• Several regional and local airports, such as Wangaratta, are under cost pressures that are forcing councils to consider closure or sale of the asset. (Steve Hitchen)
    Several regional and local airports, such as Wangaratta, are under cost pressures that are forcing councils to consider closure or sale of the asset. (Steve Hitchen)

The Regional Airport Users Action Group (RAUAG) has proposed a new funding model for regional and local airports that would see cash diverted from non-aviation businesses at primary airports.

Labeled the National Airport Infrastructure Fund (NAIF), the scheme was outlined this week in the RAUAG submission to the Productivity Commission Inquiry into the Economic Regulation of Airports.

"Access to air travel (be it airline, freight, other commercial or private/business) must be considered as part of our national strategy, even more so given the vast distances involved," RAUAG convenor Geoff Breust states in the submission.

"Even in the United States, the bastion of free enterprise in the world, airport infrastructure right across the country is part of a national strategy to ensure access, promote development and safeguard national defence. It is clear Australia has no such strategy.

"Given the current commercial business enterprise and cost shift to local government approach is not viable, a wider government, national strategy is necessary."

A study commissioned by the Australian Airports Association in 2016 found that 61% of regional airports had budget deficits in 2014-15, with costs exceeding revenues by an average of 45% for airports without RPT services. It is a position RAUAG believes can be corrected.

"Through co-operative arrangements between the Commonwealth and state/territory governments, a recommended solution is the establishment of an airport infrastructure program where funding is made available for major refurbishment and development at regional and local airports," RAUAG states.

"With the availability of this fund, local councils would not be required to make the huge contributions to depreciation reserve accounts and service substantial debt thereby reducing cost and charging pressures and placing commercial operations at risk."

Under the NAIF, major capital city airports such as Sydney, Melbourne and Brisbane would contribute a small sum from non-aeronautical income, justified because those airports benefit from their connections to the struggling regional airports.

"Almost $1.8 bn was earned by the three top capital city airports (Sydney, Melbourne and Brisbane) in FY 2017 from non-aeronautical activities," RAUAG points out. "All three made a combined net profit of almost $1.26 billion. A small levy, of say 2.5% on their non-aeronautical revenue would provide the fund with $45m per annum. Add contributions from the other major airports and the contribution would exceed $50m per annum.

"This, combined with relevant contributions from State and Federal Government grant programs, would enable regional and local airports to survive and develop appropriately while maintaining a charging regime under which the aviation industry servicing those communities could manage."

RAUAG has also recommended that airports that benefit from NAIF be required to establish an effective advisory committee, and that aircraft registered with Recreational Aviation Australia also be required to pay airport users fees that are currently levied on general aviation aircraft.

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