Audit of Sydney Airport slots shows Qantas, Virgin working system to their advantage

A minister-ordered audit of Sydney Airport airline slots shows Qantas and Virgin are working the system to their own advantage but are not breaking any rules.

An independent audit of Sydney Airport slots shows Qantas and Virgin Australia are working the system to their advantage but are not breaking any rules.

Slots are the time windows allocated to airlines for access to Australia’s biggest gateway, of which Qantas, Jetstar and Virgin Australia hold the lion’s share.

That access has prompted accusations by Sydney Airport of “slot hoarding” and that the dominant airlines are holding on to more slots than they need for the purpose of keeping competitors out.

Federal Transport Minister Catherine King earlier this year ordered an audit following on from the Harris Review which examined demand management at curfew-constrained Sydney Airport.

Brisbane-based consultancy To70 Aviation undertook the audit which found “airlines often employed tactical approaches to manage their slot portfolios with both positive and negative impacts”.

“These practices are permissible under the scheme and provide the necessary operational flexibility to airlines to manage disruption caused by factors both in and out of their control,” the audit report says.

“However, this also has implications for the overall efficiency and fairness of the slot allocation system, especially during peak periods.”

Limited competition was considered a factor in the manipulation of the system, because it allowed airlines to easily retain slots under the 80-20 rule.

The rule means airlines must use a particular slot at least 80 per cent of the time or lose it.

At the same time the audit showed no airline had more slots than they could conceivably use based on their fleet size.

Furthermore, the audit showed slot use had improved markedly since the Covid-19 pandemic, and that Qantas Group consistently used more than 90 per cent of its slots and Virgin Australia more than 87 per cent.

Prior to its collapse, Rex had the best utilisation rate on major city routes at 97.9 per cent, but failed to use 37.3 per cent of its regional slots out of Sydney due to aircraft and crew availability.

In an effort to ensure maximum slot utilisation, Ms King was seeking a swift passage of the

Sydney Airport Demand Management Amendment Bill 2024, which is due to go before the Senate on Thursday.

The legislation has sought to toughen the penalties for slot misuse by introducing four new offences including failing to use an allocated slot, and applying for slots with no reasonable prospects of use.

“The Albanese government’s Sydney slots legislation represents the most comprehensive reform of the slots system in 25 years,” Ms King said.

“As the nation’s busiest airport, reforming the slots system at Sydney will drive competition across the entire network.”

Qantas and Virgin Australia planes travel down the runway at Sydney Airport. Picture: David Gray/AFP

The slot misuse offences would be enforceable through the courts, and incur civil penalties of up to $99,000 per offence.

It would also introduce transparency mechanisms, compelling airlines to produce information about slot usage.

Ms King said the law would “help boost competition, drive down prices and give Australian travellers a better experience”.

“We urge the Opposition and the Greens to support the passage of the bill in the Senate to strengthen competition into the Sydney basin – a critical gateway for Australia’s aviation market,” Ms King said.

A Qantas spokesman said the slot audit provided “welcome transparency” and clearly showed that Qantas and Jetstar complied with the rules and had not been hoarding slots.

“Qantas and Jetstar only request slots and schedule flights which we have the aircraft and crew to operate,” the spokesman said.

“We have welcomed the legislative reforms from the government, which increase transparency and better align Sydney Airport’s slot management system with international best practice.”

A Virgin Australia spokesman was also welcoming of the findings that the airline had always complied with the scheme rules.

“As the only scaled competitor to Australia’s two other national airlines, Qantas and Jetstar, we support greater transparency and processes that improve competition across the aviation sector,” said the spokesman.

“That is why we have welcomed the Government’s important review of slot operations for Sydney Airport, including closer alignment to international guidelines.”

Originally published as Audit of Sydney Airport slots shows Qantas, Virgin working system to their advantage