Australia's regional airports are averaging losses of around $200,000 per year, according to data collected by the Australian Airports Association (AAA).
The extent of the financial hole incurred by regional airports became apparent after 41 airport operators responded to a survey commissioned jointly by the AAA and Regional Capitals Australia and conducted by ACIL Allen covering the 2024-25 financial year.
AAA published the data last week, noting that 60% of responding airports were operating at losses ranging from $100,000 up to millions.
AAA CEO Simon Westaway said the findings demonstrate the complex economics of regional aviation.
“What this report shows is that many regional airports are operating at a loss–often supported by local councils and ratepayers–simply to keep their communities connected,” Westaway said.
“The typical regional airport is losing around $200,000 a year just to keep aircraft moving and runways open.
“These airports are essential infrastructure supporting healthcare access, tourism, emergency services and regional economies.”
Westaway noted that 23 airports included in the survey indicated they had deferred upgrades due to the financial situation, and called again for a sustainable funding model for regional airports.
“Regional aviation operates in very thin markets, where passenger volumes are small and airline capacity decisions largely sit outside the airport’s control," he said.
“These findings also reinforce the need for a permanent and sustainable funding mechanism to support regional airport infrastructure and ensure regional communities remain connected.
“Encouraging sustainable airline competition and new entrants is one of the most effective ways to put downward pressure on airfares over the long term.”
In their submission to the Productivity Commission Inquiry into airfares, the AAA said that regional airports accounted for 21% of domestic passenger movements, but the average operating cost per passenger was 63% higher than metropolitan airports, and that the gap between the operating cost per passenger and the income per passenger was very narrow.
According to the AAA, airport operating costs are not being covered by income from the airlines.
"The cost of maintaining and renewing core airfield infrastructure generally cannot be recovered through airport charges to airlines alone," the AAA submission states.
"Many runways and airfield assets were constructed decades ago and now require substantial rehabilitation to remain compliant with aviation safety standards."
Increased costs
Rob Walker, CEO of the Regional Aviation Association of Australia (RAAA) said his organisation was not surprised by the survey results and outlined ongoing challenges facing the regional aviation sector.
"Many regional aviation businesses, including large and small regional airline operators are also struggling with increased costs," he told Australian Flying. "
"Regional aviation business margins are extremely thin, and the sector is very price sensitive. Any change in operating costs, particularly fuel prices and increases in airport landing charges, are felt immediately."
Walker said the RAAA supported recent calls from the Australian Consumer and Competition Commission (ACCC) to expand their role to oversee more airports and help ensure the aviation sector remains viable and sustainable.
"The RAAA is also looking to the current Productivity Commission inquiry into the determinants of regional airfares to provide the community with greater insights into the cost base for regional airfares," he added. "This includes the costs that regional airlines have little or no control over.
"Regional aviation is critically important to the regional and remote communities of Australia who rely on the vital services that provide medical, education and business productivity activities across Australia."
The RAAA has encouraged the Federal Government deliver a new Regional Aviation Investment Fund (RAIF) to create a sustainable funding model for all regional aviation businesses including airlines and airports.
"The RAIF would access the existing $1.1 billion revenue collected through the Passenger Movement Charge (PMC) which is collected from international passenger movements, and use the revenue to invest in regional aviation sustainability," Walker explained.
"The regional aviation industry is at a pivotal moment. Immediate action by the government will ensure the ongoing viability of our critically important sector."
Simon Westaway also believes the current war in the Middle East is exacerbating the funding problems facing regional airports.
“The ongoing conflict in the Middle East is creating uncertainty across global aviation markets, particularly through higher jet fuel prices and potential supply disruptions,” he said.
“For regional airports and the communities they serve, this is a dynamic situation we’re watching closely, because any sustained increase in fuel costs or disruption to supply can quickly flow through to airline operations and place further pressure on already fragile regional air services.”
- Steve Hitchen