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Report on performance

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Outcome 1_—Transport outputs and programmes

Output 1.4.2—Aviation and airports

Highlights

The regulatory environment for decisions on classification of airspace was reformed in 2006-07, with the passage of the Airspace Act 2007. The Act transfers responsibility for airspace regulation from Airservices Australia to the Civil Aviation Safety Authority (CASA). It also provides for clearer guidance about directions for airspace policy, through an Australian Airspace Policy Statement.

CASA took up its new role as Australia's airspace regulator on 1 July 2007.

Overview-Output 1.4.2-Aviation and airports

Output 1.4.2 is delivered by the Aviation and Airports business division.

The Department's responsibilities under Output 1.4.2 include:

  • fostering a competitive, sustainable and safe aviation sector through appropriate policy development, regulation and programme delivery;
  • advising the Minister for Transport and Regional Services, including on the efficient management of Australian airspace and aircraft noise and emissions;
  • working closely with portfolio agencies-the Civil Aviation Safety Authority (CASA), Airservices Australia and the International Air Services Commission (IASC)-and other government agencies;
  • representing Australia's interests in international regulatory forums, such as the International Civil Aviation Organization (ICAO); and
  • administering the government's interests in privatised airports under the Airports Act 1996 (Airports Act) .

The output includes six administered programmes:

  • Airport Lessee Companies-reimbursement of parking fines;
  • Compensation for the sale of airport land;
  • Implementation of noise amelioration (Adelaide Airport and Sydney Airport);
  • International Civil Aviation Organization-contribution (refer page 161);
  • Payment Scheme for Airservices Australia's en route charges; and
  • Sydney West Airport-rental properties.

Table 3.37 summarises the output's performance in 2006-07.

Did you know?

The Australian aviation industry is experiencing record traffic levels with 44.26 million domestic passengers and 21.48 million international passengers being carried in 2006. Domestic passenger numbers have increased by 30.3 per cent and international passenger numbers have increased by 35.5 per cent compared to the respective volumes in 2000, the year prior to the collapse of Ansett Australia.

Summary of performance-Output 1.4.2-Aviation and airports

Table 3.37 Summary of performance-Output 1.4.2

PBS/PAES performance indicators Results

Effectiveness

Industry operates in a robust and stable regulatory environment

The Department participated in a number of international regulatory forums to ensure that Australia's interests were actively represented. It also took part in Australian Government projects to assist Australia's near neighbours to improve the effectiveness of their air transport regulation, including a safety assistance package that will be made available in 2007-08 to support Indonesia in addressing transport safety challenges.

The Department continued to support the Minister for Transport and Regional Services in his strategic oversight of the Civil Aviation Safety Authority (CASA) and Airservices Australia.

Businesses and consumers have access to competitive international and domestic air services

Air services agreements were negotiated with nine countries, including an agreement with the United Kingdom, Australia's largest European market for air services. The agreement allows for airlines to provide unlimited services between Australia and the United Kingdom, up from the 28 services per week that were previously allowed.

There was continued growth in passenger movements. Despite high fuel costs, Australia's major domestic and regional airlines remained profitable. Growth in passenger numbers travelling to and from regional Australia was particularly strong. The Department continued to support access to air services in regional Australia through targeted subsidies for en route air traffic control charges. This programme has been extended for a further four years from 1 July 2007.

Airspace is managed efficiently within international standards

The regulatory environment for decisions on classifications of airspace was reformed with the passage of the Airspace Act 2007, which transferred the airspace regulatory function from Airservices Australia to CASA on 1 July 2007. The Australian Airspace Policy Statement, which sets the direction for airspace policy, also came into effect, on 2 July 2007.

Australian Government investments in transport infrastructure are managed responsibly

The Department administered the Australian Government's interests in the operation and management of the 22 privatised airports. The regulatory environment for development approvals on leased federal airports was improved, with new guidelines for public consultation issued and amendments passed to strengthen the Airports Act 1996.

The Department also took the lead role in implementing the Productivity Commission's Review of Price Regulation of Airport Services. The revised regulatory regime for pricing airport services at the major airports commenced on 1 July 2007.

Community exposure to aircraft noise is minimised with attention to the needs of specific communities

The Department actively participated in international forums which address the problems of aircraft noise and aviation emissions. The Department also continued to support the Sydney Airport Community Forum and to further refine aircraft noise software that helps airports and communities work together to explore options for managing aircraft noise.

Price

$27.1 million

The actual price of this output in 2006-07 was $28.7 million.

Overall performance

Detailed report on performance-Output 1.4.2-Aviation and airports

Effectiveness indicators-Output 1.4.2

Industry operates in a robust and stable regulatory environment

 

 

International aviation environment

The Department contributes to the international regulatory environment for air transport in three ways:

  • ensuring that Australia is actively and effectively represented in international regulatory forums, particularly the ICAO;
  • supporting the efforts of governments in our region to improve the effectiveness of their regulatory regimes; and
  • reducing regulatory obstacles to secure Australia's position in international markets, without compromising Australian safety standards.

Cooperation

In 2006-07 the Department continued to ensure Australia was an effective participant in the development of international air transport regulation, including by:

  • coordinating the whole-of-government response to international regulatory issues in aviation;
  • providing a permanent presence in Montreal, Canada, to represent Australia on the ICAO Council and the ICAO Air Navigation Commission;
  • representing Australia on the Council of the Pacific Aviation Safety Office, and providing practical assistance to the office; and
  • coordinating the Asia Pacific Consultative Link online discussion forum.

Assistance

The Department also took part in Australian Government projects to assist Australia's near neighbours to improve the effectiveness of their air transport regulation. This included providing administrative assistance to Papua New Guinea's Civil Aviation Authority, through the Australian Government's Enhanced Cooperation Programme.

Following a series of air crashes in Indonesia, the Australian Government announced on 6 May 2007 that it would provide $24 million over three years for a package of training and technical assistance to support Indonesia in addressing significant transport safety challenges.

