Senate Rural and Regional Affairs and Transport Legislation Committee [Part 2], , 1:23:59 to 1:49:31
Review of Airservices Australia's operational performance, flight delays at Sydney Airport, and proposed increases to aviation service fees.
Topics: Infrastructure, Public service staffing
Speakers: Rob Sharp, Senator Bridget McKenzie, Senator Glenn Sterle, Unknown Speaker
>> Thanks, Senator Brockman. And that's the outcome for done. So look, we've got a couple of minutes to air services. Should we break earlier? Yeah, let's come back let's take a 15-minute and come back at 10 past, >> Okay, inside broadcasting. Thanks, guys. Welcome back, everyone. And I welcome Airservices. So, do you want to make an opening statement, Mr. Shaw?
>> a brief verbal
>> A brief one, yeah.
>> Thank you. >> Sure. >> I I did want to acknowledge the important milestone in aviation with the opening of Western Sydney International Airport. I've been around this industry way too long and it was very exciting to be out there to see that delivered and we played a role in it. Our first digital aerodrome services was delivered and has been in use since July. And also we've deployed an off leading edge firefighting service out there and pretty significant milestone and achievement for us. So we we were pleased to play our role and support the growth in Australia. Also just brief update on Sydney Kingsford Smith Airport. We are working closely with CASA and the ATSB on the recent incidents and we're progressing with those. That work is identifying potential improvements and we'll obviously take those on board and and implement those. The same time we are progressing a resilience plan for KSA and that's focused on controller numbers. So I have spoken to that issue before but it's also around strengthening our workforce planning and the airlines have indicated particularly that there's a consistency in service that they're after. So whilst we have some good periods we're not consistently delivering. And we are collaboratively working with industry our union representatives, staff representatives as well as the department on a uh traffic control working group to deliver that certainty. The minister also recently announced an independent assurance panel and we'll look to work with that panel as I set up and we'll also look at any improvement initiatives that come out of that. finally next week we actually release package four of the noise action plan in Brisbane. Uh this is actually going to present further options for noise sharing and the will start next week. Uh sorry, first week of November. So, we recognize that the aircraft noise is still an issue in Brisbane, and we believe this will further improve what we're doing in that space, and look forward to delivering those improvements. Chair, we're happy to take any questions from the committee.
>> Good stuff. Thank you. Senator McKenzie.
>> Thank you. Great to see you, Air Services there was a spate of severe disruption events at major airports over July-August. Mr. Sharp, I'm surprised you spoke about Western Sydney Airport uh opening, and your packages, but you didn't mention the near misses.
>> Uh I specifically did, Senator. Sorry.
>> Resulting in delays, cancellations of hundreds of flights as a result of air traffic control staff shortages. There have also been six near miss events between aircraft at Sydney Airport within a month. Between 27th July, two separate events on the 9th of August, 17th of August, 18th of August, and 25th of August. And the ATSB has just today released its preliminary report on two of those events. Given you've reported employing more air traffic controllers across Australia than pre-COVID, why have there been so many staff-related delays and cancellations inflicted on the flying public at Sydney
>> Uh Senator, I would fully acknowledge the issues that took place in July and August. Uh it has impacted on the public, and we've publicly apologized for that. Uh it is a tale of two stories. We have actually recruited 170 air traffic controllers in the time that I've been in this role. However, Sydney remains an issue for us. Whilst technically on paper we have the required numbers of staff in Sydney, I've mentioned before the resilience in Sydney is not there. We do need to keep recruiting. Sydney's quite complex. It's our most complex network hub. Uh you sneeze in Sydney and it affects the rest of the nation. And so we are actively working on it. Uh it's not one that you can just click your fingers and uh and put staff in. So over the last 18 months we've had a resilience plan which we're working on. However, uh we did experience uh a spate of issues in July and August. Uh and this is the consistency issue I talked about uh that the feedback we're getting from the airlines. We are working uh with a working group uh to resolve this issue. And [clears throat] there is a detailed plan that we've developed uh in conjunction with the
>> Given your poor performance impacting flights with chronic delays and cancellations over the past few months, how can Air Services Australia justify its application for an additional $150 million in air traffic control taxes on flights per year, which is currently before the ACCC?
