The Operation, Regulation and Funding of Air Route Service Delivery to Rural, Regional and Remote Communities
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5 February 2018 Dr Jane Thomson Committee Secretary Senate Standing Committee on Rural and Regional Affairs and Transport Department of the Senate PO Box 6100 Parliament House CANBERRA ACT 2600 Dear Dr Thomson Inquiry into the operation, regulation and funding of air route service delivery to rural, regional and remote communities This submission is provided to the Committee on the basis that Brisbane Airport (BNE) is a major generator of aviation capacity to and from regional airports across Australia. In light of this we believe the following may be of interest to the Committee. Regional Connections BNE is the most regionally connected airport in Australia. With a domestic network of 52 destinations, 46 of which are non-capital city ports, BNE plays a vital role in the regional aviation network. This table shows the number of domestic routes, both capital city and regional, from each of the three largest capital city airports in Australia. Capital Regional Total Brisbane 6 46 52 Sydney 6 38 44 Melbourne 6 24 30 Of the total domestic destinations serviced by BNE, approximately 89%are regional destinations. BNE’s importance to aviation services into regional Queensland, in particular, is clear. In 2017, the following percentage of passengers (pax) arrived on flights from BNE: • 100% of all pax into Gladstone Airport; • 100% of all pax into Bundaberg Airport; • 90% of all pax into Rockhampton Airport; • 86% of all pax into Mackay Airport; • 60% of all pax into Proserpine Airport; • 54% of all pax into Hervey Bay Airport; • 53% of all pax into Townsville Airport; • 27% of all pax into Hamilton Island Airport; and • 26% of all pax into Cairns Airport. Source of the above: IATA Airport IS, YE December 2017 Whilst there has been a slight reduction in total volume of passengers between BNE and regional destinations over recent years, this decline can be largely, if not entirely, attributed to the end of the mining boom. Regional Access In October 2012, Brisbane Airport Corporation (BAC) introduced a runway demand management system (RDMS) for BNE. This implemented was to mitigate flight delays caused by rapid growth in services, driven largely by the mining boom. The RDMS follows International Air Transport Association (IATA) international guidelines and applies to all airlines and aircraft operators flying into and out of BNE. There is no discrimination between international, domestic or regional flights classified as RPT (Regular Public Transport). BNE provides the infrastructure and facilities to accommodate all types and sizes of aircraft up to the largest passenger aircraft operating today, the Airbus A380. The airport also offers excellent facilities for passengers who transfer between regional and domestic or international flights. Pricing The passenger aeronautical price which BAC charges to airlines has three key components: a) Terminals, Aprons & Related Infrastructure charge; b) Runway System charge; and c) Government Mandated Security charge. BAC applies the ‘building block’ methodology to determine the Terminal and Runway charge. This method is consistent with the other major Australian airports. This approach is also consistent with the pricing mechanism adopted under regulated utility markets in Australia. The Mandated Security Charge is passed through at cost. The building block methodology requires a number of assumptions to determine price. One of the key assumptions that determines price is the number of passengers. The more passengers at an airport the lower the price as the annual “required revenue” can be distributed across a higher passenger number. With a growing passenger base, passenger pricing should decrease over time, however with more passengers, further investment is required to facilitate the growth (which should increase the pricing). Page 2 The published domestic passenger price at Brisbane Airport ($/passenger excluding GST) is summarised below. The four year compound annual growth rate (CAGR) is 5.9% p.a. from FY13 to FY17. While this growth is higher than inflation, excluding the runway and security charge (approximately 60% of the passenger charge), the CAGR is 2.0% p.a. Future Growth A new parallel runway is currently under construction at BNE and will be operational in 2020. This project will result in BNE operating a wide-space parallel runway system, effectively doubling its current runway capacity to the equivalent of the capacity operated currently by the likes of Hong Kong International Airport. This additional capacity will enable continued aviation growth from Brisbane into regional ports, carrying international visitors and domestic travellers. BAC remains committed to delivering the benefits of aviation connectivity to communities across Australia. If the Committee is interested in any additional information please do not hesitate to contact me at any time. Yours sincerely RACHEL CROWLEY HEAD OF CORPORATE RELATIONS BRISBANE AIRPORT CORPORATION PTY LIMITED T Page 3 .