Markets

Significant progress was made towards streamlining regulatory approval processes for members of Australia's aviation industry who wish to participate in international markets, through:

  • the finalisation of the executive agreement and implementation procedures for airworthiness under the Bilateral Aviation Safety Agreement with the United States, which entered into force on 28 November 2006; and
  • the signing of arrangements and making of regulations to bring the Civil Aviation Legislation Amendment (Mutual Recognition with New Zealand) Act 2006 into effect on 30 March 2007.

Australian aviation safety regulation

The Department continued to work closely with CASA to improve the safety of the aviation sector, and provided policy advice to the Minister for Transport and Regional Services on his strategic oversight of CASA and Airservices Australia.

The Department also continued to administer aviation regulations and programmes to support the Australian aviation industry, as summarised in Table 3.38.

Review of aviation regulation

An Aviation Regulation Review Task Force, was established in April 2007 by the Minister for Transport and Regional Services. The task force was created in response to concerns that CASA's regulatory reform programme was taking too long, and that aviation regulations were too prescriptive and were not obtaining the best safety and lowest cost outcome for the industry.

With a reporting deadline of December 2007, the task force has been asked to:

  • provide advice to the government to assist in setting key directions and priorities for aviation safety regulatory reform for the next five years; and
  • explore options and identify solutions for completing the CASA Regulatory Review Programme within realistic timeframes.

Changes to the regulatory regime

The Department also played a significant role in:

  • preparations for the introduction of drug and alcohol programmes in the aviation sector-under an initiative announced in the 2007-08 Budget, companies will be required to have drug and alcohol programmes in place for safety-sensitive staff, and CASA will carry out its own testing programme;
  • increased industry surveillance by CASA-the government will provide CASA with an extra $12.8 million from 2007-08 to increase the authority's ability to work with airlines to develop their safety management systems and to carry out more inspections and audits; and
  • the review and introduction of new fees for CASA regulatory services, as part of the broader move towards appropriate cost recovery.

General Aviation Action Agenda

The Australian Government announced on 14 September 2006 that an Industry Action Agenda would be established for the General Aviation industry. Action Agendas are a central element of the government's industry strategy. Their focus is to foster industry leadership, develop strategies for growth, agree on priorities and make commitments to change.

The Strategic Industry Leaders Group which is developing the Action Agenda was appointed by the Minister for Transport and Regional Services with representatives from key segments of the industry, including pilot training, charter operations, recreational aviators, airport operators and maintenance providers. The Group has consulted widely across the industry in developing it's report, which is expected to be provided to the Australian Government in the first half of 2008.

Review of aviation rescue and firefighting services

Following discussions with industry that commenced in 2005-06, the Australian Government is considering recommendations on the policy and regulatory framework underpinning the provision of aviation rescue and firefighting (ARFF) services in Australia. In particular, the changes being considered include examining the criteria for the establishment of ARFF services and options for introducing contestability in the provision of these services.

Table 3.38 Trends in aviation and airports

  2003-04 2004-05 2005-06 2006-07 2007-08 estimate
Price of output n/a $21.8m $27.2m $28.7m $36.9m
Activity regulated under the Air Navigation Act 1920
Aircraft noise permits issued 25 48 31 28 35
Activity regulated under the Airports Act 1996
Airport master plans approved 3 13 2 1 No target
Variations to master plans approved 1 0 1 1 No target
Airport environment strategies approved Not reported 18 1 0 No target
Major development plans approved 5 7 5 9 No target
Major development plans not approved 0 0 0 1 No target
Variations to major development plans 2 1 2 0 No target
Decisions made on development proposals infringing on federal airspace 27 18 34 36 No target
Administered programmes

Payments to airport lessees

  • Parking fines
  • Sale of airport land
  • Land acquisition

 

$1.5m
0
0

 

$1.7m
0
$3.4m

 

$0.9m
0
0

 

$1.6m
0
0

 

$1.5m
$9.8m
0

Payments for Airservices Australia's en route charges
  • Operators supported
  • Cost of programme
43
$4.3m
41
$4.7m
35
$6.0m
31
$6.0m
31
$6.0m
Cost of other programmes administered, including contribution to ICAO and airport noise programmes $42.1m $18.6m $16.8m $7.4m $5.6m
Total cost of administered programmes $56.2m $35.6m $23.7m $15.0m $23.9m

Businesses and consumers have access to competitive international and domestic air services

 

International air services

The Bureau of Transport and Regional Economics reported a total of 21.48 million international passenger movements on international flights to and from Australia in 2006. This total represents a 3 per cent increase since 2005, and consolidates the considerable growth in passenger movements which has occurred since 2003.

Air services agreements with other nations

A breakthrough in Australia's international air services access was achieved when a new air services agreement with the United Kingdom was negotiated during 2006-07. The agreement was initialled on 7 July 2006, with the negotiations for the formal treaty continuing through 2006 and into 2007. The agreement allows for unlimited services between Australia and the United Kingdom, and was the first increase in the number of services since 1996, when 28 services per week were allowed.

The United Kingdom is Australia's largest European market for air services, and Heathrow Airport, London, is a significant hub for travel to and from the European mainland. Securing this access has been an important part of ensuring that Australian airlines are competitive and well placed to plan their future European operations.

Air services talks were held with the United Arab Emirates (UAE) and Qatar aeronautical authorities. Agreement was reached with the UAE on a comprehensive, five-year approach to increase capacity for services between Australia and the UAE, which represents a doubling of services for the carriers of both countries. Agreement was reached with Qatar for the commencement of up to 14 services per week for the airlines of both countries.

Air services agreements were also negotiated with the aeronautical authorities of Brunei, Croatia, Hungary, Spain, Sri Lanka and Turkey.

Aviation coverage by the World Trade Organization

On behalf of the government, the Department led efforts to expand the coverage of air transport arrangements by the World Trade Organization (WTO) during 2006-07, including by resuming the chair of the Friends of Air Transport Services, a grouping within the WTO.

Although most aspects of air services are effectively excluded from the WTO, Australia was instrumental in seeking to lock in the benefits of global liberalisation in the ground handling and airport operations sectors by having them included in the General Agreement on Trade in Services, the multilateral treaty establishing the framework for trade in the services sector.

