Flinders Island Tourism and Business Inc. www.visitflindersisland.com.au /visitflindersisland @visitflindersisland A submission to the Rural & Regional Affairs and Transport References Committee The operation, regulation and funding of air route service delivery to rural, regional and remote communities with particular reference to: Background The Furneaux Islands consist of 52 islands with Cape Barren and Flinders Island being the largest. The local Government resident population at the 2016 census was 906 and rose 16 % between the last two censuses. The Flinders Island Tourism & Business Inc. (FITBI)represents 70 members across retail, tourism, fishing and agriculture. It plays a key role in developing the visitor economy through marketing to potential visitors as well as attracting residents to the island. In 2016, FITBI launched a four-year marketing program. The Flinders Island Airport at Whitemark is the gateway to the island. It has been owned by the Flinders Council since hand over by the Commonwealth Government in the early 1990’s. Being a remote a community the airport is a critical to the island from a social and economic point of view. It’s the key connection to Tasmania (Launceston) and Victoria. The local residents must use air transport be that for health or family reasons. The high cost of the air service impacts on the cost of living as well as discouraging visitors to visit the island. It is particularly hard for low income families. The only access via sea is with the barge, Matthew Flinders 11, operated by Furneaux Freight out of Bridport. This vessel has very basic facilities for passengers and takes 8hours one way. Flinders Island is currently serviced by a Regular Transport Service (RPT) supplied by Sharp Airlines since 2010 with a one to thrice daily service from Launceston and 2 to 7 times weekly service from Essendon (Victoria). Flinders Island is currently in a phase of stable air access, it has over the past witnessed a number of operators who have been unable to compete. There are two charter operators who service the island on a regular basis, one based on Flinders Island and the other based at Bridport in Tasmania. The Bridport based company also services the mail delivery. Flinders Island Tourism and Business Inc. President Secretary ABN: 38 572 201 607 Michael Grimshaw Michael Buck PO Box 143, Whitemark, Tasmania 7255 [email protected] [email protected] [email protected] 0427 100 342 0408 351 599 Social and economic impacts of air route supply and airfare pricing FITBI has a mandate to grow the population and therefore the economy of the islands. A four- year marketing plan has been developed to grow visitor numbers to the island. Increased visitor numbers mean increased job opportunities to service the visitor sector as well as new business opportunities. As the Flinders Island Airport is the key entry point between the island and mainland Tasmania and Victoria, airfare pricing has a direct social and economic impact on visitor numbers and population growth. The island as a destination is competing with many overseas destinations which in many cases are cheaper than airfares to the island. A standard return airfare between Flinders Island and Essendon (Victoria) is $502 per person. The cost of getting on and off the island is a major consideration for people thinking about permanent relocation to Flinders Island. It is a challenge for residents need to remain in touch with families who live elsewhere or to travel for work, education and health related reasons. The marketing program to sell the island has gone a long way towards increasing visitor numbers, however air travel needs to be priced to encourage growth. Given the concern worldwide about visitor numbers damaging the essence of key attractions by over- crowding it would be appropriate to consider how Government can assist in encouraging more visitors to regional areas. One way to do this would be to provide subsidies to regional airlines or communities which would reduce the cost of travel to and from key centres to places like Flinders Island. In the case of Flinders Island, it has excellent facilities that are underutilised compared with mainland regional centres. Different legal, regulatory, policy and pricing frameworks and practises across the Commonwealth, state and territories Charter airlines operating in the area have significant impact on the operating cost of an RPT service. They have less regulatory burden than RPT and as result have cheaper fares. They generally use private air strips which add to the risk of passengers as well as adding an extra burden to Flinders Island rate payers who cover the loss of the Flinders Island Airport to the tune of $180,000 per year. On Flinders Island this disparity causes pricing issues and the RPT airline is having difficulty competing. An increasing number of passengers are choosing to fly with charter airlines to and from Bridport at a cheaper rate, rather than to Launceston with the RPT. This is compounded by the fact that people can leave a car at Bridport airport for free rather than paying $600 per year car parking fee at the Launceston Airport. How airlines determine their pricing This is not our area of expertise however we are aware that for the RPT airline the short haul flight to Launceston from Flinders Island is more expensive than Essendon to Flinders Island route. The other impact on pricing is the low number of passengers during the winter months. This is where financial support to the airline linked to marketing could have a positive impact. Flinders Island Tourism and Business Inc. www.visitflindersisland.com.au /visitflindersisland @visitflindersisland The determination of airport charges for landing and security fees, aircraft type and customer demand The Flinders Council owns and operates the Flinders Island Airport at a loss of $180,000 per year. The airport maintenance costs are impacted by a higher cost in rural areas. Because there is only one RPT operator and a small number of charter operators it is difficult for the Council to pass on the full operational costs to the airlines. The Council as a result is subsidising passengers to the value of approximately $200,000 per year. The issue of security is an important consideration for the island as any introduction of increased security checking at Launceston or Essendon Airports would have a significant impact on the island. It is impractical and expensive to introduce screening at the Flinders Island Airport. Security at Launceston and Essendon can be arranged separately through the location of separate terminals as is the case at the Launceston airport. Pricing determination, subsidisation and equity of airfares In the 1950s to the late 1960s, many regional airlines including Ansett ANA that operated the Flinders Island service received a subsidy which allowed the company to utilise larger aircraft. Once the subsidy was removed the island was left with smaller aircraft with a lower seating capacity. This had a significant impact on visitor numbers to the island. The introduction of Sharp Airlines to the island with larger seat capacity offered the opportunity to grow visitor numbers. Currently most of the visitors come via Essendon and any increase in passenger charges would impact on the visitor economy and therefore local employment. We note that unlike other regions there is a low number of repeat visitors and this can be attributed to the high cost of airfares. Airline competition within rural and regional routes. While another RPT operator could commence operations on the Flinders Island routes it is unlikely. The competition is more likely to come from charter operators who are offering cheaper fares. They are also utilising landing strips that are unmanned both on and off the island that have little or no cost. This is an important bio security issue for Tasmania. An argument can be put forward both from a financial, passenger safety and bio security protection that charter operators should be forced to use one central airport when providing charter services. This would reduce the financial burden to the community and provide more effective bio security. It is during the winter months with few passengers travelling that managing flights that occasionally have only one passenger becomes a challenge particular if flights are cancelled. Many business people travel in and out on the same day, rather than incur additional accommodation costs. Flinders Island Tourism and Business Inc. President Secretary ABN: 38 572 201 607 Michael Grimshaw Michael Buck PO Box 143, Whitemark, Tasmania 7255 [email protected] [email protected] [email protected] 0427 100 342 0408 351 599 Consistency of aircraft supply and retrieval of passengers by airlines during aircraft maintenance. While it can be challenging at times for regional airlines to maintain consistent services, Sharp Airlines manages breakdowns and delays in an efficient manner taking into account cost and passenger requirements. However, there is a restriction on landing after last light which can be difficult during the winter months. All related costs and charges imposed by the Civil Aviation Authority and related matters CASA operating costs are standard across all airports. Related to this is the need for the Government financial assistance to CASA for regional airport support. While grants provide a fill up for specific airport projects they do not elevate the on-going burden to the islands rate payers particularly when you consider the on- going cost of maintaining the other on- island infrastructure such as roads. The airport is the gateway to the air road to and from Flinders Island. Summary recommendations 1. Provide on-going support the RPT service to counter seasonal low passengers’ numbers. This could be linked to specific marketing. 2. Consider options to rationalize landing strips used by charter operators to maximise income for the Flinders Island Airport.