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Aviation

Bruce GemmellContact Bruce Gemmell
First Assistant Secretary
Aviation Division
Phone (02) 6274 7392
Email Bruce.Gemmell@DOTARS.gov.au

LINKS TO PORTFOLIO OUTCOME

Government priorities such as safety, accessibility and economic prosperity are at the forefront of policy development in the Aviation Division. Through active management of aviation security regulation, improved opportunities in international aviation, and a sound support base for Government services, the efforts link Australia, its regions and the world.

1999-2000 HIGHLIGHTS

Aviation industry

Industry performance

The domestic aviation industry exhibited continued moderate growth during 19992000 and strong growth in international traffic. See graphs below for an industry overview.

Figure 3 - Domestic passenger traffic

Figure 4 - BTE index of posted fares

Figure 5 - International passenger traffic

The Department played a key role in shaping a coordinated timely response to the Avgas fuel contamination crisis, during which a significant number of general aviation aircraft in New South Wales and Victoria were grounded. The Department also assisted in securing a satisfactory compensation package from Mobil.

A national Y2K (year 2000) committee was formed and chaired by the Department to ensure all sectors of the Australian aviation industry were communicating and sharing information to better ensure incident-free experience on critical Y2K dates.

An Australian Global Navigation Satellite System (GNSS) Coordination Committee was established to ensure coordinated, efficient utilisation of GNSS technology by all modes of transport.

Developments in aviation reform

In November 1999 the Minister for Transport and Regional Services released a comprehensive aviation safety policy statement, A measured approach to aviation safety reform. Set out in both this statement and in the Charter letters for Airservices Australia and the Civil Aviation Safety Authority were the broad directions of aviation policy for the immediate future. The statement is available at www.DOTARS.gov.au/aviation/safety/index.aspx

Consumer protection

Actions were taken during the year to advance the interests of aviation consumers. They included: Government agreement to proceed with the ratification of the Convention for the unification of certain rules for international carriage by air (the Montreal Convention 1999) to protect consumers interest by providing a more equitable framework for passenger compensation; the enactment of the Damage by Aircraft Act 1999 to improve compensation for third parties on the ground suffering death, injury or damage from aircraft; and facilitation of the International Civil Aviation Organisation audit of elements of the Civil Aviation Safety Authoritys activities.

International relations

Bilateral aviation, consultations and agreements

Scoping discussions, both formal and informal, were held to explore open skies liberalisation with four foreign governments: New Zealand, the United Kingdom, the United States of America and Singapore. Negotiations were also conducted with 10 other bilateral partners to liberalise existing air service arrangements. Negotiations and exchanges during the year with a further five countries continued. Discussions were also held with United Nations Transitional Administration in East Timmor regarding services to East Timor.

Consultations held during the year also resulted in liberalised freight opportunities. Unrestricted capacity and frequencies for dedicated freight services were negotiated with five countries. This brings to 22 the number of dedicated freight arrangements with open capacity.

Foreign investment in Australian airlines

Throughout the year the Australian airline industry has undergone significant changes as a result of foreign investment in Australian carriers. The interest in Australian airlines among foreign investors was assisted by policy emphasis on the scope available within Foreign Investment Review Board guidelines to allow foreign interests to invest in the Australian aviation industry. In the last year the Department has been involved in the assessment, from a national interest perspective, of foreign investment proposals for the entry of Virgin Blue, the expansion of Impulse Airlines, and the purchase of Ansett Airlines by Air New Zealand.

Approval for passenger and freight timetables, charters and tariffs

International airlines lodged 527 applications in relation to approvals for scheduled air services. In addition, 89 cabotage dispensations were issued and 270 tariff applications approved. New International Airline licences were issued to five international airlines. Eleven temporary designations were issued to airports that do not normally have international services to accommodate international flights. They included Yulara, Northern Territory, for the arrival of the Olympic torch in Australia.

The level of non-scheduled activity reported to the Department declined during the year due to increased competition from scheduled carriers and the application of liberalised reporting guidelines. A total of 37 applications for non-scheduled services covering 1208 flights was approved by the Department during the year. In addition to freight charters by the PNG airline Transair, passenger charters were operated by Britannia, Airtours, Harlequin, Canada 3000 and Fitzroy Aviation. Air North and Qantas operated regular services to Dili in support of Australias involvement in United Nations operations in East Timor.

Policy development and implementation

The Department has been implementing Government decisions set out in the policy statement International Air Services (available at www.DOTARS.gov.au/aviation/intairservices.pdf). It includes the regional package that provides foreign airlines unrestricted access to Australias regional airports. Since July 1999 regional packages have been agreed with Dubai, the United Arab Emirates, Fiji and Brunei Darussalam.

Multilateral reform of air services is included in Australias agenda in the General Agreement on Trade in Services (GATS), and Australia has indicated its intention to participate in the mandated review of the annex to the GATS on air transport services. The Department is also developing options for plurilateral liberalisation of air services arrangements with Asia Pacific Economic Cooperation member economies, and will take up other opportunities as they arise.

Stakeholder consultation

The Department consulted with stakeholders about Government decisions relating to the streamlining of processes and procedures for allocating air service capacity to Australian carriers. Legislative amendments to implement the Governments decisions are in train. Further regulatory changes are planned in relation to procedures relating to approval of timetable applications, tariffs, cabotage requests and the advertising of charter flights.

Formal consultation with interested parties regarding air services discussions took place during the year. The first international air services stakeholders conference was held on 8 December 1999 with more than 60 stakeholders invited from the airline, tourism and export industries, together with State government representatives. The conference created a forum for exchange of views on directions in international aviation. The next conference will be held in early July 2000, and thereafter twice a year.