International airline timetable and licence approvals

In accordance with the requirements of the Air Navigation Act 1920 and its regulations, the Department continued to regulate scheduled international air services in 2006-07. It approved 241 timetables for international airlines operating passenger or freight operations either in their own right or on a code share basis, and approved 176 timetable variations.

Five airline licences were issued, three airline licences were reissued and 11 permissions for charter programmes were approved by the Department during the year.

Domestic air services

The Australian Government has pursued a policy of commercial deregulation of airline operators. While the Department, through CASA, strictly enforces safety regulations, airlines are free to make decisions which relate to commercial operations. The Department continued to provide policy advice regarding this framework during 2006-07.

More than 44 million passengers were carried on Australian domestic airlines (including all regional airline operations) in the year ending December 2006, an increase of 6.4 per cent on the total for the year ending December 2005. The industry is operating at record levels, with passenger numbers for each month of 2006 higher than the numbers recorded in the corresponding month of any previous year. Passenger numbers are now well ahead of the 34 million carried in 2000-01, prior to the collapse of Ansett.

The growth in regional aviation was particularly strong: more than 5 million passengers were carried on regional routes in 2006, which represents an 8.2 per cent increase since 2005.

In recognition of the particular challenges facing regional aviation, the Australian Government continued to subsidise smaller airlines through a scheme that reimburses airlines for the cost of Airservices Australia's en route air traffic control charges for regular public transport and aeromedical aircraft of less than 15 tonnes take-off weight. The payment scheme for Airservices Australia's en route charges was extended by four years in the 2007-08 Budget.

Further, New South Wales regional aviation services into and out of Sydney Airport were protected through the regional 'ring fence' pricing arrangement under the Sydney Airport Demand Management Act 1997 and price notification arrangements with the Australian Competition and Consumer Commission.

Airspace is managed efficiently within international standards

 

The new airspace regulatory environment

The Department provides policy advice to the Minister on the safe and efficient management of Australian airspace. In September 2006, the Australian Government announced a range of policy reforms concerning the management of Australia's airspace, to be in place by 1 July 2007. The reforms included the:

  • transfer of the airspace regulatory function from Airservices Australia to an Office of Airspace Regulation, to be established within CASA;
  • development of an Australian airspace policy statement to provide guidance to CASA in administering and regulating airspace;
  • setting out of robust and transparent processes to be followed in airspace decision making;
  • development of a common risk management framework to assist agencies in ensuring risks and mitigation strategies are identified when changes are considered; and
  • reiteration of the government's support for the reform objectives of the National Airspace System (NAS).

The new airspace regulatory arrangements-encompassed in the Airspace Act 2007, the Airspace Regulations 2007 and the Australian Airspace Policy Statement, together with consequential changes to other legislation-come into force from 1 July 2007.

Transfer of the airspace regulatory function

The decision to transfer the airspace regulatory function from Airservices Australia to CASA from 1 July 2007 was taken after careful consideration of industry views, especially of the need to demonstrate the independence of the safety regulator. Within CASA, the regulatory function will be performed by the Office of Airspace Regulation from 1 July 2007.

Development of the Australian Airspace Policy Statement

The Australian Airspace Policy Statement was approved by the Minister following work by the Department in consultation with Airservices Australia, CASA, the Department of Defence and the aviation industry.

The statement provides guidance to airspace users, regulators and service providers on how airspace will be administered as a national resource. It is designed to meet Australia's commitment to world-leading standards in airspace administration, including Australia's obligations as a member of ICAO and commitment to the objectives of the NAS. It also identifies key policy development objectives for CASA to pursue, including assessment of a number of NAS characteristics as well as some key safety issues.

The policy statement comes into effect on 2 July 2007. The first edition of the policy statement will be reviewed, with further industry input, within the first 12 months.

Implementation of the National Airspace System

In May 2002, the Australian Government introduced the NAS policy in order to build more flexibility and efficiency into Australian airspace operating procedures, while maintaining a high level of safety. The system, which has been successfully operating in the United States for the past 40 years, is being adapted for Australian conditions for a phased-in implementation.

A post-implementation review of the new operating procedures at non-towered aerodromes was completed during 2006-07. These procedures were implemented in November 2005 under Stage 2c of the NAS. The review was conducted by independent consultants engaged by the Department, following discussions with a wide cross-section of the industry and government agencies.

Based on a full year of operations under the new procedures, the consultants concluded that the procedures had a good safety record, but recommended a series of changes to maintain and improve that record. Changes to the procedures will be pursued with industry, through CASA's notice of proposed rule making process.

Coordination of aviation policy

To ensure that airspace policy, and aviation policy generally, was developed in a coordinated and consultative manner, officials from the four Australian Government agencies involved in aviation policy, regulation and service provision-the Department, Airservices Australia, CASA and the Royal Australian Air Force-met regularly in 2006-07.

The Aviation Policy Group (APG) continued to provide a forum to build better working relationships; develop strategic directions for aviation, including airspace policy; and coordinate action across the four agencies. The APG collectively addresses broad aviation policy issues, while each agency retains individual authority and accountability for its own functions.

The members of the APG are the Secretary of DOTARS (Chair), the Chief Executive Officer of Airservices Australia, the Chief Executive Officer of CASA and the Chief of Air Force.

The Aviation Implementation Group was responsible for carrying forward work identified by the APG, identifying problems and issues for the APG, and dealing with the detail of aviation issues. The group's members are senior officers from the Department (which chairs the group) and the other three agencies.

DOTARS continued to work closely with the Department of Defence to ensure a collaborative approach to airspace policies, including flexible use of airspace for both civilian and military applications. To achieve this close collaboration and to foster better communication, senior officers from Defence were located in the Department.

Australian Government investments in transport infrastructure are managed responsibly

 

 

 

Regulatory framework for airport management

In 2006-07 the Department contributed to significant reviews of, and changes to, aspects of the regulatory framework for airport management, including amendments to the Airports Act, a departmental review of the airport environmental protection regime, and a Productivity Commission review of the regulatory approach for pricing of airport services.

