White moves for Australia's aerospace industry?

By Emma Kelly

This year's Australian International Air Show (Avalon), to take place at Avalon airport, Geelong

from 10-15 March, comes at a crucial stage in the country's aerospace industry, with Australia set to have its first-ever comprehensive aviation industry strategic plan later this year in the form of an Aviation White Paper.

The process was launched in April 2008 with the release of an issues paper, highlighting the major concerns of the country's major airlines, regional airlines, general aviation sector, airports and aerospace companies. Eight months - and 290 industry and public submissions - later the government released its National Aviation Policy Green Paper, dubbed Flight Path to the Future, outlining its view of the way forward. Following a further round of industry and public consultation, the final White Paper is scheduled for release in the second half of this year, according to Anthony Albanese, minister for infrastructure, transport, regional development and local government.

The White Paper will attempt to bring all aspects of aviation policy together in a single forward-looking statement. "The government's aim is simple - to give industry the certainty and incentive to plan and invest for the long term, to maintain and improve our excellent aviation safety record, and to make clear commitments to travellers and airport users, and the communities affected by aviation activity," the Green Paper says.


The White Paper will come at a crucial time for the local aerospace industry after decades of strong growth by airlines, airports and industry, but as the industry faces capacity constraints, dire skills shortages, the global economic meltdown and stiff competition from airlines in the region.

Aviation has been vital to the growth of Australia and the country has a long history of aerospace innovation, laying claim to the development of the black box flight recorder and the inflatable escape slide, among others.

James Morgan/Sydney Airport
© James Morgan/Sydney Airport

Industry growth has been strong in the past few decades, with passenger numbers, for example, trebling over the past 20 years alone, from 2.3 million in 1958 to 69.5 million in 2007 - a rate of growth 14 times that of population increase, says the government. That growth is expected to continue, with the government forecasting a 4% annual growth rate through to 2025-6.

Aviation supports nearly 50,000 jobs and contributes A$6.4 billion ($4.08 billion) each year to Australia's economy.

In the Green Paper the government lays out a series of short-, medium- and long-term policy initiatives based on four key principles. These are that safety is the number one priority that the aviation industry is a key driver of broader economic prosperity and a strategic approach based on properly functioning, competitive markets is needed to secure its future a co-ordinated approach to airport infrastructure investment is required and a responsible approach is required to managing the impacts of aviation, including emissions and noise.

In the area of safety, the government is strengthening the country's aviation regulator, the Civil Aviation Safety Authority, by reinstating a board to guide the organisation and improve its approach to regulation and surveillance of airlines. The move follows years of criticism of the regulator, most notably in the wake of the release of the report into the fatal Lockhart River crash in 2005, in which 15 people died. In addition, the government proposes to deliver an expanded surveillance programme, strengthen the body's regulatory powers when it comes to international carriers operating to Australia and ensure the long-running regulatory reform programme is completed by the end of 2010.

To enhance the independence of the country's safety investigation agency, the Australian Transport Safety Bureau, the government proposes to establish it as a statutory agency working under a commission structure.

It also seeks to pursue air safety improvements in Australia's neighbourhood through targeted safety regulatory and air traffic management activities, including the implementation of the Indonesia Transport Safety Assistance Package and aid to Papua New Guinea.

In the area of air traffic management, the government aims to support technological applications that offer safety, efficiency and environmental benefits. This includes, "as a high priority", finalising a proposal for the wide adoption of automatic dependent surveillance - broadcast. Australia is already implementing ADS-B above flight level 300, but a proposal to extend it below has not progressed due to industry concerns, especially regarding cost issues.

The government also wants to see the development of a joint national air traffic management platform by Airservices Australia and the Royal Australian Air Force which will result in flexible use airspace and the development of a strategic air traffic management plan in consultation with industry.


Canberra says it is committed to ensuring the growth of Australia's international air services at the same time as maintaining a strong local aviation sector. With this in mind, it intends to continue the liberalisation of international aviation through open skies agreements. It will offer foreign airlines unlimited access to secondary gateways - international airports other than Brisbane, Sydney, Melbourne and Perth. In addition, fully open arrangements for dedicated cargo services will be sought and existing arrangements that prevent foreign operators from carrying domestic passengers retained. And Canberra will seek greater investment opportunities in international airlines for Australian investors through the incorporation of principal place of business criteria in bilateral agreements.

Access to the transpacific route will not be opened up to third-country carriers yet to allow Virgin Blue's new international operation, V Australia a reasonable opportunity to establish its operations, stresses the paper. It says the government has not, however, ruled out trading such access in the future where it is in the national interest.

© Boeing

The government plans to retain the basic 49% foreign investment limit in Australia's international airlines under the Qantas Sale Act, which for some time the national carrier has been seeking to have lifted. The move is intended to "ensure that our airlines remain majority Australian owned and controlled". As a compromise, however, the government says it will consider removing the additional restrictions on foreign ownership - namely 25% for foreign individual shareholdings and 35% for total foreign airlines shareholdings. It will also look at whether Australia should move from a regime based on substantial ownership and effective control to one based on principal place of business.

Taxation issues, including the current cap on aircraft effective life of 10 years and the potential reintroduction of the investment allowance to support fleet growth, are to be considered as part of a broader review of the country's taxation system.

