Once you get away from the southeast corner, regional flying in Australia is characterized by long distances and sparsely populated towns. It has always been hard to make a dollar out of these routes. It explains why regional flying in Australia has long been under threat. But does it have a future? I think so.
Not a homogeneous sector
When you think about regional flying in Australia, you need to realize that it isn’t a homogeneous sector. There are tiers. The first tier services the big regional centers like Coffs Harbour, Launceston, Mildura and Rockhampton. Qantas and Virgin Australia have a presence on these routes. There’s a big enough population and enough industry in these regional centers to safeguard their flights.
The second tier services midsize towns, maybe with a population of around 10,000 people five or six hours drive from capital cities. Places like Parkes, Port Lincoln, Geraldton and Emerald. The economics of flying to these destinations can be marginal but airlines like Regional Express (REX) have carved out a decent niche here. You’ll also see the occasional presence of QantasLink Q400s at such airports.
Where regional flying in Australia gets particularly challenging is flying to far-flung small towns of less than 5,000 people. Towns like Winton, Bourke, Meekatharra, and Gove. They might be a day or a day and a half drive from a big city and they need air links. But the small population makes these links very difficult to sustain.
And this is where regional aviation in Australia is most under threat and its future most difficult to predict.
Many towns have lost their air links
In the last generation, swathes of small towns have lost their air links. Small airlines have gone under or abandoned loss-making routes in an attempt not to go under. Places like Temora, Cunnamulla, Tennant Creek and Nyngan all lost their air links.
These are towns where populations are in decline. There are lots of reasons why. Some are environmental, like prolonged drought Other reasons are economic such as high unemployment. Then there are social reasons like the siren call of larger centers and cities.
Into the mix you can add local councils who are saddled with the cost of maintaining local airports, giving rise to the pernicious issue of high passenger fees at airports that are really just flyspecks on the map.
Regional Express has been proactively negotiating with local councils to reduce passenger fees at its airports in order to either continue flying in, or to offer reduced fares to local residents. They call this their community fares program and it extends to nearly 40 airports.
Subsidies are key
But most of these long and very skinny flights to small regional centers need underwriting. This is usually the remit of Australia’s State Governments. To their credit, Queensland, NSW, and Western Australia subsidize regular passenger transport on some routes in their respective states.
A couple of examples are the Queensland Government subsidizing REX’s flights in central and western Queensland. In the far west of NSW, drought-ravaged Bourke (ten hours drive west of Sydney), saw its first passenger air service in 12 years yesterday. Three times a week, Dubbo based Air Link will buzz between Bourke and Dubbo, where passengers can connect onto flights elsewhere. The flights seat just seven people and are subsidized by the NSW Government.
In a similar vein, FlyPelican is now operating flights into Cobar after REX withdrew in 2017.
Sometimes businesses will get behind an air service and help underwrite it. Rio Tinto is giving Kununurra based Avair a leg up with its new Broome – Karratha flights, saving local residents a nine-hour drive.
On matters Kununurra, a tour company is guaranteeing a minimum buy on new flights between Melbourne and Kununurra in 2020.
What’s the takeout from this? Forget about regional aviation to the big centers. That’s doing fine. It’s the smaller centers that are most threatened. While there are some encouraging signs with new flights, the costs of operating passenger flights in 2019 mean that, as standalone propositions, most routes are uneconomic.
The future lies in subsidies. That might offend market purists, but public transport in most big western cities is unprofitable and subsidized by the taxpayer. Why shouldn’t residents of remote towns enjoy the same benefits?
That subsidy doesn’t necessarily have to come from the state. In the mining and resource zones, private enterprise can play a role.
Despite what many say, regional flying isn’t dying. It’s evolving.