Amendment of the Airports Act

On 30 November 2006 the government introduced the Airports Amendment Bill 2006 into the House of Representatives to amend the Airports Act to:

  • make various changes to airport land use, planning and building controls and environment management provisions at Australia's 22 leased federal airports;
  • implement a number of recommendations arising from a Senate committee inquiry into the Brisbane Airport master plan;
  • align planning arrangements for Canberra Airport with those of the other federal airports; and
  • provide for greater flexibility for future updates of some day-to-day on-airport activities.

In preparing the Bill consideration was given to the 61 submissions provided as part of the 2002-03 review of the Airports Act conducted by the Department. The Bill also implemented the government's response to the Senate Standing Committee on Rural and Regional Affairs and Transport Committee's June 2000 report, Inquiry into the development of the Brisbane Airport Corporation Master Plan.

The Bill was referred to the Senate Standing Committee on Rural and Regional Affairs and Transport for consideration. The committee received 73 written submissions and held a public hearing on the inquiry, and released its report in February 2007.

The two key recommendations arising from that report, which were incorporated into the Airports Amendment Act 2007, require airport lessees to provide notice to relevant state and local government Ministers and organisations when key planning documents are released for public comment, and to provide the Minister for Transport and Regional Services with copies of all public submissions when lodging these documents for approval under the Airports Act.

The amendments to the Airports Act took effect from 13 May 2007. To complement the changes to the Airports Act, consultation guidelines were released by the Minister in December 2006 to provide for a systematic approach to effective public and stakeholder consultation in relation to airport development and environmental management at leased airports.

Review of the airport environment protection regulations

The objectives of the Airports (Environment Protection) Regulations 1997 are to establish a system of regulation and accountability for activities which generate pollution or excessive noise, and to promote the improvement of environmental management practices at the leased federal airport sites.

In 2006-07 the Department commenced a review of the environment regulations, in response to:

  • the identification of areas for improvement in the environment regulations, based on their application in the assessment of major development plans and minor development proposals;
  • advances in environmental science;
  • the introduction of, and amendments to, the Environment Protection and Biodiversity Conservation Act 1999, and the revision of other environmental standards;
  • the establishment of the National Environment Protection Council, and associated national environment protection measures; and
  • changes in community and government expectations that have occurred since the regulations were introduced.

An initial report is being prepared to assess the content of the environment regulations, make recommendations on potential amendments and identify benchmark legislation in other countries. The review is also expected to include a legal assessment and refinement of the potential amendments, and a statement of the possible impacts of regulatory change.

Review of price regulatory approach for airport services

In March 2006 the Australian Government announced that it would examine the effectiveness of the light-handed regime for regulation of aeronautical prices at Adelaide, Brisbane, Canberra, Darwin, Melbourne, Perth and Sydney airports. The Department took the lead role in developing the terms of reference for this major inquiry, which was undertaken by the Productivity Commission from April to December 2006.

The Department provided a submission to the inquiry and developed advice on the Australian Government's response to the Productivity Commission's report.

In April 2007 the government announced its decision to continue monitoring aeronautical prices until 30 June 2013, under a modified approach, at Adelaide, Brisbane, Melbourne, Perth and Sydney airports, and to discontinue price monitoring at Canberra and Darwin airports. See the case study on page 145 for more information.

Management of federal airport leases

The Department is responsible for administering the Australian Government's interests in the operation and management of 22 privatised airports, under the Airports Act and associated regulations.

Between 1997 and 2003, 22 airports owned by the Australian Government were privatised. The rights to operate 21 of the airports were leased out for an initial period of 50 years with an option to renew for another 49 years. The exception is Hoxton Park Airport in Sydney: the lease for Hoxton Park Airport expires in 2008 with an option to extend to 2010, after which it converts to freehold title.

The Airports Act establishes a comprehensive framework for the regulation of the leased federal airports. The areas of regulatory control cover leasing and management; ownership and control of airport companies; land use planning and building controls; environmental management; protection of airspace; control of on-airport activities; pricing and quality of service; and access and demand management.

Appendix I provides quantitative information on the performance of airports in 2006-07.

Planning approvals

Under the Airports Act, a master plan and an airport environment strategy must be prepared for every airport except Mt Isa Airport and Tennant Creek Airport.

A master plan represents the airport lessee company's planning and development vision for the airport over a 20-year period. Every five years each airport is required to prepare a master plan, which must address specific matters outlined by the Airports Act. Each master plan must be approved by the Minister for Transport and Regional Services.

A major development plan is required for each 'major development' at an airport, as defined by section 89 of the Airports Act. Major developments include runways, buildings with construction costs above a specified threshold, and developments likely to have significant environmental or ecological impact.

In 2006-07 the Department provided assessments to the Minister on:

  • one master plan;
  • one minor variation to a master plan; and
  • 10 major development plans.

In February 2007, the Sydney Airport Corporation Ltd draft major development plan for a retail development in the south-south-east precinct of Sydney Airport was not approved because of the concern about the vulnerability of members of the public at the location in the event of loss of control of an aircraft on take-off or landing.

Table 3.38 provides trend information on the numbers of master plans and airport environment strategies approved.

Lease compliance reviews

The Department is responsible for assessing the leased federal airports' level of compliance with the terms of their leases. This includes undertaking a rolling programme of annual lease reviews of all 22 leased airports.

Airport lease and sale agreements impose obligations on lessees in relation to the maintenance of a range of insurances. Airport insurance coverage is reviewed each year, taking into account the different renewal dates of policies at various airports. The Department conducts the annual reviews, with the assistance of a contracted insurance adviser.

Details of the airport lease review meetings held and the progress of insurance reviews in 2006-07 are provided in Appendix I.

A select tender process was conducted during 2006 to engage a new insurance adviser. The successful consultant was Jardine Lloyd Thompson. The consultancy commenced on 22 September 2006 and will continue until 21 September 2009, with the option for a one-year extension.

Environmental management and building control

Under the airport leases, the management of the environment at the airport site is the responsibility of the airport lessee. Through the Airports Act and the Airports (Environment Protection) Regulations 1997, the Department monitors compliance and regulates activity at the airports that has an environmental impact.

The regulatory regime under the Airports Act advocates continuous improvement in environmental management, and requires each leased federal airport to implement an airport environment strategy in conjunction with its master plan. The airport lessee drafts the strategy after taking into account public comments, and submits it for approval by the Minister for Transport and Regional Services. The strategies are normally in force for five years from the date of approval by the Minister.

