Qantas and Virgin accused of hoarding slots at Sydney Airport

Sydney Airport has accused Qantas and Virgin of hoarding valuable slots at the gateway to keep them out of competitors’ hands.

Sydney Airport says Virgin Australia is holding on to all its slots despite its intended reduction in flights. Picture: NCA NewsWire / Christian Gilles

Sydney Airport has accused Virgin Australia and Qantas of hoarding slots at the gateway to keep out competitors, in behaviour that could impede the recovery of the aviation industry.

In a strongly worded submission to the Australian Competition & Consumer Com­mission in response to the proposed expanded partnership between Virgin and Alliance Aviation, Sydney’s general manager of aviation, Rob Wood, said slots at the airport were a “scarce ­resource”.

The two major airline groups, Qantas and Virgin Australia, “own” 76 per cent of all Sydney Airport slots — or timeframes when aircraft can take off and land. Normally the slots are subject to “use it or lose it” rules, but a ministerial direction issued in the current COVID environment had seen those rules temporarily waived.

Mr Wood said that meant airlines were hanging on to slots they had no intention or ability to use, possibly for many years, in order to prevent others from getting hold of them.

“Virgin Australia has announced the closure of Tigerair, a 43 per cent reduction in fleet and its intention to reduce capacity and routes flown, yet Virgin Australia continue to hold on to all their pre-COVID and pre-­administration slots, including those used by Tigerair,” he said.

“The Qantas Group has similarly sought to retain all of its pre-COVID slots notwithstanding announcements about long-term fleet reductions/groundings.”

He told the ACCC that such a pattern of behaviour had the cumulative effect of preventing competition and impeding the recovery of the aviation industry.

The airport also raised concerns about Virgin Australia’s plan to “loan” some of its unused slots to Alliance for the operation of regional services on its behalf.

“To allow them to be loaned in this matter with the stated intent to prevent other airlines being able to access them would set a dangerous precedent that could materially reduce access to Sydney Airport for new entrant airlines,” Mr Wood said. “It would also represent a profound circumvention of the slot regime and ­allocation process.”

He made the point that the availability of slots was the only issue Sydney Airport had with an expanded partnership between Virgin and Alliance.

Sydney’s general manager of aviation, Rob Wood, said slots at the airport were a “scarce ­resource”. Picture: AAP

Regional Express went further in its submission to the ACCC, raising concerns about the sharing of sensitive information between the two carriers on up to 40 regional routes, including 23 neither currently flew.

Rex government relations director Ben Worsley said allowing competitors to share information on pricing, strategies and costs under an interim authorisation carried significant risk.

“Knowledge is not reversible; the parties simply cannot stop knowing what they know if the final authorisation is denied. Put simply, the egg cannot be unscrambled,” Mr Worsley wrote.

The ACCC is due to decide whether to allow an interim authorisation for the expanded Virgin-Alliance association this week.

It will coincide with Virgin Australia’s emergence from administration under new owners Bain Capital. On Tuesday, the $3.5bn sale will officially be completed with administrators Deloitte due to handover the final paperwork, following the transfer of all shares in the airline and its removal from the ASX.

Virgin went into administration on April 20 with debts in excess of $7bn.

As part of its restructuring, the airline has gone to a fleet of all Boeing 737s, which are unsuitable for a number of regional routes.

In order to continue servicing those areas, Virgin has applied to the ACCC to expand its partnership with Alliance, which has a fleet of Fokkers and Embraer 190s.