NSW Government Submission Inquiry into the Operation, Regulation and Funding of Air Route Service Delivery to Rural, Regional and Remote Communities March 2018 1 of 44 Table of Contents: 1 Introduction ................................................................................................................ 4 2 NSW Government legislative, policy and planning framework .................................... 5 2.1 NSW legislative framework for intrastate air transport routes .................................. 5 2.2 NSW framework for licencing regional aviation ......................................................... 7 2.3 Deregulation of intrastate air service routes .............................................................. 7 2.4 Air space regulation and the use of drones ................................................................ 9 2.5 NSW Government strategic direction for regional transport ................................... 10 2.6 Aviation and regional planning ................................................................................. 11 3 Social and economic impacts of air services ............................................................... 14 3.1 Growing the visitor economy .................................................................................... 14 3.2 Regional development initiatives and regional aviation ........................................... 16 3.3 Importance of regional aviation services for international trade ............................. 17 3.4 Importance of regional aviation services for international education ..................... 18 3.5 Western Sydney Airport impact on regions .............................................................. 18 3.6 Regional air services and NSW Health services......................................................... 19 4 Matters not within NSW regulatory context .............................................................. 22 4.1 Fare pricing determination, subsidisation and equity of airfares ............................. 22 4.2 Airport charges for landing and security fees, aircraft type and customer demand 22 4.3 Consistency of aircraft supply and retrieval of passengers by airlines during aircraft maintenance and breakdown .................................................................................................. 23 4.4 Costs and charges imposed by the Civil Aviation Safety Authority .......................... 24 5 Other matters ............................................................................................................ 25 5.1 Slot allocation and regional access to Kingsford Smith Airport (KSA): ..................... 25 5.2 Access to Sydney Airport and the Visitor Economy .................................................. 26 5.3 Biosecurity ................................................................................................................. 27 5.4 Skills issues ................................................................................................................ 27 5.4.1 Supply of trained aviation personnel ........................................................................ 27 2 of 44 5.4.2 Skill shortages ............................................................................................................ 28 5.4.3 Aircraft maintenance training and licensing ............................................................. 28 5.4.4 Aviation training and licensing .................................................................................. 29 6 Appendix A: Legislative Council Inquiry into regional aviation services...................... 31 7 Appendix B: Aviation aspects of NSW regional plans ................................................. 33 8 Appendix C: NSW Health telehealth services ............................................................. 42 3 of 44 1 Introduction The NSW Government welcomes the Rural and Regional Affairs and Transport Reference Committee’s inquiry into the operation, regulation and funding of air route service delivery to rural, regional and remote communities. Transport for NSW (TfNSW) has coordinated this submission on behalf of the NSW Government, with input sought from the Department of Premier and Cabinet, the Department of Planning and Environment, the Department of Industry (including Destination NSW), the Department of Education, the Department of Justice and NSW Health. The submission covers the following Terms of Reference (ToR): the regulatory, planning and policy framework in NSW, including noting relevant Commonwealth laws (ToR b, f, g); social and economic impacts of air route supply and airfare pricing (ToR a); matters not within the State regulatory framework (ToR c, d, e and i); and other relevant matters (ToR h, j) 4 of 44 2 NSW Government legislative, policy and planning framework The NSW and Commonwealth Governments both have legislative responsibilities in relation to air services. This submission focuses on the NSW aspects of regulation. The NSW Government position is provided on certain on aspects of Commonwealth legislation affecting access to airports and the costs of running aviation services, particularly regional services: Access (including pricing) at Kingsford Smith Airport (KSA) through the Sydney Airport Demand Management Act 1997 (which deals with slot allocation and management), the Sydney Airport Curfew Act 1996 (which sets the 80 movements per hour cap and the times at which certain flights cannot land or depart) and the combined effect of the Competition and Consumer Act 2010 and Airports Act 1996 (which give the Productivity Commission and Australian Competition and Consumer Commission (ACCC) oversight of prices, including the ACCC’s determination of KSA access prices by regional air services). y Securit (which affects maintenance and costs at regional airports) through the Aviation Transport Security Act 2004. Safety via the Civil Aviation Act 1988 and the Civil Aviation Safety Authority (CASA). Local government has ownership and responsibility of local airports through the Aerodrome Local Ownership Plan (ALOP) of the early. 1990s Under the ALOP, the Commonwealth Government transferred its ownership of local airports to local governments and contributed one‐off funding for the maintenance and development of airports at the time of the transfer. Since 1993, the local Governments have a direct role in funding and managing regional airports. 2.1 NSW legislative framework for intrastate air transport routes The Air Transport Act 1964 (the AT Act) sets out a framework for the regulation and licensing of intrastate air transport routes in NSW. The AT Act requires a licence to operate a regular passenger air service over an intrastate route unless that route has been deregulated. The AT also empowers the Minister to deregulate an air route. 5 of 44 The AT Act provides that a person shall not carry passengers by an aircraft within NSW unless the person holds a licence for the route. Under s 3, a licence is required where the service operates: • in accordance with fixed schedules over that route, or • unless otherwise authorised by the Secretary, on 5 or more occasions within any period of 28 days over that route. However, a licence is not required where the route is a deregulated route or the service is a charter service (s 3(3)). The Secretary may grant or refuse any application for a licence. Section 6 requires the Secretary to consider the following factors when granting a licence and to have regard to no other matters: the needs of the public of NSW, and of the area to be served by the air service proposed; the allocation of routes to the airlines operating public air transport services in NSW to promote competition and discourage monopoly; the applicant’s character and suitability to hold the licence applied for; the effect, if any, on the maintenance and development of adequate and reasonable public air transport services within NSW; the effect, if any, on the economic development of, or on the environment within NSW; whether the applicant and the applicant’s aircraft, pilots and passengers will be adequately insured; and the ownership of, or the extent of the applicant’s rights to operate, the aircraft to be used by the applicant. A person who contravenes the above is guilty of an offence under the AT Act and is liable for a penalty not exceeding 50 penalty units or imprisonment for a period not exceeding 12 month or for both. Under provisions of the Passenger Transport Act 2014 ethat hav yet to commence (expected to commence later in 2018), the presumption of regulation will be reversed, that is, all routes will be deregulated unless the Minister declares them regulated. 6 of 44 2.2 NSW framework for licencing regional aviation It has been NSW Government policy to issue only one licence per route on regulated routes. A licence therefore means that no other operator can provide service on the licensed route, but does not guarantee the licensed operator will provide the service. Historically, this provided smaller airlines with protection from competition on low volume routes. The passenger air services market has changed significantly since that time and most intrastate routes in NSW have been deregulated (Section 2.4). The Secretary may, by having regard to the matters listed in the AT act, grant licences and determine the conditions to which they are subject. The conditions attached to currently regulated route licences include the following: provide services at or above the regular service