>> Our funding uh for the organization comes through a building block model regulatory model which is articulated in legislation. So where we invest in infrastructure, so one sky, uh the opening of Western Sydney International, replacement of safety uh fire trucks that are at end of age, there's a return that we get. That price comes out of that particular process. In regards to performance, uh we're clearly needing to have skin in the game. And uh we are in con- we are in conversations with the airlines in conjunction with the pricing uh for a incentive/penalty type regime similar to what's in
>> So sorry, Mr. Sharp. Your performance has been appalling and you are asking customers essentially to pay an additional $150 million a year in taxes to reward your poor behavior and poor performance. I don't talk me through resilience plans, etc., etc. You're here to explain why you think increasing airfares across the country by $150 million a year will actually assist your performance.
>> The uh the pricing is geared to actually delivering the services that we provide to the airlines. That that actually underpins service. So part of the challenges that Air Services hasn't put its pricing up for over a decade. So it's actually 24% lower.
>> There would be arguments to say you don't haven't earned the right to actually increase prices cuz the actual bare minimum service provision expected of Air Services Australia isn't being achieved. Cancellations and delays and six near misses.
>> I agree. Uh in July and August those uh that data point is true. If if you step back there's been substantial improvements in our performance in the last 12 months. Uh 86% of the service variations have decreased. Industry including Qantas have actually acknowledged the improvements we're
making.
Thank you, chair.
However,
So uh basically the uh the challenge for us is we do need to invest >> [clears throat] >> in aged infrastructure to be able to deliver on the performance and also recruit staff. So there is a a what I call a transition period that the organization is going through uh but substantial improvements have occurred over the last 12-18 months and uh I believe that we do have a platform From a service perspective, I do think that having a an incentive scheme or a penalty scheme similar to Europe is something that is missing here and we're willing to back ourselves with that type of scheme and we've started the dialogue with the airlines.
>> How many of the 170 staff are working today that you mentioned earlier?
>> Uh they they are all working within the airline and we have 95 coming through this year of which about 50 are in already in the hot seats.
>> Um did you request approval for Minister King prior to submitting the request to increase air traffic control taxes to
>> was a full consultation process through the department as well as with the minister. I personally met with the minister to talk through the financing requirements, our performance, and also the requirements over the next 5-10 years with an aging asset base that is a key challenge for air services.
>> Has Minister King raised any concerns with Airservices Australia over the proposed fee increases?
>> I think the minister was concerned about what would the impact be on the consumer, Senator.
>> And what did you tell her?
>> But I indicated to her that there's been a structural change in the market here in Australia post-COVID. So the airlines are up-gaging their aircraft. Uh which means they're putting bigger aircraft in. We get paid on a per aircraft movement basis, not on a passenger basis. And those aircraft are carrying more passengers. So we looked at the average fares that are actually being charged by the airlines and the forecast growth. Those aircraft coming in and on a per passenger basis, we're expecting about a $1.50 on a one-way economy fare by the average increase per year over a five-year period. We believe that from an air services perspective, we need to be able to invest in the infrastructure to support the industry and the growth. And that funding is critical for us to be able to manage that transition of old infrastructure into new.
>> But the airlines don't believe that it'll be only a dollar fifty, do they?
>> The The airlines have been engaged over 18-month period in the build-up to those
>> I'm just asking what their advice is of the ticket price increases.
>> I think the airlines' perspective is ticket prices change over time and they pointing at the moment to high fuel costs. So the last thing they need is to see further cost increases. That's that's the message they're giving us. The actual drivers through the regulatory model have been shared in detail with the airlines and there's a ACCC independent review process that's underway at the moment.
>> Yes, no, I understand that. So Minister King approved your request to increase air traffic control taxes?
>> The Minister acknowledged
>> Yes or no?
>> Well, the Minister doesn't approve that. What the ACCC approves it. And then the process is all go to the Minister for a formal approval.
>> But you briefed her on your
>> briefed her so she was aware that we were putting up a relatively steep increase and the reasons why.
>> And she was okay with that.
>> She She was comfortable with us to progress the consultation process with the airlines and to commence the ACCC
>> Well, she wasn't very happy with your spate of delays and near misses. She called you in for a meeting on the 10th of August. And she reported that you had committed to implement improved rostering practices from early September. So, what improved rostering practices have you implemented since that meeting?
>> Uh I'll pass to Mr. Curran to talk to the uh detail on rostering.
>> Thank you.