Thin Intrastate Air Route Regulation in WA: Compellingly Justified?

Abstract

In March 2008, the WA Government announced a review of intrastate aviation policy. The Review will examine whether the existing regime for regional air services remains adequate. That regime is characterized by deregulation on jet routes and, in effect, closely regulated monopolies on smaller turboprop routes. The State has historically kept a tight rein over intrastate competition policy and, for the most part, has been slow to deregulate regional routes. The argument being that certain routes are not viable without regulation and cannot sustain open competition. Regulation limiting competition, it is put, is necessary to ensure that appropriate services are available on all routes. Prominent recent and historical experience of instability in the aviation sector has appeared to have confirmed faith in this approach. Yet in a contemporary environment of deregulation, and with a new National Aviation Policy on the cards, questions might now be validly put to a framework defined by exclusive licenses, price controls and entrenched incumbent operators. Certainly consumers and others will be keen to ask whether this environment remains efficient and, above all, whether it does what it claims to do – serve the market appropriately.