Airport environment officers are statutory office holders appointed by the Secretary of the Department to administer the Airports (Environment Protection) Regulations 1997. The airport building controller at each airport has responsibility for approving all building activities on the airport site.

Authorisations issued under the Airports (Environment Protection) Regulations 1997

The Department may authorise a lessee to undertake an action on an airport that may result in environmental emissions that exceed the levels mentioned in the schedules attached to the regulations. Such an authorisation may be provided only where the emissions will be no more damaging to the environment than if the levels in the schedules had been met. Authorisations are intended to provide for transitional arrangements while the applicant investigates and pursues methods of achieving compliance with the schedules. Details of the authorisations issued during 2006-07 are provided in Appendix I.

Monitoring of compliance with infrastructure investment obligations

Lessees for 10 leased federal airports-Adelaide, Alice Springs, Brisbane, Canberra, Gold Coast, Darwin, Hobart, Launceston, Melbourne and Perth-collectively committed to invest approximately $700 million in aeronautical infrastructure over the first 10 years of their leases.

In 2006-07 the Department continued to monitor the progress of the 10 airports in meeting their infrastructure obligations. There were no specific infrastructure investment obligations under the agreements for the other 12 leased federal airports.

As at 30 June 2007 (the most recent date for which data is available), the airports had invested more than $630 million in aeronautical infrastructure since the leases were signed.

The investment obligations are split into two five-year periods. All 10 lessees have exceeded their obligations for the first five-year period (see Table 3.39). As reported in the Department's 2005-06 Annual Report, six lessees-Adelaide, Darwin, Hobart, Launceston, Melbourne and Perth-have exceeded their 10-year obligations and are no longer required to submit plans or reports to the Department. Since that time, Alice Springs has also exceeded its investment obligations with a total expenditure of $6.3 million. The audited statement for the remaining airports - Brisbane, Canberra and Gold Coast- were expected on 21 September 2007, and will be assessed by the Department.

Refer to Appendix I for expenditure details.

In 2006-07 the lessees of major airports continued to develop the airport sites and commit themselves to further significant levels of aeronautical investment. For example:

  • Melbourne Airport is planning to spend around $450 million on airfield and international terminal redevelopment over the next five years;
  • Essendon Airport is spending approximately $5 million on new airfield lighting systems and approximately $30 million on terminal precinct development, building air wings of police and ambulance services and resurfacing roads and footpaths.
  • Gold Coast Airport has invested $25 million in the redevelopment of its runway system, including a 458 metre runway extension and an upgrade to the taxiway and apron facilities, which was opened in May 2007, and is planning an extension to the low-cost carrier terminal following approval by the Minister on 3 September 2007, which will cost in excess of $70 million; and
  • Brisbane Airport is constructing an extension of its international terminal building and northern concourse, which will cost in excess of $300 million, and is planning to construct a new parallel runway following approval by the Minister on 18 September 2007, which will cost approximately $1 billion.

Performance audit of airport lease management

The Australian National Audit Office (ANAO) tabled its report Management of airport leases: follow-up audit (Audit Report No. 25 of 2006-07), the follow-up to Management of federal airport leases (Audit Report No. 50 of 2003-04), on 8 February 2007.

The ANAO found that the Department had significantly improved and enhanced its practices across the full range of its lease administration responsibilities since the first audit. The report did not identify any significant issues of concern.

Left to right: Dennis Chant, Director, Queensland Airports Ltd, Jim Tolhurst, Chairman, Queensland Airports Ltd and the Hon Mark Vaile MP, the Deputy Prime Minister and Minister for Transport and Regional Services, at the opening of the extension of the Gold Coast Airport runway. The 458 metre extension allows for the deployment of code F aircraft at the airport (Photo DOTARS)
Left to right: Dennis Chant, Director, Queensland Airports Ltd, Jim Tolhurst, Chairman, Queensland Airports Ltd and the Hon Mark Vaile MP, the Deputy Prime Minister and Minister for Transport and Regional Services, at the opening of the extension of the Gold Coast Airport runway. The 458 metre extension allows for the deployment of code F aircraft at the airport (Photo DOTARS)

Table 3.39 Airport development expenditure at major airports

Airport Sale phasea Spending to 30 June 2004 Spending to 30 June 2005 Spending to 30 June 2006b Period 1 obligationc Period 2 obligationd Commitment met?
Adelaide 2 $72.3m $72.3m $72.3m $41.4m $22.6m Yes
Alice Springs 2 $0.5m $1.8m $2.7m $1.2m $1.9m Yese
Brisbane 1 $82.1m $179.0m $223.9m $44.4m $292.9m Yesf
Canberra 2 $32.2m $39.6m $50.7m $11.0m $46.9m Yes
Gold Coast 2 $19.2m $23.4m $28.4m $19.2m $8.5m Yes
Darwin 2 $4.2 m $21.6m $21.6m $3.3m $2.7m Yes
Hobart 2 $1.8m $7.8m $7.8m $3.8m $1.7m Yes
Launceston 2 $3.0m $3.5m $3.5m $2.2m $0.9m Yes
Melbourne 1 $107.8m $107.8m $107.8m $78.3m $29.0m Yes
Perth 1 $64.8m $111.3m $111.3m $54.6m $33.3m Yes
Total $387.9m $568.1m $630.0m $259.4m $440.4m

a Phase 1 was completed in 1997 and Phase 2 in 1998. The date of sale affects the deadline for completion of Period One obligations.
b Data for 2006-07 is due to be submitted to the Department by 21 September 2007 and will be reflected in the 2007-08 annual report.
c Period 1 commitment is in line with Schedule 11 of each sale agreement.
d Period 2 commitment is in line with Schedule 11 of each sale agreement. No extensions to Period 2 have been granted to date.
e Alice Springs Airport's Period 1 commitment was not met by the end of the first five-year period due to a downturn in passenger traffic and aircraft movements for reasons including terrorism, disease and the Iraq war. An extension to Period One was granted until 30 June 2007 on the basis of these reasons. Alice Springs met its Period 2 obligations during the 2006-07 financial year. The spending to 30 June 2007 details will be reflected in the 2007-08 Annual Report.
f Expectation, subject to an assessment of the final audited reports to be submitted to the Department by 21 September 2007.

