The diversity of Australian aviation goes far beyond commercial flights between capital cities – there is also a vital network of non-scheduled, charter and fire-fighting services which keeps regional Australia connected.
But these smaller regional carriers and airports are threatened by the creep of red tape from big regulators. The disconnect between heavy regulation and aviation reality was pointed out today in The Australian by Benjamin Morgan from the Aircraft Owners and Pilots Association:
Our sector is governed by a department and a regulator that are deeply disconnected from the realities and challenges facing general aviation.
The industry is in open rebellion against the impractical, overly-prescriptive, incomprehensible rule set, especially rules that relate to aircraft maintenance, pilot fatigue and licensing.
And it seems the multitude of recent reviews—from the Aviation Safety Regulation Review (2014) to the Aviation White Paper (2009), and more specific reviews such as the NSW Parliamentary Inquiry (2014)—have made remarkably little headway.
Regulators—from the monolithic Civil Aviation Safety Authority (CASA) down to state and local governments—progressively and cumulatively pile rules and costs onto this struggling industry.
Of course some regulation of aviation is necessary.
But this does not remove regulator responsibility in adhering to good regulatory practice. It is simply poor policy to apply new rules and dictates without effective and appropriate cost benefit analysis.
Unfortunately it is the smallest carriers who are hit first.
Small carriers face already high capital costs and investment, often infrequent cash flow, and already heavily regulated operating environment. Overly-prescriptive, complex and duplicative regulations only exacerbate these challenges.
Indeed, CASA acknowledges this cost problem for small carriers:
CASA estimated that a large airline would expend approximately 2.78 percent of its operating budget on compliance. CASA does acknowledge that smaller airlines, which do not have the same economies of scale, do bear a higher cost which it estimated to be approximately 3.6 percent of operating expenditure.
And that’s likely a conservative estimate. The Australian Airports Association estimates the costs of compliance for small airports are closer to 12 per cent, compared to only 4 per cent for larger airlines.
It is clearly becoming not only costly, but prohibitive, to operate smaller airlines.
The NSW Parliamentary Inquiry unfortunately and unsurprisingly painted a bleak picture for regional aviation:
Aviation is the lifeblood of Australia. It is how regional areas receive their services, trade with the cities, and remain prosperous and connected. It is inevitable that if regulators keep pushing more red tape onto these businesses they will slowly close. Governments must encourage aviation not through subsidy or direct support, but through lifting the red tape burden.
