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Air Transport System; Operators and Australian Regulatory Authority

Assignment 1


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This paper will look at the Airline Transport system in Australia, examining trends in the

regulatory framework and what they have forced the onboard players to do to survive. The

Australian airline industry has seen significant reforms to its policy and operating atmosphere

over the past decade, culminating in very stormy economic situations in that period (Osborne,

2013). This paper examines these mayhems and some of the threshold matters arising,

principally with the sustainability of operative competition in the industry.


Air transportation is a means of transport through which air conveys passengers, mail, and

freight. Australia has an outstanding, high-capacity Transport system record and an advanced

airline regulatory framework. However, there are opportunities for the system to be improved to

ensure Australia remains a leading aviation nation (Ross Love, 2014).

Australia is more dependent on air transport than many other states due to its massive and

sparingly populated landscape, and its detachment from many of the world's population centers.

Australia's air travel plays a significant role in the nation's connectivity and economy

(Wensveen, 2010).

With this estimated growth of air transport reliance, the challenge for Australian

Regulatory framework at large will be to guarantee other players of their security and smooth

operations in a cost-effective way (John Kain, 2002). On the other hand, the movement of people

and their goods to the carriers should be well facilitated through screening points in a well-timed

and honorable manner among other measures.

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Australia Regulatory Framework

Currently, the domestic air transportation is deregulated while Australia's international

airline operations remain reasonably regulated at the Commonwealth level. International air

travels are subject to the comprehensive capacity regulations that are part of the traditional

system of mutual air service agreements (ASAs) that reinforce the industry (O'Sullivan, 2015).

ASA's bilateral represent the international regulatory framework facilitating the operation

of programmed international air services between nations. These treaties regulate the amount of

airline seat capacity to be set out on scheduled services to the individual state to state routes; they

are basically of contract status and are enforceable in international law.

In the year 2007, airspace regulation mandate was relocated from Air services Australia

(Air services) to CASA, making it the solitary welfare regulator for the civil aviation system in


The industry was ostensibly 'deregulated' at the national level with the termination of the

two airline dogma in 1990. Nevertheless, some federal government upholds economic regulation

of intra-state routes. At the national level, the Australian Competition and Consumer

Commission (ACCC) regulates the state of competition; in accord with the trade practices


Another regulatory body is the National Transport Commission (NTC). It was put in

place in the year 2003 with continuing duty to progress, control and maintain even or nationally

steady regulatory and operational changes concerning roads, rail and air transport.

Air Transport Operators

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As of 2012, the Australian air transport industry comprised roughly 20,500 active

aircraft, together with over 7,500 sports and recreational aviation aircraft.

A substantial global trend that is opening up in Australia is the swift emergence of low-

cost international airlines. High Profile European examples include Irish airline and Ryan air

while South-west Airlines is an established American model. These are occasionally denoted as

'value-based airlines', basing on their focus on the aggressive repression of costs to withstand

highly competitive fare rates (DIRD, 2012). Australian Airlines and Freedom Air are the

Australasian airlines have been introduced in recent years to cater for this growing market.

Unlike selected few of the new low-cost international carriers in Australia; these airlines are not

self-regulating. They are fully-owned, separate detachments of Qantas and Air New Zealand (Air

NZ) respectively (John Kain, 2002).

In efforts to free up the international airline transport, the Commonwealth implemented a

policy of permitting more than one Australian international carrier to operate arranged services

to and from Australia. Unfortunately, the September 2001 letdown of the Ansett Airlines team

gave rise to the end to Ansett International's short-term operations. Notably, Qantas is once again

the only Australian flag bearer. On the other hand, Virgin Blue has motioned its intention to

operate in some international markets in Australia's direct regions, such as the trans-Tasman

market (Osborne, 2013).

Air transport; travelers carried in Australia was most recently measured at 70883315.08

in year 2013, conferring to World Bank statistics. Air commuters carried comprise both domestic

and international aircraft of air carriers listed in the country.

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Challenges facing the Australian airline industry

Australia's regulatory system faces the challenge of incorporating swiftly developing

RPT sector, while not superfluously burdening smaller operators. The main airlines mainly use

modest much aircraft compared to other departments (John Kain, 2002). In the year 2012, the

average age of the Australian central airline fleet was eight years old, in comparison to 28 years

for smaller operators and GA. The different scale between the two sectors implies the

insinuations for the types of safety systems they use. In this light, CASA ought to account for

this difference in its regulatory oversight.

Another challenge is the concern on current poor integration between the airline industry

and the regulator. In modern years, the regulator has embraced an across the board hardline

attitude, that is not suitable for a progressive aviation nation such as Australia (Tom Young,

2012). Consequently, relationships involving the industry and the Civil Aviation Safety

Authority (CASA) have, in most instances, become antagonistic.

The guidelines and regulations that have administered the air transport industry for many

years are facing opposing. The rules were formerly known for the innumerable motivations.

Drivers include; safety, national esteem, national defense, regional and urban expansion,

environmental sustainability, public service and other non-commercial goals in respect to

countries (Ross Love, 2014).

However, there is a mounting consensus that pointless obstructive regulations may have

led to substantial losses of economic productivity. Therefore; a disappointment to secure low-

cost air transportation to the biggest possible part of the population; the vital goal of air transport

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policies. This place a contention on whether to revise the dogmata or convince the system

players of the impending fruits if any.