 

Grant to the Central Australian Tourism Industry Association

The Australian Government contributed $191,200 to the Central Australian Tourism Industry Association towards the purchase of security screening equipment and an aircraft tug for use at Alice Springs Airport.

The aim of the project is to strengthen economic growth opportunities by increasing international tourism in central Australia.

Slot management at Sydney Airport

The Department is responsible for administering the Sydney Airport Demand Management Act 1997. The Act provides the framework to implement a limit of 80 aircraft movements per hour at Sydney Airport through a slot management regime. Under the Act, the Sydney Airport Slot Management Scheme facilitates an orderly and equitable allocation of arrival and departure slots at Sydney Airport.

Broadly, the objectives for the introduction of slot management at Sydney Airport were to:

  • provide an effective means of administering the movement limit;
  • alleviate delays caused by congestion;
  • safeguard access for regional airlines;
  • provide equal access to slots for new entrants; and
  • spread aircraft movements more evenly within hours.

Effective administration

Airservices Australia is responsible for monitoring compliance with the aircraft movement limit and reporting to parliament. There were no reported breaches of the movement limit in 2006-07.

Responsibility for the day-to-day administration and management of the slot management scheme rests with Airport Coordination Australia. The Slot Manager is appointed by the Minister for Transport and Regional Services in accordance with the provisions of the Act.

The Act also provides for the Sydney Airport Compliance Scheme, which details the processes for monitoring aircraft operators' compliance with slot allocations. Primary responsibility for monitoring compliance rests with the Sydney Airport Compliance Committee, which met six times in 2006-07. Chaired by an officer of the Department, the committee considered performance against allocated slots and reasons for any early or delayed movements over six meetings in 2006-07.

Reduced delays

In 2006-07 the Sydney Airport Compliance Committee found that, although there were aircraft movements which operated early or were delayed beyond the permitted tolerance limits (15 minutes for flights shorter than three hours and 30 minutes for flights longer than three hours), less than 20 per cent of these exceptions were caused by delays within the operator's control. All flights that operated into and out of Sydney Airport were allocated slots beforehand. No penalties were issued in 2006-07.

Slots are allocated for periods based on seasons in the northern hemisphere, for consistency with international practice: 'summer' is April to October, and 'winter' is November to March. Figure 3.5 shows on-time performance statistics for Sydney Airport for each period, from the commencement of the demand management arrangements in 1998 to 2006.

Figure 3.5 On-time performance of all services, Sydney Airport, 1998 to 2006

Figure 3.5 On-time performance of all services, Sydney Airport, 1998 to 2006

S = summer period (April-October), W = winter period (November-March).
Note: The graph shows on-time performance as arrivals and departures within 15 minutes of the scheduled time; however, the graph does not account for delay factors that are outside the operator's control (e.g. weather, air traffic control and increased security measures) which are assessed by the Sydney Airport Compliance Committee.
Source: Airport Coordination Australia

Equitable access

The slot management scheme includes specific conditions relating to the allocation of slots to regional service operators and new entrants to the Sydney route. These measures guarantee equitable access to Sydney Airport for operators of regional services and new entrants to the Sydney route.

One international airline, Etihad Airways, commenced operating at Sydney Airport during 2006-07.

Regional operators received 1,503 of the additional 10,278 slots allocated to accommodate the increase in services to and from Sydney Airport during 2006-07.

Figure 3.6 shows the effect of the scheme on access by contrasting slot allocation in 1998 to allocation in 2006. Following the collapse of Ansett Airlines and its subsidiaries in September 2001, the Minister for Transport and Regional Services issued a direction to the Slot Manager to ensure that the slot regime continued to maximise the efficient use of the Sydney Airport infrastructure while avoiding the possibility of creating an anti-competitive outcome. Under the direction, all airlines can have access to the old Ansett Airlines slots in accordance with the slot allocation process, but only new entrant airlines can gain historical precedence (or permanent access) to them.

The graph shows the seasonal distribution of international, domestic (interstate) and regional (intrastate New South Wales) slots and the old Ansett Airlines slots that have been allocated but not to new entrant airlines. The difference in allocated regional slots between summer 2006 (15.9 per cent) and winter 2006 (14.6 per cent) is attributed to the reduced demand for regional slots during the December/January holiday period.

Figure 3.6 Average weekly runway movements, allocated and available, by type of service, Sydney Airport

Figure 3.6	Average weekly runway movements, allocated and available, by type of service, Sydney Airport

S = summer period (April-October), W = winter period (November-March).
Note: The total number of possible movements per week is 80 movements per hour over 17 regulated hours per day within a seven-day week.
Source: Airport Coordination Australia

Australian Government investments in transport infrastructure are managed responsibly (continued)

Even distribution of aircraft movements

The slot management scheme facilitates a more even distribution of aircraft movements by controlling movements in 60-minute periods commencing every 15 minutes, thus minimising congestion problems associated with peak period cluster scheduling that characterised operations prior to the operation of the scheme.

A sample of the spread of aircraft movements across the busiest operational hours at Sydney Airport is shown in figures 3.7 and 3.8. Under the slot management scheme, slot allocations in the peak periods are spread across the 60-minute periods rather than being congested for a limited number of hours under the first-in, first-served basis that existed prior to the scheme.

Did you know?

The most popular short-term overseas destination for Australian air travellers in 2005-06 was New Zealand, with 831,734 visitor trips from Australia to New Zealand. After New Zealand, the next most popular destinations for Australian air travellers were the United States and the United Kingdom, with 437,283 and 408,800 visitor trips respectively.

