My recent experience across a large recent regional airline administration in Australia was complex and the rebuild work cut across all of the key issues facing regional aviation. The Federal government nearly owned this airline, as a buyer of last resort to maintain much essential regional connectivity.

The airline had multiple technical problems with old aircraft, chronic underinvestment across the business, high staff attrition and severe demand on limited cash. A large portion of the fleet was parked, the airline’s long term reliability and on-time-performance metrics have been awful for customers and stakeholders.

All of this impacted customer demand, because the airline wasn’t seen as reliable. Would the flight turn up? How could the fleet be more reliable?
The project quickly moved beyond due diligence to thinking about how to create a financially viable regional aviation business that could then commence a CapEx project to refleet this regional airline with alternate aircraft.

As part of this project we conducted an economic analysis of airport infrastructure, including policy perspectives, and recommendations to deliver better services and connectivity for Australians.

In our analysis, we found that regional airports were mostly transferred to local councils with financial terms set in perpetuity. This left councils without sustainable funding, or a blueprint for how to run the airport. At times the airport manager was also the infrastructure manager, flipping public sector cash between roads, amenities and runways!

A decision made decades ago is having ramifications today, leading to significant regional airport infrastructure deficits with many runways and aprons approaching end-of-life status. This is one example where larger aircraft options do not work easily, it is also an example where regional airlines will be unable, in almost every case, to pass costs for runway upgrades, new terminals and security screening onto their diminishing passenger cohort.