Regional airport upgrades excessive: Regional Express

Airline Regional Express has blamed “irresponsible and grandiose” spending on regional airport upgrades for threatening the viability of regional air services.

The airline has called on federal and state governments to be “discerning” about providing funding for regional airport refurbishments, like the 2013 $13-million Port Lincoln Airport upgrade.

A Rex spokesperson said since 2002-03 the average Rex ticket price had only increased by 1.1 per cent a year while its operating costs increased significantly, “particularly with the costs imposed by local government for the essential use of regional airports”.

“The most significant factor contributing to the escalating airport charges has come about by irresponsible and grandiose spending on regional airports to construct excessive facilities that provide no meaningful improvement to the air service but add significantly to the operating costs as well as increasing significantly the annual depreciation expense, which is then charged back to the airline through increased airport charges.”

The Port Lincoln Airport Passenger Levy has only increased by $2.70 since the new terminal building was constructed back, from $6.60 in 2012-13 to $9.30.

This included a $1.20 increase when the airport was constructed to help pay for the new building and other required infrastructure.

Lower Eyre Peninsula District Council chief executive officer Rod Pearson said further increases of $1 in 2015-16 and 50 cents in 2017-18 were applied to offset lost revenue from declining passenger numbers.

“In relation to the Port Lincoln Airport, council believes that the $13m investment made in 2013 was a significant investment in the future of the region, as the airport terminal building is now a modern facility which will service the region well into the future.”

Mr Pearson said before the new terminal was built, people regularly expressed the view that the facilities were not up to the required standard and did not present a good first impression of the region.

“The new facilities have been widely accepted as being a massive improvement, for which the travelling public are making a small contribution through minimal increase in the passenger levy.”

He said the council understood the cost pressures faced by regional airlines and was aware Rex had not been a supporter of what it described as unnecessary airport investment, but the council believed the Port Lincoln Airport investment had been beneficial.

“Council is mindful of any impact on airlines and the travelling public from its passenger levy and for this reason has continued to impose a modest levy since taking over the airport...almost 30 years ago.”

The Rex spokesperson said major regional airport upgrades – often facilitated using federal or state government funding – made regional air travel more expensive, which directly threatened the viability of essential regional air services.

“It is indeed disappointing to see that the majority of the government subsidies for regional airport refurbishment are granted without any inputs from the only carrier which services the airport and this has often resulted in the carrier withdrawing all or part of its services when the airport charges become unviable economically.”