International Air Services Commission (IASC)

The IASC is an independent statutory authority which allocates to Australian carriers air route capacity negotiated by the Department on public benefit grounds. Comprehensive coverage of IASC activities is included in its 19992000 annual report.

Aviation statistics

The Department provided a statistical information and analysis service in direct support of both aviation policy formulation and public information. During the year 17 publications were produced and nearly 600 public hotline enquiries handled. Forecasts were completed for inclusion in Departmental publications, in support of: Sydney Olympics planning activities; the International Civil Aviation Organisation; Tourism Forecasting Council technical group; and to assess the growth outlook for domestic aviation in Australia. Twelve detailed country or market briefs were prepared in support of international bilateral air service negotiations and other purposes.

Security and the Olympics

Aviation security regulatory framework

A significant development in the regulatory framework of aviation security was the introduction, in June 2000, of checked-bag screening at major international airports in Australia. This followed an extensive period of consultation with airport and international airline operators.

As a result of industry consultation the Department is finalising a proposal to more closely align the four categories of airports with specific aviation security requirements. This will focus Department and industry resources on the higher-risk major regular public transport airports. The Department completed its annual security assessments of all 37 categorised airports and 61 major domestic and international airlines with security programs. Inspections of 197 international cargo agent sites were also completed. Testing security screening practice and equipment was also undertaken at categorised airports around Australia.

Dissemination of information and industry consultation

Major formal meetings were held quarterly with airlines, airports and relevant industry bodies during the year. The meetings were supplemented in December 1999 by a special regulatory workshop in Sydney.

Security intelligence and exercises

The Department was active in distributing, to security-cleared industry representatives, threat and intelligence advice received from other government agencies. In addition to politically motivated violence intelligence from regular Commonwealth sources, the Department has increased its intelligence base of criminal and other threats through a series of consultations this year with State and Territory police and on-airport agencies.

International Civil Aviation Organisation (ICAO) Aviation Security Panel

Australia attended the ICAO Security Panel meeting in Montreal in April 2000. The Panel is the peak ICAO security expert group for determining international aviation security standards and practices. The Panel meeting agreed to the establishment of a drafting group to examine possible changes to international aviation security standards and recommended practices (Annex 17 to the Chicago Convention). Australia was one of seven countries selected to be in the drafting group. The Panel is scheduled to meet again in April 2001 to consider the drafting groups proposals to amend Annex 17.

Sydney 2000 Olympic Games

In November 1999, the Department completed a National Aviation Facilities Guide for the Sydney 2000 Olympic Games to assist those planning to visit Australia for the Olympics and Paralympics. The Guide was subsequently sent out to a wide range of interested parties and also put on the Internet, and is updated to reflect changes in information as the Games draw near (for example, take-up of aircraft parking facilities). (It is available on the Internet at www.DOTARS.gov.au/olympics).

Competition in the Australian domestic aviation industry

On 5 June 2000, Impulse Airlines, an established regional airline, commenced services between Sydney and Melbourne, using Boeing 717 jet aircraft. Another prospective carrier, Virgin Blue, also announced its intention to commence services linking Sydney, Melbourne and Brisbane in the early months of the 200001 financial year. These airlines are the first new airlines to enter the domestic trunk route market since the demise of Compass II in December 1993.

The Australian domestic market has long been considered capable of supporting more than two major operators. It is a little-known fact that the SydneyMelbourne route is the third-busiest domestic airline route in the world. It carries about four million origin/destination passengers a year and is busier than any major air route in the United States of America. In recent years strong growth in the Australian economy has not been matched by continued growth in domestic aviation. Historically, growth in domestic air traffic is a multiple of between 1.5 and two times GDP growth. Over the last three calendar years, however, passenger growth has averaged only 1.8 per cent, well under the average GDP growth of around 4 per cent. This suggests an amount of unmet demand, or at least that the opportunity exists for a further innovative operator to stimulate the market. In meeting this demand, additional employment and business activity in the sector are likely to be stimulated.

The Governments announcement in June 1999 of a new international aviation policy framework included a provision that foreign persons (including foreign airlines) will be allowed to acquire up to 49 per cent of the equity of an Australian international airline, and up to 100 per cent of the equity in an Australian domestic airline (unless this is contrary to the national interest). This policy has opened the way for the UK company, Virgin, to launch Virgin Blue as a fully foreign-owned, but Australian-based, domestic airline.

Contrary to some reports, policy change in domestic aviation has developed predictably over the past decade. It should lead to an increased range of services and choices, and more competitive pricing, to the benefit of all consumers.

ENVIRONMENTAL PERFORMANCE

Environmental imperatives that relate to aviation policy are the responsibility of the Airports Division and the Departments Environment Group, which report in sections 2.6 and 2.10, respectively.

SERVICE PERFORMANCE

Aviations direct services to its Ministers and Parliamentary Secretary involved more than 670 items, of which 89 per cent were rated satisfactory.

During the year 527 applications for approvals for international scheduled services were considered. Eighty-nine cabotage dispensations were issued and 270 tariff applications approved. In relation to aviation security, 37 categorised airports and 61 international airlines were subjects of an annual security assessment, and 197 inspections of international cargo agent sites were completed. In aviation statistics, 17 publications were produced and approximately 600 hotline enquiries acted on. During the year there were no serious breaches of the service charter parameters affecting airline operations.

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Document description:

  • Output 1.1 Policy advice and Ministerial services
  • Output 2.1 Approvals and monitoring of directions, rules and regulations
  • Output 3.2 Administration of programs and grants for communities
  • Output 4.1 Trade facilitation
  • Output 4.2 Safety and security education and information
  • Output 4.3 Economic research and data
  • Output 4.4 Administration of programs and grants for industry
  • Administered Item 1.1 Services to communities
  • Administered Item 2.1 Services for industry and economic development