Virgin Australia, based in Brisbane International, is firm in its stance that they’re not preventing smaller competitors from expanding their market share at Sydney Kingsford Smith Airport. The chief legal officer of the airline, Susan Schneider, responds to inquiries raised by parliamentarians at a House of Representatives Standing Committee on Economics hearing in Canberra on June 30. She argues that the slot system, though controversial, is functioning efficiently at the airport.
Both Virgin Australia and Qantas have consistently denied allegations of slot hoarding at Australia’s busiest airport. Accusations suggest these airlines reserve more slots than needed and cancel flights at the last minute to block smaller rivals. This alleged misuse is notable given the 80/20 rule from Airport Coordination Australia (ACA) requiring airlines to utilize their slots 80% of the time or risk losing them. The two airlines, with a 90% domestic market share, face accusations of misusing this system since cancellation rates at Sydney Airport far exceed those at other major Australian airports.
Navigating the Slot System
Sydney Airport CEO Geoff Culbert argues that this overscheduling reduces competition, although the airport has no part in the slot allocation process. Schneider asserts that while improvements could be beneficial, no changes to the ‘use it or lose it’ or 80/20 rules are necessary. She highlights the operational and regulatory complexities of Sydney Airport, such as a curfew, hourly landing restrictions, and runway limitations.
Schneider ensures Virgin Australia remains competitive against the larger Qantas Group due to its slot portfolio at Sydney Airport. She firmly believes that any restrictions limiting their ability to compete could reduce the competitive constraint against Qantas. While Virgin Australia has been discussing potential changes to the Sydney Airport Demand Management Act, Schneider insists that altering the ‘use it or lose it’ rule isn’t necessary.
The Critics and the Costs
One of the most vocal critics of the slot regime is Rex – Regional Express, who’d like to grow their operations at the airport. Interestingly, John Sharp, Rex’s current deputy chairman and the creator of the current system during his time as Australia’s transport minister, regrets implementing the 80/20 rule which now impedes Rex from securing additional peak time slots.
Startup Bonza, which currently does not operate at Sydney Airport, also factors into the conversation. Schneider says even if peak Sydney slots are unavailable, non-peak slots still offer opportunities.
Other airlines like FlyPelican and Link Airways, while small, operate scheduled domestic flights from Sydney. Jetstar Airways, part of the Qantas Group, has a significant presence there as well.
Cost, rather than slot access, is one of the major hurdles to doing more business at Sydney Airport, Schneider says. She suggests having a mechanism like the Australian Competition and Consumer Commission to help arbitrate discussions with airports would be beneficial to all parties involved.
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