Even though the ticketing systems show that there are more than 150 flights a day between Sydney and Melbourne, finding one that won’t get cancelled can be as difficult as playing Russian roulette. This air route has long been considered to be one of the busiest in the world.
According to the statistics, slightly less than one in ten flights along the route will be canceled. Meanwhile, there is a heated debate going on within the aviation community, with some suggesting that major airlines are selling tickets to Sydney services that they have no intention of flying.
They claim the rigorous regulation that regulates Sydney airport offers perverse incentives for airlines to plan then cancel some services, and a growing chorus of critics are appealing for reforms to the rules. The strict legislation that governs Sydney airport.
In addition to a curfew that goes into effect between the hours of 11pm and 6am, the activities of Sydney Airport are restricted by a number of other laws.
At airports all throughout the world, airlines are allotted a particular time and day, which is referred to as a slot, for their aircraft to touch down or take off. This allows for maximum efficiency. Slots are generally distributed twice a year, during what are known as “seasons,” and incumbent airlines are allowed to keep their slots throughout each season.
However, if during a given season an airline is unable to operate at least 80% of a certain slot, which means that they do not run a particular flight more than 20% of the time on its schedule, the airline runs the risk of losing that slot.
A cap of 20 movements every 15 minute interval is mandated by legislation that was passed in 1997 with the intention of reducing the amount of noise pollution in the heavily populated catchment area around the airport. This cap effectively implies that there cannot be more than 80 combined take-offs and landings each hour in Sydney.
The so-called “use it or lose it” or “80/20 rule” was enacted to prevent airlines from bidding for all unallocated slots and then purposefully not flying them as a strategy to obstruct competitors who were looking to start a competing service. This rule was aimed to prevent this practice.
The term “slot hoarding” has been used to describe this type of behavior.
Critics argue that the 80/20 ratio has proven to be excessively generous for an airport with slots as scarce as Sydney’s due to the growing demand for flights into and out of Sydney over the past few decades.
There are allegations that airlines, in particular Qantas, Jetstar, and Virgin, carefully participate in slot hoarding at Sydney airport, but that they do so while adhering to the laws in order to keep their slots.
In order to accomplish this, it is believed that airlines will schedule more flights on a specific route than there is demand for or capacity for, and then they will finally cancel the flights that are in excess.
The airlines are able to distribute the cancellations across their schedules by rotating which services they cancel and concentrating customers onto their remaining flights. This ensures that no specific slots have a cancellation rate that is more than 20%.
As evidence that the laws are being broken, naysayers point to the persistently high cancellation rates on Sydney routes. These rates were 8.7% in July of this year between the city and Melbourne and Canberra, and they remained stubbornly high for Adelaide and Brisbane as well.
According to the data provided by the government, larger carriers had a greater percentage of flight cancellations on these routes compared to smaller operators. For example, in July, Virgin cancelled 10.9% of flights between Sydney and Melbourne, while Rex’s cancellation rate was only 4.6%.
Smaller airlines, such as Rex, which has only recently begun operating large planes between Sydney and Melbourne and Brisbane in the past few years, as well as the recently established low-cost carrier Bonza, have been begging for the Sydney slot allocation system to be restructured.
They report that gaining access to peak time slots is a particularly difficult challenge. If an airline can only access slots on either side of Sydney airport’s curfew, it poses issues in running a return leg and coordinating aircraft and crew across a national network. If an airline can only access slots during peak periods, this can be crucial for an airline aiming to establish a presence at an airport. Slots at peak times can be important.
The smaller airlines contend that it is unfair if they are prevented from establishing flights during the times of the day when there is the highest demand for air travel. During these times, it is much simpler to sell all available seats on an airplane and run profitable flights.
It’s not just the more insignificant airlines that are upset by the rules. The need for immediate action has been voiced on several occasions by a diverse group of professionals in the fields of aviation and competition. These leaders include Sydney airport, the Australian Airports Association, and both previous and current commissioners of the Australian Competition and Consumer Commission. Reforms were also suggested in a review of the system that was ordered by the government in 2021.
Some people believe that the laws that are currently in place inhibit competition and cause Australians to pay a higher price for flights departing from Sydney airport.
On Monday, Geoff Culbert, who will soon step down as chief of Sydney airport, addressed the issue of sluggish growth in the number of domestic passengers. He said, “We continue to see evidence of unused slots going to waste, with a persistent mismatch between slots held by domestic airlines and the schedule that is flown.”
According to prior statements made by John Sharp, who was the deputy chairman of REX and the transport minister in 1997 when the legislation was enacted, “It’s as plain as the nose on your face that Qantas is hoarding slots by cancelling sufficient flights to remain within the 80/20 rule.”
Both Qantas Group, which together with budget carrier Jetstar operates 66% of domestic aviation, and Virgin Australia deny in the strongest possible terms that they hoard slots at Sydney.
As evidence that the system is effective, Qantas cites the fact that it lost 1% of its slots during the most recent season. Additionally, the airline suggests that the high cancellation rates out of Sydney are primarily due to poor weather conditions and a scarcity of air traffic controllers.
“The claim that Qantas is hoarding slots at Sydney airport is simply wrong,” the chief executive of its domestic subsidiary, Andrew David, said in July. “The claim that Qantas is hoarding slots at Melbourne airport is simply wrong.”
The company Virgin Australia has stated that it does not believe it is necessary to change the 80/20 rule. In June, Susan Schneider, the airline’s chief legal and risk officer, testified before a legislative standing committee on economics, stating that “we have a slot portfolio that is necessary for us to be competitive, to have scale, and to compete against the Qantas Group.” Schneider was referring to the airline’s need to have a slot portfolio in Melbourne in order to compete against the Qantas Group.
It’s true that bad weather and a lack of air traffic controllers can lead to flight cancellations, but Sydney Airport thinks airlines overstate the impact of these factors in order to cover up planned cancellations. In April, there was a 46% cancellation rate for flights between Sydney and Melbourne on days when there were neither weather nor air traffic controller issues.
The evaluation conducted by the government in 2021 resulted in a number of suggestions, one of which was an increased focus on the data regarding flight cancellations and an increase in the amount of communication with airlines to assess whether or not cancellations inhibited competition.
An aviation white paper, which has a large potential for industry-wide reforms, is instead being pursued by the Albanese government as an alternative strategy. However, the earlier draft, which was referred to as the green paper, is already running behind schedule. The white paper is not due until the following year.
Catherine King, the minister of transport, has resisted requests to immediately modify the Sydney and Melbourne slot system in advance of the process of developing a white paper.
As a result of this, critics are afraid that the practice of slot hoarding will be able to persist for years to come.