Chapter 1Introduction and background
Referral and conduct of the inquiry
1.1On 10 October 2024, the Senate referred the provisions of the Sydney Airport Demand Management Amendment Bill 2024 (the bill) to the Rural and Regional Affairs and Transport Legislation Committee (the committee), for inquiry and report by 14 November 2024.
1.2The committee called for submissions on the inquiry website and wrote to a wide range of stakeholders inviting them to make a submission by 23 October 2024.
1.3In total, 20 submissions were received and published on the committee's website. A list of submitters is provided at Appendix 1. The committee also conducted a public hearing for the inquiry on 12 November 2024 at Parliament House in Canberra.
1.4On 12 November 2024, the committee agreed to extend the time for the presentation of its final report until 19 November 2024.
Structure of the report
1.5The report consists of two chapters. The first chapter provides background information and outlines the key elements of the bill. Chapter 2 examines key issues raised in submissions and at the public hearing. Chapter 2 ends with the committee's view and recommendation.
Background
1.6The Sydney Airport Demand Management Amendment Bill 2024 seeks to make changes to the Sydney Airport Demand Management Act 1997 which regulates the allocation and use of aircraft movement slots.
1.7The introduction of the bill follows several reviews and engagement processes that have investigated the efficacy of the Sydney Airport Demand Management (SADM) Scheme, including the:
Productivity Commission's 2019 inquiry report on the Economic Regulation of Airports;
2021 Independent Review of the Sydney Airport Demand Management Scheme (Harris Review); and
Government's Aviation White Paper process.
Productivity Review into the Economic Regulation of Airports
1.8The Productivity Commission's inquiry into the economic regulation of airports was established to determine 'the effectiveness of the economic regulation of services provided by airports to passengers, airlines and commercial operators'. The inquiry investigated whether regulatory arrangements constrained airport operations, focussing on the four airports monitored by the [Australian Competition and Consumer Commission] ACCC—Sydney, Melbourne, Brisbane and Perth and 'airports in the second tier of monitoring, such as Adelaide, Canberra and Gold Coast'.
1.9The inquiry report made several recommendations regarding the Sydney Airport Demand Management Act 1997. These recommendations included changing conditions around the allocation of permanent regional service series (PRSS) slots to allow flights servicing regional New South Wales (NSW) to have access to any peak-period slot. The report also recommended changes to how aircraft movements are counted in the hour, suggesting that measuring the number of actual aircraft movements once (rather than four times) an hour would better achieve the intended 80 movements an hour.
1.10The Productivity Commission concluded that the current approach to airport regulation benefits passengers and the community and remains fit for purpose but the monitoring regime should be strengthened, 'to enhance transparency over airports' operations and detect the exercise of market power'.
2021 Review of the Sydney Airport Demand Management Scheme
1.11In October 2020, Mr Peter Harris AO was commissioned by the Department of Infrastructure, Transport, Regional Development, Communications and the Arts (the department) to determine whether the SADM Scheme remained fit-for-purpose. The review found that the SADM Scheme should remain in place, but with reforms.
1.12One of the recommendations of the review included the introduction of a 'recovery mode' which can be enacted after a serious incident has caused a delay in aircraft movements. During a declared recovery mode, additional movements above the 80 per hour movement cap could occur. The review recommended that this recovery mode should have a limit of two hours.
1.13The Harris Review also proposed a range of recommendations around slot management, including but not limited to:
The Sydney Airport Slot Management Scheme 2013 be amended to remove the preference for changes to historic slots to rank ahead of new entrant slot allocation requests.
The SADM adopt the Worldwide Airport Slot Guidelines (WASG) 2020 standard for slot misuse and the WASG definition of 'new entrant'.
The Slot Manager be given the authority to allocate PRSS slots to regional carriers serving Sydney Airport from regional airports outside of NSW.
That changes be made to the definition of 'peak periods', from 6.00am to 11.00am and 3.00pm to 8.00pm, to 7.00am to 10.59am and 5.00pm to 7.59pm.
An independent Chair with substantial legal experience be appointed to the Compliance Committee.
That the Minister (or a delegate of the Minister) have the responsibility to take forward any action of slot misuse to the Federal Court if recommended by the Compliance Committee.
Aviation White Paper
1.14In August 2024 the Government released its 'Aviation White Paper: Towards 2050'. The paper outlined a range of reforms, including the government's commitment to improve slot management at Sydney Airport, in line with the recommendations of the Harris Review.
1.15Consultation undertaken as part of the government's Aviation White Paper suggested that the Sydney Airport slot allocation scheme was not working as intended. Submissions to the Aviation White Paper claimed that the current design of the Sydney Airport Demand Management Scheme provided:
… incentives for airlines to reserve more slots at Sydney Airport than they intend to use, which limits competition, imposes barriers to new entrants and results in higher rates of flight cancellation.
