A study commissioned by the Australian Airports Association (AAA) has found that many regional Australian airports may soon be unable to provide essential aviation services for their area without immediate government aid.
The ACIL Allen study has completed the first ever quantitative assessment of the economic contribution of regional airports across Australia and the financial challenges they face in operating and maintaining these facilities.
Australian Airports Association CEO, Caroline Wilkie, welcomed the recognition of the economic and social contribution made to regional Australia by its airports, but warned that inadequate government funding could threaten their viability.
“The findings of this study confirm what the industry has known anecdotally for many years,” said Ms Wilkie.
“Regional airports play a crucial role in connecting our regional and remote communities with the rest of the country whether it is for the provision of essential and emergency services, business, or education.
“However, over the next decade, many regional airports will simply not be able to generate sufficient revenue to fund critical maintenance and infrastructure works to enable them to continue to meet the needs of the communities they serve,” Ms Wilkie said.
The Regional Airport Infrastructure Study found that regional airports across Australia invested $185 million in the 2015 financial year to maintain and improve airport operations and employed 1720 FTEs. This induced another $83.4 million in spending in the rest of the Australian economy and created an additional 2750 jobs
Due to the high-cost, low-revenue nature of many regional airports, the local councils that own and operate them often face significant financial stress from simply maintaining the airport to a satisfactory and safe condition. This stress is compounded when upgrades are needed to meet future aviation needs.
On average, 61 per cent of regional airports had budget deficits in the 2015 financial year, with non-RPT airports suffering the most with their costs exceeding their revenues by an average of 45.6 per cent.
To compound these financial difficulties, expenditures at regional airports are expected to rise by 38 per cent over the next decade. Nearly 40 per cent of regional airports expect persistent budget deficits over the next decade.
Across Australia’s network of approximately 400 regional airports, it is expected that the annual budget deficit will be $17 million per year, equating to a $170 million shortfall in essential infrastructure and maintenance funding at regional airports over the next decade.
In response to the study, the AAA has called on the government to address the funding shortfall facing many essential regional airports across Australia.
The AAA action plan proposes:
- The Commonwealth Government amend the scope and funding allocated to the existing Regional Aviation Access Program (RAAP) and Remote Airstrip Upgrade (RAU) program to:
a) be accessible to a wider range of regional airports, including those with RPT services up to 400,000 annual passengers;
b) be used for critical maintenance works, as well as essential aeronautical infrastructure projects;
c) review the requirement for Commonwealth funding being contingent on an equal funding contribution from the applicant; and
d) increase the funding from $33.7 million over the next three years, to $70 million over the next four years in the 2017-18 Budget.
- The Commonwealth Government consider the development of a National Regional Airport Infrastructure Loan Facility (open to all regional airports) that provides concessional loans and affordable financing for essential aeronautical infrastructure and maintenance works. (This facility could operate in a similar manner to the Northern Australia Infrastructure Facility but on a smaller scale and administered by the Department of Infrastructure and Regional Development)
- State and Territory Governments to review current airport financial assistance programmes, with a focus on creating or expanding existing airport funding and financing opportunities.
“Now is the time to take a long-term, strategic view of regional airport infrastructure investment to ensure Australia’s regions remain competitive, livable and sustainable,” Ms Wilkie said.
The Australian Airports Association has been representing airports across the country for the past 30 years. It represents 260 airport members, including all the capital city airports through to the small regional aerodromes of rural Australia.