Sydney Airport CEO expresses concern over actions from major airlines blocking new entrants to the market
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Smaller airlines are being disadvantaged by slot blocking at Sydney International Airport according to the airport’s chief executive Geoff Culbert.
Submitting to a review of Sydney Airport Demand Management Scheme, Culbert says Qantas and Virgin Australia are maintaining 100 per cent of their landing slots at the airport, despite not running at full capacity, and as a result cancelling flights.
“Over time, the globally unique array of operating restrictions, specific local rules, and their enforcement at Sydney Airport, has artificially constrained capacity. This has meant slots are not being allocated efficiently and airlines are incentivised to oversubscribe for slots, which leads to under-utilisation of capacity and resultant inefficiency,” the submission says.
“Sydney Airport remains concerned about patterns of behaviour that have developed over time. In many cases, the combination of over-filing for slots (particularly on well serviced routes) and then cancelling services has effectively restricted new entrants from being able to enter the market and existing carriers from expanding services,” Culbert said.
“The data demonstrates that over time domestic airlines are operating smaller aircraft, at increasing frequencies, and with increasing cancellation rates.
“Since 2002, Sydney Airport has observed a significant shift amongst the domestic carriers to higher frequency, smaller aircraft instead of larger aircraft. More services require more slots and, as a result, the proportion of slots held by the major airlines has significantly increased.”
“For example, Australian and New Zealand based carriers held 70 per cent of peak slots in 2002. This increased to 87 per cent in 2017,” he said.
“By way of comparison, the Australian and New Zealand based carriers’ passenger share reduced by over 10 per cent to 78 per cent over the same period.”
“Sydney Airport has noticed an increase in airline wide cancellation rates on this route from 2.9 per cent in 2010 to 6.8 per cent in 2019, equating to approximately 76 cancelled flights per week. Cancellation rates across other routes at Sydney Airport and at many other busy airports globally tend to be around 1-2 per cent over the course of a season.
“The increase in cancellations escalated from 2017 to 2019 with the cancellation rate on the SydneyMelbourne route increasing by 76 per cent. This is in contrast to the nationwide cancellation rate (excluding Sydney Airport), which fell by 10 per cent. Similar behaviours have been observed on the Sydney-Brisbane route, another leg of the “Golden Triangle”, where cancellation rates have increased by 50 per cent since 2017,” Culbert said.
Internationally the trend is for larger aircraft to operate less frequently, resulting in less cancellations. Behavior from major airlines operating in and out of Sydney have bucked that trend.
Email the Travel Weekly team at traveldesk@travelweekly.com.au
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