1.16To address these unintended incentives, the Aviation White Paper listed a range of proposed reforms. Many of these reforms are included in the proposed bill or could be enacted through delegated legislation under the bill. These reforms included:
temporarily allowing up to 85 movements in an hour to support the recovery of operations at the airportfollowing a significant and sustained disruption, such as a severe weather event, for a maximum of 2 hours—included in the bill
requiring additional reporting by airlines and the Slot Manager of slot allocation and use, including the reasons for cancellations or irregular slot movements and slots lost due to misuse or not meeting the 80:20 rule—included in the bill
allowing operators of New South Wales regional services to access additional slots in more desirable peak times and allowing other airlines to use slots that had been reserved for regional New South Wales flights but were not being used—not included in the bill
providing flexibility for the Slot Manager to 're-time' certain slots to improve efficiency, with agreement of the relevant airlines—not included in the bill
allowing airlines greater flexibility to use different sized aircraft—not included in the bill
making the Minister responsible for development of the SADM, rather than the Slot Manager—included in the bill
adopting international definitions of 'new entrants' to increase these operators' priority in slot allocation—with 'new entrants' to include airlines with fewer than 7 historical slots on a given day, up from fewer than 5—not included in the bill
adopting the WASG definition of 'slot misuse' to enable improved scrutiny and enforcement—not included in the bill.
1.17Five of the eight Aviation White Paper reforms listed above are not included in the proposed bill but are expected to be included in the new Slot Management Scheme.
Key provisions of the bill
1.18The following section provides a summary of the key amendments proposed in the bill.
Recovery period declaration
1.19The bill proposes changes to the movement cap to create a 'recovery period'. The 'recovery period' will only be declared if aircraft movements at Sydney Airport have been significantly disrupted, due to severe weather or other major incidents. During a recovery period 85 movements per hour for up to two hours will be permitted. This is an additional five movements per hour compared to the existing cap of 80 aircraft movements per hour.
1.20The declaration of a recovery period must be made by recommendation from Airservices Australia and will only allow flights already scheduled for that day to take off and land. A recovery period will not be permitted to extend into curfew hours and the total number of aircraft movements will not be permitted to exceed the current 1360 per day. All recovery period declarations will have to be published on the department's website.
Changes to Ministerial power in relation to slots and the Slot Management Scheme
1.21The bill seeks to transfer the responsibility for making the Slot Management Scheme, from the Slot Manager to the Minister. Amending the Act to allow the Minister to develop and implement the Slot Management Scheme will provide greater flexibility for implementing reforms and improve transparency and governance arrangements.
1.22The bill empowers the Minister to make the Slot Management Scheme by legislative instrument. This would allow the Minister to make reforms around the conditions imposed on the use of slots, including conditions around the allocation of PRSS slots.
1.23The bill also gives the Minister the power to compel airlines to produce information around their use and misuse of slots. The Slot Manager would also be required to publish information about how slots are issued and used by airlines. This is intended to provide consumers with better information about airline performance.
Civil penalties for slot misuse at Sydney Airport
1.24The bill repeals existing civil penalty provisions and replaces them with a new suite of civil penalties for slot misuse. Under the proposed bill, slot misuse by an operator will include:
(a)failing to use an allocated slot;
(b)conducting a gate movement without an allocated slot;
(c)conducting a gate movement outside the period for which the slot is allocated;
(d)conducting flight operations otherwise than in accordance with prescribed requirements for a slot;
(e)applying for the allocation of slots without reasonably practicable plans to use the gate movements permitted by the slots;
(f)failing to return certain unused slots to the Slot Manager, or to transfer the slots to another operator.
1.25As part of the compliance regime, the bill triggers parts 4, 5, 6 and 7 of the Regulatory Powers (Standard Provisions) Act 2014 (Regulatory Powers Act).
1.26The proposed 'civil penalties are broadly based on the WASG'. The penalty amounts included in the bill have been set consistently with the Australian Government’s Guide to Framing Commonwealth Offices, Infringement Notices and Enforcement Powers.
Compliance Committee
1.27The Compliance Committee’s current role is to ‘oversee compliance by operators and, where necessary, apply enforcement provisions in relation to slot management’.
1.28The bill makes changes to the membership and functions of the 'Compliance Committee', moving the membership requirements from the Sydney Airport Demand Management Regulations 1998 into the Act. The bill proposes that membership of the Compliance Committee consist of a chair, a representative of the airport-operator company, a representative of the Slot Manager, a representative of Airservices Australia, and three other members appointed by the Minister. The Chair must be appointed by the Minister and be independent from Sydney Airport, the Slot Manager, Airservices Australia and airlines that operates out of Sydney airport.
1.29The bill also makes changes to the function of the Compliance Committee, as explained in the Bills Digest:
Item 30 removes the Committee’s powers relating to recommendations for varying or cancelling slot allocations. The Committee’s new role will involve inquiring into, and reporting on, issues relating to slot allocation and use (proposed subsection 66(6)). It may inquire into these issues at its own discretion or in accordance with a request of the Minister.
Aircraft noise
1.30According to the bill's Explanatory Memorandum (EM), the proposed changes in the bill should have limited to no impact on aircraft noise:
The Bill does not impose new noise impacts on the Sydney community as it does not change the existing curfew arrangements or movement caps at Sydney Airport. Instead, the Bill intends to increase efficiency of aircraft movements within the current movement caps to ensure that slots are effectively allocated and utilised across the day to avoid excessive numbers of flights occurring in busy periods.
Financial implications
1.31According to the EM, the Government has already committed '$7.7 million in funding over the forward estimates in the 2024–25 Budget, and $1.5 million per year ongoing, to implement reforms to the Sydney Airport Demand Management regime'.
Consideration by other parliamentary committees
1.32At the time of writing, the Scrutiny of Bills Committee and the Parliamentary Joint Committee on Human Rights had not considered the bill.