Sydney Airport boss alleges Qantas and Virgin hoard slots

The ACCC says airfares are falling, but service standards remain poor.

The ACCC says airfares are falling, but service standards remain poor. Photo: Getty Images

Rex Airlines has joined the head of Sydney Airport in denouncing Qantas and Virgin’s alleged hogging of runways at Australia’s biggest airport.

Sydney Airport CEO Geoff Culbert claimed in The Australian earlier this week that both Qantas and Virgin ask for more slots at the airport than they needed, only to then cancel flights.

This then allegedly decreases competition and ultimately customer value, because smaller or newer airlines have reduced access to the airport.

Rex Airlines deputy chairman and independent director John Sharp told The New Daily that he agreed with Mr Culbert’s claim. 

The Sydney Airport Demand Management Act 1997 allows for no more than 80 movements on the runway at the airport at any given time and requires airlines adhere to the “slots” that they have been allocated to use the runway.

Ironically, Mr Sharp was the one who introduced the Act which limited Sydney’s slots back in the 1990s.

At the time, the cap was a way to deal with noise. He said it seemed like a good idea at the time, but now he believes it’s time for the system to be updated.

“It seemed like a fair thing to do at the time. Because what you don’t anticipate is the type of people who might run airlines in the future,” he told The New Daily.

He says over time, airlines figured out as long as they kept operating 80 per cent of the time in a particular slot, they could keep it.

“You can play the 80-20 rule and that means that it’s harder for new entrants or competitors to access a slot at Sydney Airport because you’re occupying all the slots,” Mr Sharp said.

Impact on other airlines

In the last season, Qantas filed for 106 per cent more slots compared to its capacity before COVID, while Virgin filed for 95 per cent more compared to 2019, Mr Culbert told The Australian.

“The actual number of flights flown will be significantly lower than that because of the cancellation rates on the Sydney-Melbourne route,” he said.

“They’re running at about 10 per cent (whereas) the national cancellation rate is 3.9 per cent so all the data indicates there is over-filing and that does prevent airlines from getting access to Sydney Airport.”

Virgin Airlines declined to comment when approached by The New Daily.

In a statement to Australian Aviation, Qantas denied anti-competitive behaviour.

“Qantas is utilising its slots in accordance with the rule and strongly denies suggestions of impropriety,” the airline said.

When approached for comment by The New Daily, Qantas referred to its submission in the review of the Sydney Airport Demand Management Scheme, which was submitted in 2020.

In circumstances where a slot is used less than 80 per cent of the time without accepted justification, the slot is not returned to the airline, thereby losing its ‘historical’ access,” the submission said,

“Qantas had over 99 per cent of slots allocated to it returned at Sydney Airport last season. This demonstrates that Qantas utilises the slots allocated to it.”

The most recent figures from the Bureau of Infrastructure and Transport Research Economics (BITRE) show Jetstar had the highest cancellation rate in February with 6.4 per cent.

Across all services, Qantas cancelled 4 per cent of flights in February and Virgin cancelled 3.4 per cent. Rex cancelled just 1.7 per cent.

Change needed

The alleged hoarding of slots doesn’t just affect competing airlines, but also passengers.

Mr Sharp said with new entrants at Sydney Airport being restricted by the slots, it diminishes competition and results in higher airfares for customers.

The 80 movements per hour rule is “completely arbitrary”; it was not based on science and was simply political, Mr Sharp said.

He also noted that in the years that followed, aircrafts have become quieter, which means noise is less of an issue now.

Mr Sharp hopes a review of the slot system would make it more “contemporary”, so it would be difficult for airlines to play the system.

He also thinks the 80-20 rule should now be 90-10 and cancellations should be audited.

There are completely legitimate reasons as to why a flight is cancelled, like weather or even a mechanical issue, but if evidence of an airline gaming the system is uncovered, the airline should lose that slot, Mr Sharp said.

Adjustments to the current system would lead to healthier competition and give airlines certainty with their schedule.

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