Figure 3.7 Distribution of aircraft movements within the morning peak hours on a Monday in the summer 2006 slot allocation period, Sydney Airport

Figure 3.7 Distribution of aircraft movements within the morning peak hours on a Monday in the summer 2006 slot allocation period, Sydney Airport

Source: Airport Coordination Australia

Figure 3.8 Distribution of aircraft movements within the evening peak hours on a Friday in the summer 2006 slot allocation period, Sydney Airport

Figure 3.8 Distribution of aircraft movements within the evening peak hours on a Friday in the summer 2006 slot allocation period, Sydney Airport

Source: Airport Coordination Australia

Australian Government investments in transport infrastructure are managed responsibly (continued)

Performance audit

The ANAO tabled its report Implementation of the Sydney Airport Demand Management Act 1997 (No. 29 of 2006-07) on 7 March 2007. The report and the Department's response to the report are available on the ANAO website, www.anao.gov.au.

The Department agreed to the report's recommendations and has commenced work to address the audit findings, including considering possible changes to the Act and regulations.

Community exposure to aircraft noise is minimised with attention to the needs of specific communities

Noise amelioration programmes

In 2006-07 the Department continued to assist Adelaide Airport and Sydney Airport and their local communities to work together to minimise the impact of aircraft noise.

The Department continued to provide secretariat support for the Sydney Airport Community Forum, which advises the government on noise and related environmental issues at Sydney Airport, during the year.

Funding to insulate eligible homes and public buildings was provided through the noise amelioration programmes administered by the Department. The programmes, which are nearing completion, have been effective in reducing the impact of aircraft noise under flight paths (see Table 3.42).

Transparent noise information package

In response to feedback from users, the Department continued to improve the transparent noise information package (TNIP) software. This communication tool is designed to enable non-specialists to gain an understanding of aircraft noise exposure patterns, and to help airports and communities to work together to explore options for managing aircraft noise.

From November 2006 to February 2007, TNIP was used as the primary tool to generate information on aircraft noise during public consultations on the proposed new parallel runway at Brisbane Airport.

Curfews

In order to minimise aircraft noise exposure, all civil aircraft in Australia are required to comply with curfews under the Air Navigation (Aircraft Noise) Regulations 1984. To minimise night-time aircraft noise, curfews apply from 11 pm to 6 am at four airports-Adelaide, Essendon, Gold Coast and Sydney. The curfews strictly control the types and numbers of aircraft that can be operated and the runways that can be used.

In 2006-07 the Department:

  • assessed 91 applications for curfew dispensation-61 for Sydney, 20 for Adelaide, nine for Gold Coast and one for Essendon; and
  • approved 45 curfew dispensations-27 for Sydney, 12 for Adelaide, five for Gold Coast and one for Essendon.

Aircraft noise levy

Costs associated with the noise amelioration programmes for the Adelaide and Sydney airports are recovered by a levy on jet aircraft landings at the respective airports, under the provisions of the Aircraft Noise Levy Act 1995. Airservices Australia is authorised under the Act to collect the levy on behalf of the Department.

The levy at Sydney Airport collected sufficient funds to recoup the Sydney Airport noise amelioration programme's budgeted expenditure, and was ceased on 1 July 2006.

Receipts totalling $14.8 million collected under the Aircraft Noise Levy Collection Act 1995 are reported in the Financial Statements as required by the Act. These receipts include all levy payments collected at Adelaide Airport plus residual payments from Sydney Airport.

International cooperation

In 2006-07 the Department continued to actively participate as a member of the ICAO Committee on Aviation Environmental Protection. This committee recommends standards and practices for minimising the environmental impacts of aviation, including through the management of aircraft noise.

Administered programmes-Output 1.4.2-Aviation and airports

Table 3.40 Summary of performance-Airport Lessee Companies-reimbursement of parking fines

PBS/PAES performance indicators Results

Quality

Revenue is passed on to airport lessees in line with a formula set by the Minister for Finance and Administration

The programme reimburses airport lessees a proportion of parking fines collected for parking offences in airport precincts. Reimbursements are made in accordance with contracts between airport lessees and the Department.

The Department made quarterly payments to airport lessees in line with a formula set by the Minister for Finance and Administration: namely, 80 per cent of the revenue from parking fines for the quarter collected by the airport lessees and forwarded to the Department, less administrative costs.

Location

Sydney, Melbourne, Brisbane, Perth, Gold Coast, Townsville, Hobart and Launceston Airports

The lessees of these eight federal airports were covered by the programme.

Cost

$1.5 million

The actual cost of this programme in 2006-07 was $1.6m.

Reimbursements are driven by the level of fines collected at airports

Overall performance

Table 3.41 Summary of performance-Compensation for the sale of airport land

PBS/PAES performance indicators Results

Quality

Airport lessees receive appropriate compensation for the sale of small portions of airport land not essential for airport operation

From time to time the Australian Government adds or removes airport land, with the consent of the airport lessee, to facilitate on-airport and off-airport development. The Department administers compensation to airport lessees after an appropriate price is agreed between parties, including the Department of Finance and Administration.

The Department executed an agreement to transfer a small parcel of land at an agreed total value of $3,000 to enable road widening and other traffic improvements off the Hobart Airport site, and worked on amendments to the Airports Regulations 1997 to reflect the change in the leased area. Settlement of this matter is expected to occur in late 2007. The Department executed an agreement and worked towards a resolution of conveyancing issues to enable settlement to take place.

In 2006-07 the Department was involved in the following land transfer negotiations:

  • the sale of land at Archerfield Airport to construct a road to alleviate significant traffic problems in the area (the sale occurred in July 2007);
  • the execution of an agreement with Brisbane Airport and the Queensland Government for the transfer of land to facilitate upgrading of the gateway and the construction of a northern access road to improve traffic flows into and out of the airport;
  • the sale of site 710 at Camden Airport, in accordance with the Share Sale and Purchase Agreement for Bankstown Airport Ltd, Camden Airport Ltd and Hoxton Park Ltd;
  • ongoing negiotations over the sale of the land from the south-west corner of Essendon Airport to facilitate the upgrade of the Tullamarine-Calder Freeway interchange (the financial impact is currently under consideration);
  • an agreement to a land transfer to facilitate construction of the Tugun Bypass on the Gold Coast, expected to occur in the first half of 2008 following completion of the road;
  • the transfer of a portion of land from the Parafield Airport lease site to the South Australian Government to enable construction of part of the Elder Smith Road (also known as the Mawson Connector); and
  • an agreement to a land swap with relevant state government agencies (no financial impact is anticipated) to facilitate land planning at Perth Airport.

