Qantas and Virgin-owned company accused of ‘slot hoarding’ could lose rights to manage Sydney Airport flights, as tender opened

Sydney Airport faces a major shake-up of how flights are scheduled and who can get access, as the federal government seeks to quash alleged issues of “slot hoarding” by Qantas and Virgin at the nation’s biggest airport.

A company majority-owned by Qantas and Virgin has been in charge of deciding which carriers get access to limited and in-demand time slots at Sydney’s Kingsford Smith gates.

The pair have been accused of keeping spaces for themselves even when they did not have flights to run in those slots, as a tactic to lock out competitors.

Transport Minister Catherine King has now opened a tender for that slot management job as part of an effort to make that system more transparent.

“Our reforms to the slot system at Sydney Airport are an important part of improving competition and significantly increase transparency,” Ms King said.

But the former head of the competition watchdog, Rod Sims, said management of airport slots should not be open to any carriers, and they should be excluded from bidding for the job.

“Make it arms-length from all the players,” Dr Sims said.

“Whether it’s Qatar or British Airways, but certainly not Qantas, Virgin or Rex, they should have no say in it.”

Slot changes follow collapse of Rex, Bonza

Regional airline Rex last week entered voluntary administration and will no longer fly between capital cities — the second airline to collapse this year after budget carrier Bonza also folded.

Shadow Infrastructure Minister Bridget McKenzie said the government had allowed the two airlines to collapse before acting.

“Labor should have started reforming Sydney Airport slots a year ago, instead of allowing a company majority-owned by Qantas and Virgin to make the decisions on allocating precious slots without any oversight,” Ms McKenzie said in a statement.

Bonza had never applied for slots at Sydney Airport.

In testimony to a Senate inquiry last year, Rex said it was not allocated the slots it had applied for and it only had 20 peak slots out of the 800 daily peak slots available.

Dr Sims said slot management was mainly an issue at Sydney’s airport because it was the most congested, and flights there had flow-on effects for every other airport and airline service.

The airline had called for slot hoarding to be addressed at the inquiry, which investigated the government’s decision to block Qatar’s request for more slots.

“Sydney slots are everything. Sydney is constrained, other airports are essentially not,” Dr Sims said.

“It’s the peak time slots which are rare and unavailable. That affects your ability [as an airline] to run a system.

“You can’t have competition without a better system of slot management at Sydney.”

Dr Sims did not question the integrity of Qantas and Virgin as managers of the current system, but said there should simply be “no conflicts” in how it is operated.

“Why get back into that situation? It’s outrageous that Qantas and Virgin have the role in the first place,” he said.

What is slot hoarding?

Currently, Sydney Airport has an “80/20 rule” that allows airlines to cancel up to 20 per cent of their flights and not lose their allocated slots.

Qantas and Virgin have both been accused of hoarding slots by scheduling more flights than they intend to run and later cancelling as many as a fifth of them.

In a statement to the ABC, a Virgin Australia spokesperson said the company has always been committed to “fair slot allocation and compliance”.

“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,” they said.

The tender process is part of a broader reform to Australia’s airline industry.

The government is due to release a white paper with more policies later this year.

Qantas has been contacted for comment.