The government says it supports the maintenance of a fully deregulated interstate domestic aviation market, allowing up to 100% foreign ownership of the country's domestic airlines. Thanks to deregulation in 1990, Australia has one of the most open and competitive domestic aviation environments, says the Green Paper.

To maintain regional services, the government says it is committed to provide A$44.7 million over four years through the Remote Air Services Subsidy Scheme and a further A$20 million over four years through the Remote Aerodrome Safety Programme. In addition, it says it will work with states on models for assistance for regional airports and services and will consider options to relieve the burden of regulatory charges on the sector.

When it comes to general aviation, the government says it recognises the difficulties experienced by the industry, but "does not believe the industry will benefit by returning to outdated business models", including active government intervention such as direct funding, regulation of commercial arrangements at GA airports and subsidies for aircraft purchases. "A return to subsidies for this sector is not in the broader interests of the industry in improving its efficiency, performance and competitiveness," says the paper.

Instead the government plans to help GA by improving the responsiveness and oversight of CASA, focusing on CASA's relationship with industry and ensuring the agency finalises its regulatory reform process as soon as possible improving planning arrangements at the country's leased federal airports work towards self-administration of private GA operations support the continued development of Australia's aircraft manufacturing and assembly, components, parts and maintenance capability by minimising regulatory impediments and ensuring there are no unnecessary regulatory impediments to realising the growth potential of the flight training industry in Australia.


To address the aviation skills shortage, which is a threat to the industry's future development, the government intends to work with aviation through the Skills Australia initiative and encourage the industry to form partnerships with schools to better define pathways from school into aviation occupations. Canberra also intends to ensure the closer alignment of civil and military air traffic controller standards and qualifications and stresses that the industry needs to be more proactive in developing attraction and retention strategies.

When it comes to aviation infrastructure, the government proposes to address airport planning deficiencies by improving the co-ordination and oversight of airport development and operations. On the contentious issue of planning for the Sydney region's long-term airport needs, the government says that following consideration of the Sydney Airport Master Plan later this year it will initiate processes to identify additional capacity for the Sydney region. The government says the pressure on Sydney airport in the face of increasing demand is "an ongoing cause for concern". The government maintains support for a second airport for Sydney, but it says constructing a new airport at Badgerys Creek is "no longer an option".


Environmental issues also feature prominently. Canberra says it is finalising the design of its carbon pollution reduction scheme, including its application to domestic aviation, and will encourage Airservices to continue with fuel saving initiatives such as flexible flight tracks, improving ATC sequencing and introducing continuous descent approaches. To address noise, initiatives proposed include maintaining curfew arrangements at Sydney, Gold Coast, Adelaide and Essendon airports and limiting the operation of noisy aircraft and phasing out marginally compliant Chapter 3 aircraft such as hushkitted Boeing 727s.

© James Morgan

The Green Paper has been met with a mixed response from industry, with many believing the document does not go far enough to address the industry's challenges.

The country's two largest airlines, Qantas and Virgin Blue, are supportive of the Green Paper, particularly the focus on safety and recognition that Australian carriers are often disadvantaged compared with their foreign counterparts.

Qantas chief executive Alan Joyce says the proposed initiatives are "broad ranging and forward looking and would play an important role in providing a co-ordinated framework for the Australian aviation industry over the long term". Although the 49% limit on foreign investment in Australian airlines is unlikely to change, Joyce welcomes the government's plans to look at other restrictions that applied to Qantas ownership. Qantas also backs the government's plans to take a closer look at taxation issues as they apply to airlines and the issue of additional airport capacity for the Sydney region.

Virgin Blue chief executive Brett Godfrey describes the Green Paper as a "responsible approach". The airline welcomes the government's effort in seeking a balance between ongoing economic reform, the national interest and the aviation sector's role in achieving that, plus the primacy of aviation safety and security. Godfrey says Virgin Blue supports efforts to improve the co-ordination, consultation and oversight of planning and development of Australia's airport, aviation and flight operations. In particular, a solution is long overdue to remedy the problems at Sydney, he adds.

The Australian and International Pilots Association (AIPA) says the Green Paper is "an important step in stabilising the Australian aviation industry, which has been stifled by a lack of debate and long-term planning". AIPA president Capt Barry Jackson says: "The industry was too focused on cutting costs and maximising profits at a time when the safety regulator was becoming increasingly close to industry. The Green Paper is a golden opportunity to reinvigorate Australia's aviation industry." He adds: "It is crucial that we stabilise the industry, re-establish a truly independent regulator and develop long-term sustainable careers for pilots."

Australia's GA industry, however, fears the White Paper will do little to alter its situation. The Aircraft Owners and Pilots Association had hoped that the country's struggling GA industry would receive assistance after the government folded the GA Action Agenda - a process designed to address the issues facing the industry - into the White Paper process. "We put a lot of effort into the Action Agenda but it just seems it has been swept under the carpet," says the association's president Col Rodgers. "I'm doubtful we'll get any assistance through the aviation policy," he says.

◄ Share this news!

Bookmark and Share


The Manhattan Reporter

Recently Added

Recently Commented