A close look at global air transport accident statistics indicates that Australia is one of the

safest nations in which to fly. However, previous performance stands as a challenge to

expectations are higher. Previous records cannot be a mirror or an indication of the future. Active

air transport system can only be efficient through a constant aggressive evolution of the current


Measures to assess the challenges in Australia Air Transport system

Prominent aviation regulators across the globe are adopting performance-based

regulation by use of a trust and verify' mechanism. Working together with industry to give

superior safety standards and make sure that the regulator keeps in touch with quickly advancing

technology and security means. At times, specific operators should push the boundaries and

necessitate close regulatory oversight and a company regulatory response (O'Sullivan, 2015).

An efficient risk-based regulator should be able to judge when a hard line is

indispensable. Some states with progressive air transport regulatory frameworks have established

cooperative relationships between the regulators and industry, pushing for open sharing of

operational data. To achieve edge of trust in Australia, the current combative relationship

between industry and CASA should be addressed. Sharing operational and security information

is a vital principle of good air transport management (John Kain, 2002).

The entire system, specifically Australia air transport regulatory framework should

initiate strategic partnerships. Legal frameworks of impoverishment reforms and association in

the country may not be pertinent to other extensive markets. State regulation should continue to

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restrict many unions. Airlines should target to pursue partnerships that can complement and even

advance what they currently do best, as well as close conspicuous gaps.

CASA and the other regulatory bodies in the industry need to create a combined

operative relationship underpinning mutual trust and respect. Consequently, CASA should set a

new strategic course. The appointment of the new Director of air transport safety regulator

should deliberate on searching for a person with leadership and reform management aptitudes,

rather than principally aviation proficiency (Osborne, 2013). Other authorities have deployed

leaders without an aviation contextual, who have been prosperous in moving to the right strategic

direction for the safety regulator.

The CASA Board must exercise full authority over the organization. The recruitment of

two additional directors and filling of two impending positions gives an opportunity to certify the

CASA Board has a relevant assortment of skills as well as veteran specialists from across the

aviation industry. To help progress the industry; the regulatory relationship is recommended.

CASA should align its organization with industry. It should re-establish small administrative

centers at major airports, implement an industry exchange program, decentralize medical

renewals to DAMEs, and put out service KPIs.

The regulatory inspection program must imitate international auditing standards, fully

releasing findings after an audit and at exit briefings. Outcomes should be categorized on a scale

of weightiness. Also, CASA should engage a third party commercial auditor as a means of

complementing its surveillance program.

An immediate resolve to the current program is needed, and a more controllable (but

regular) process of intermittent maintenance should be put in place. This support ought to only

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alter regulations when modifications are required to expand safety measures or to ensure

harmonization with international best practice and the Ideals and Commended Practices of the

International Civil Aviation Organization (ICAO). Australia has to ensure that its exclusive

regulatory requirements are curtailed.

Future of Australian Air Transport industry

There is a seeming presence of economies of scale. The profits are by way of minimized

costs from the swelling size of operations in the national airline industry. The scenario proposes

that there may be a continuing necessity for regulation to avert monopolization over the long

term. In the absence of in effect economic, regulatory control of the industry, it has the

perspective to grow into a Qantas monopoly (Ross Love, 2014). Huge capital and setup costs

have by tradition led to high entry costs and have amplified the market muscle of the incumbent

airlines, hindering competition.

Should such conditions endure to prevail over an extended term, it rears various subjects.

Whether Australia's local market is large enough to withstand competitive supply and whether a

casually regulated oligopoly is still suitable (John Kain, 2002). Even though the past two airline

policy was not a substitute of an industry-specific economic. The regulatory management for

airlines is prone to the overall competition policy necessities of the Trade Practices Act 1974.

Trade practices are controlled by the Australian Competition and Consumer Commission.

Rivalry in Australia's international airline industry will remain to be toughened by the

bilateral air service treaties unless there are effective multilateral strategies towards a more

profuse administration over the longer term.

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The unrelenting success of Australia's air transport system will be compelled in

significant degree by public assurance in the safety and security of regular public transport air

amenities. To protect against illegitimate intruders in the aviation industry, an encrusted attitude

to preemptive safety is reinforced by the Aviation Transport Security Act 2004 (John Kain,

2002). The air transport system has long wriggled with limitations, but the present growth phase

in many markets, joined with growing technology and customer partialities, offers a real

opportunity. By espousing the measures recommended, carriers and other players can furnace

better relationships with stakeholders. They can cut costs efficiently, and progress their financial

performance in a maintainable way. This cane is in sole efforts with the right group of partners

(Wensveen, 2010).

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DIRD, 2012. Aviation Policy & Regulation. Aviation Safety Journal.

John Kain, R. W., 2002. Australian Airline Industry. [Online]

Available at


[Accessed 17 August 2015].

Love, R., 2014. The standard has been set: adapt or die. Australian Business Review, 28 March.

Osborne, C., 2013. Challenges affecting airline and airport. [Online]

Available at

[Accessed 17 August 2015].

O'Sullivan, M., 2015. Virgin Australia flies higher in domestic market but faces challenges

overseas. The Morning Herald, 19 February.

Tom Young, E. v. B., 2012. Australia; Aviation security: the Legislative update. [Online]

Available at

[Accessed 17 August 2015].

Wensveen, J., 2010. The Airline Industry: Trends, Challenges, And Strategies, New York, USA:

The University of Sydney.

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