Location

Hobart

The programme was administered in Hobart and other locations, as described above.

Cost

$3,000

The actual cost of this programme in 2006-07 was nil.

Variance is due to delays in finalising the sale of land at Hobart Airport, which is now scheduled to occur in July 2007.

Overall performance

Table 3.42 Summary of performance-Implementation of noise amelioration (Adelaide Airport and Sydney Airport)

PBS/PAES performance indicators Results

Effectiveness

Community exposure to aircraft noise is ameliorated in eligible buildings

The airport noise amelioration programmes were introduced in Sydney in November 1994 and in Adelaide in May 2000. Under both programmes, the Australian Government offers homeowners financial assistance to install noise insulation for eligible residences under the major flight paths. The government also provides for the insulation of public buildings such as schools and colleges, preschools, health and aged care facilities and churches.

Both programmes are nearing completion. All eligible residences and public buildings have been identified and, where the offer was accepted, insulated. Only warranty period obligations remain.

The programmes have been effective in reducing the impact of aircraft noise on homes and public buildings under flight paths. Trend information on aircraft noise amelioration is provided in Table 3.43.

More information on noise and flight path monitoring at major airports is available from the Airservices Australia website, at www.airservices.gov.au/reports.

Quality

Work is carried out by qualified professionals and is rated as good or better by 80 per cent of building owners

Work has been completed at all eligible residences where homeowners accepted the offer of insulation. All eligible public buildings have also been insulated, with only warranty periods remaining. More than 80 per cent of respondents have consistently rated the quality of work done as very good or better.

Quantity

Approximately 4,755 eligible homes and 102 eligible public buildings are insulated from aircraft noise

By 30 June 2007, more than 4,500 residential dwellings and more than 100 public buildings had been insulated against aircraft noise. More information on the properties that have been insulated is available from the Department's website, at www.dotars.gov.au/transport/programs/aviation/.

Location

Adelaide, Sydney

The programmes were administered in Adelaide and Sydney.

Cost

$7.5 million

The actual cost of this programme in 2006-07 was $3.9 million.

More than $450 million has been spent on the programme since 1994. Variance is due to delays associated with the practicalities of building projects with works on the last large public building in Adelaide being delayed due to the sale of the building and the need to negotiate the scope of works with the new owner.

Overall performance

Table 3.43 Trends in aircraft noise amelioration

  2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Adelaide Airport
Private homes insulated 220 208 240 4 0 0
Public buildings insulated 0 2 1 2 1 1
Work rated very good or better by clients 90% 88% 83% 100% n/a n/a
Cost of works to government $11.1m $13.2m $13.9m $7.6m $1.3m $1.9m
Sydney Airport
Private homes insulated 268 113 12 12 0 0
Public buildings insulated 7 2 1 3 2 1
Work rated very good or better by clients 82% >80% 82% 100% n/a n/a
Cost of works to government $24.9m $7.7m $3.9m $6.2m $3.3m $1.9m

Table 3.44 Summary of performance-Payment scheme for Airservices Australia's en route charges

PBS/PAES performance indicators Results

Effectiveness

Costs are reduced for airlines providing eligible regular public transport and/or aeromedical services

The programme helps airline operators to provide services to regional communities by reimbursing them for Airservices Australia's en route air traffic control charges. The Department administers a subsidy that makes it possible for small regional airlines to fly to more destinations and makes airfares in regional Australia more affordable. The subsidy also helps support aeromedical operators such as the Royal Flying Doctor Service.

The subsidy is available to regular public transport operators that use aircraft with a maximum take-off weight of 15 tonnes or less, as well as aeromedical operators.

In Western Australia, the subsidy is also available to regular public transport operators that use aircraft with a take-off weight between 15 tonnes and 21 tonnes, because the state's enormous distances require the use of larger aircraft.

Quality

Claims from airlines are processed efficiently and accurately

The turnaround time for payment of invoices is a maximum of seven days from receipt of all information required to process the claim. Payment runs for the Department occur weekly.

No complaints were received from recipient operators about the accuracy or timeliness of processed claims during 2006-07.

Quantity

Approximately 36 operators are reimbursed for Airservices Australia's en route air traffic control charges

The programme is demand driven. The number of airlines seeking reimbursement decreased to 31 airlines in 2006-07, from 35 airlines in 2005-06.

Cost

$5.4 million

The actual cost of this programme in 2006-07 was $6.0 million.

Payments are driven by the level of claims by eligible airlines.

Overall performance

Table 3.45 Summary of performance-Sydney West Airport-rental properties

PBS/PAES performance indicators Results

Effectiveness

The Australian Government meets its obligations as a landlord

The Australian Government owns and leases out commercial and residential properties on a site at Badgerys Creek, New South Wales, originally acquired for a proposed second major airport to service Sydney.

The Department administered the leases during 2006-07 to ensure the Australian Government met its obligations as a landlord. This included paying water and land rates and authorising maintenance to ensure properties remain in reasonable condition.

Quantity/Location

Approximately 254 commercial and residential properties are maintained at the Sydney West Airport site (Badgerys Creek)

A total of 254 commercial and residential properties were maintained.

Cost

$2.7 million

The actual cost of this programme in 2006-07 was $2.3 million.

Variance is due to the difficulty in estimating the level of property maintenance costs.

Overall performance

Outlook-Output 1.4.2-Aviation and airports

The transfer of the airspace regulatory function to CASA and, in particular, the release of the Australian Airspace Policy Statement have established a new blueprint for airspace administration in Australia. In 2007-08 the Department will actively monitor CASA's progress in establishing its role and implementing its work programme as set out in the Australian Airspace Policy Statement. In consultation with industry stakeholders, the Department will also commence a detailed review of the policy statement and its implementation.

In relation to airport management, the Department will focus on:

  • monitoring infrastructure developments taking place on the leased federal airports, particularly in the light of the large increases in development that are forecast for 2007-08; and
  • continuing to bed down the recent changes to the Airports Act, and review associated regulations, to ensure airports are managed responsibly and effectively.

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