

Knock-on

A final repayment figure has yet to be declared.

But Ms de Palacio said the EU executive estimated Ryanair received 15m euros in subsidies for using Charleroi.

She said 70-75% of the aid had been authorised, leaving Ryanair facing a repayment request of 25-30% of its subsidies.

That would imply a sum of about 4.1m euros (£2.8m, $5.15m), well below the top-end figure of 7m euros some had initially feared.

Ryanair shares rose 10% following the decision.

Henk Potts of Barclays Stockbrokers said: "Other discount airlines do not have the same exposure to these secondary public airports as Ryanair does.

"I think this will result in some of their expansion plans being put on hold.

"Some profitable flights... may now become unprofitable ones, and prices on those may have to rise in the short term."

Ms de Palacio said this might affect prices "by six or eight euros per ticket".

'Flight reductions'

The cut-price Irish carrier and the European Parliament had warned the ruling could force up prices, and that the Charleroi area, which has benefited from Ryanair's presence, could lose out if Ryanair now decides to cut operations from the region.

Mr O'Leary said the airline would appeal to the EU's highest court, the European Court of Justice, and warned that an adverse judgement could force Ryanair to drop some routes out of Charleroi.

The presence of Ryanair is estimated to have boosted the run-down regional economy by about £30m a year.

"We do not envisage pulling out of the airport altogether, but there may well be some reductions in flights and routes," he said.

Ryanair had also earlier warned it could mean "the end of low fares and regional development in Europe".
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Old 24th Sep 2004, 09:26
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In case you had not noticed OverRun there are alreadymassive levies on ALL fuels in Australia. How much of the taxes on Avgas & Avtur actually go back into aviation infrastructure? With privately owned airports and AirServices returning a dividend to it's government shareholder each year I would say not much!

Another funding model for Oz is a fuel levy (possibly on all transportation fuels, from petrol to Jet A1).
Where does all that aviation realted tax income go? CASA is generating far more revenue now since they have doubled and tripled their fees. EG ATPL exams were $100 per set of seven now they are $40 each that makes an increase of $180!!!!

The money is already being gouged out of aviation it just isn't being spent back in aviation!

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Old 25th Sep 2004, 07:29
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Indeed Icarus2001, I had noticed the fuel levies. Something of my field outside of aviation. To put them into perspective, the Australian ones are actually rather small by world standards (apart from being massive in real dollar and cent terms of course).

These sort of general government taxes are very distorting. They change prices in many industries without giving any direct benefit. I like to confuse wine merchants when I offer to buy a bottle of Howard Park Cab Sauv for Aussy $12 - which is more than Howard Park get for it when they sell it overseas. In the interests of fairness of course, I'll also pay the $30 in taxes and other charges that they have to meet. So the receipt says $42 (it's the very young Howard Park), but at least the proper allocation of monies is being recognised. Fuel is no different. It is still cheap in Australian today, even after the oil price rises, at 45 cents a litre (plus 55 cents taxes and other charges). Beats the UK at 45 Oz cents a litre (plus $A1.60 cents taxes and other charges).

I would say that bugg#r all of the taxes on Avgas & Avtur actually go back into aviation infrastructure right now. Central Treasuries of all countries are rather strict on getting all the money they possibly can. I can only imagine that Australia is even more efficient than most. Central Treasuries hate the thought that money raised in taxes be directed to a specific purpose, without them having complete control. It is not very hard to get their political masters to agree. All very Yes Minister.

However that model has broken down in other areas, notably roads. And it can be broken down for aviation as well, and national taxes pursued. The thing to avoid in aviation charges is the "specific charges" approach - nickel and dime stiff - it'll bleed aviation to death. Landing fees are one of these. The CASA exam fees are another prime example. The AA tower fees proposed for the small airports are another example (and they haven't gone away forever, whatever the present deal is). Wait till the bean counters get onto the obscure charges like a special medical review (must be chargeable at $750 !!) or an ingrown toenail charge ($2500 for PPL and $3762.45 for ATPL).

It is time to take a leaf out of other transportation modes, demand specific national funding, and lift aviation up out of the mud. It is a national asset, and has national application, and the answer is a national solution. Oz pumps billions into other transport modes, and its time to start asking for some of those billions to go into aviation. One thing DJ has done, and all credit to them, is that it is they have moved aviation from the silver-tails into the wider public. The Labor voter of yesterday is the DJ customer of today (and the Jetstar customer too). That gives the opportunity for us to start a new dialogue about national funding of aviation.

Johhny Utah has nicely encapsulated the European concern. I can imagine their panic. Here is success. Not done by them. The presence of Ryanair is estimated to have boosted the run-down regional economy by about £30m a year. Goodness me, if that sort of thing carries on, some of the uselessness elsewhere will be shown up.
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Old 26th Sep 2004, 08:20
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I think transport funding for aviation infrastructure is a vital and immediate priority!!!

Pity the people best placed to make it happen are currently at odds (or at war on this forum) over some simple airspace stuff
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Old 26th Sep 2004, 09:57
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Thumbs up I'm with ya baby

YCKT,

you are dead right - 2 or 3 posts at the start of this thread immediately pasted DJ for their move.

If it is for the greater good of Aviation, lets all get behind it.

Quim

not an attack on you mate but remember QF is where it is today because it was owned by the taxpayer for many, many years and protected in a cosy arrangement that kept it and Ansett healthy.

DJ's suggestion is for everyone's benefit and more power to them.

Cheers
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Old 26th Sep 2004, 12:05
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New ideas in aviation

What Australian aviation needs, since aviation policy is permanently corrupted by the malign influence of Dick Smith and his idiot supporters, is an aviation equivalent of the Wentworth Group. This group of eminent environmental scientists, outside government, published 'Blueprint for a Living Continent', delivering a message of fundamental environmental reforms which received extensive media coverage and consideration at the highest levels of government. This blueprint has changed the face of environmental policy forever.

Perhaps Voices of Reason could assemble a coterie of eminent Australian aviation professionals, outside government, to work on fundamental reforms to aviation policy in Australia. This group could produce a blueprint for real reform of aviation. Free of constraints and able to think laterally, the group could tackle all the big issues - economic sustainability, security, infrastructure funding, aviation safety administration, reviving GA, attracting the young to aviation as a career, innovative technolgies, environmental sustainability...

Then present this to Government and the industry and see where vision can go!

Dick Smith is the past, friends, the future is in your hands.
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