GRADY, Ms Sybilla, Senior Manager, Policy and Research, and Acting Head, Policy, Australian Airports Association [by video link] WESTAWAY, Mr Simon, Chief Executive Officer, Australian Airports Association [by video link] CHAIR: Welcome. I understand that information on parliamentary privilege and the protection of witnesses giving evidence to Senate committees has been provided to you. Do you have a brief opening statement? Mr Westaway : Yes, we do have a very short statement. CHAIR: Please go ahead. Mr Westaway : I'll fire away. Thanks to the committee for the opportunity to appear. The Australian Airports Association represents more than 340 airports and aerodromes and over 150 corporate members across the aviation ecosystem, from major international airport gateways, such as Sydney, Melbourne, Brisbane and Perth, to regional airports and remote airstrips. Our members form a national network of critical infrastructure that underpins connectivity, economic activity and access to essential services across Australia. Airports are often thought of as transport infrastructure. We would emphasise that they are enabling infrastructure. Airports connect regional communities to health care, education and essential goods. They support national supply chains and exports. We help underpin tourism and investment. We enable workforce mobility across key industries, and airports play a central role in emergency response, including with aeromedical services and in disaster recovery. Aviation is a system that delivers Australia's economic and trade objectives in practice. This is directly relevant to productivity. A well-functioning aviation system reduces distance, supports regional economies and connects Australia to global markets. When aviation is constrained, the impacts are felt quickly across the economy. That's because aviation operates as a single integrated system, Regional, domestic and international networks are interdependent. Major airports connect Australia globally, while regional and remote airports ensure connections reach communities and industries across the country. Productivity depends on the performance of that entire network. However, the system is under structural pressure. Close to 60 per cent of regional airports operate at a loss, with a median annual deficit of around $192,000. Many are maintained by local governments with limited revenue bases, and yet they are expected to deliver nationally critical infrastructure and services. This highlights a clear misalignment between national expectations and local funding capacity. At the same time, rising infrastructure requirements and regulatory settings that are not always proportionate are constraining efficiency of investment and long-term sustainability. These pressures are now being compounded by external factors. Australia is operating in a more competitive global market for fuel, capital, freight and passengers. Maintaining an efficient and reliable aviation system is critical to ensuring Australia remains an attractive place to do business and to invest. Fuel is now central to that challenge. While supply remains stable in the near term, the issue has shifted to sustained cost pressure, system resilience and distribution risk. Airlines are already adjusting schedules and capacity, with impacts emerging through reduced connectivity, particularly in regional and marginal markets. These impacts flow beyond aviation, affecting supply chains, tourism, freight, efficiency and workforce mobility, with broader implications for national productivity and economic performance. In this environment, reducing avoidable system inefficiencies becomes even more important. Border processing is a core component of aviation productivity. Without efficient border systems, we create bottlenecks that contain capacity, increase costs and reduce competitiveness. Our AAA submission sets out practical steps to address this, including full digitisation of arrival processes, reinvestment of passenger movement charge revenue into border infrastructure and expanded deployment of kiosks and smart gates. There's also an opportunity to improve freight and border efficiency through more streamlined customs, biosecurity processes and better land site access. Improving productivity in aviation requires a system-wide approach that recognises interdependencies across airports, airlines, fuel, infrastructure and regulation. The policy response does not require sector-specific intervention, but it does require recognition that aviation is essential infrastructure and that its performance underpins national productivity. Stepping back, the core point is this: aviation is not simply a mode of transport. It is a system that enables Australia to function as a modern connected economy. Thank you, and we look forward to taking questions. CHAIR: I think we'll kick off with the deputy chair. Senator GROGAN: I have a particular interest in regional communities and how we support productivity in those communities. How important is aviation from that regional perspective? Mr Westaway : It's absolutely fundamental. On any number of measures and in many ways, regional and remote airports are probably a little bit less understood than they should be. The reality is that they connect communities. At one level, they connect people directly. People, freight and lives are connected between these regional and remote centres to a major regional city or, indeed, to a larger gateway, such as Sydney, Melbourne, Brisbane, Adelaide and around the country. We're a very large country or continent. We're diverse in terms of the spread of our people and airlines. Airports and where they have to operate are really core to that, and probably a little bit misunderstood by the big cities, as to the number of medical aircraft, emergency aircraft and things of that nature. They actually represent a number of percentage points in the overall landings, and obviously mean a lot more than that to those communities. Senator GROGAN: You've referenced some risks in your opening statement and also in your submission in terms of looking to the future. When we look to the long term with a productivity lens, how do you see technological developments, such as new and different aviation fuels, lower emissions and those kinds of things, playing out in the next 10 years? Mr Westaway : It could play out on a range of fronts. My colleague Sybilla can jump in if there's anything else to add. In terms of sustainable aviation fuels, or SAF—low carbon fuels—we're still at a very entry stage, if you like, in terms of the Australian market. The take-up of these fuels is very, very low as a percentage of overall fuel intake. The evolution of electric engines for aircraft is quite advanced. I would like to think and believe that, in time, we will see a couple of airline providers or some investors looking at how you could bring these types of aircraft into the market. We have an issue in Australia at the moment with our regional passenger services, commercial aviation, where we actually don't have a lot of that smaller airframe aircraft—your 19-seat style of aircraft, your Beechcraft 1900 type of aircraft. You do have the SAAB fleet, which obviously Rex operate, which is an over-30-seat aircraft. There are some smaller operators, Sharp Aviation and the like. But we don't have that smaller plane, which does mean that we are seeing some challenges around the larger aircraft such as, say, Qantas's Q400s. They're great regional aircraft, but they're not necessarily the right fit for some of these airports. So we're seeing the market sort of readjust a little bit around that. Ultimately, we have this opportunity. We think, just with new technology, we can maintain our airstrips, keep the investment and keep them compliant. We have the ability to meet that future market. However, it comes through technology, population growth in some of these centres and, perhaps, market change. I'm being optimistic, but I believe we've got to look at it that way. Senator GROGAN: Good. We like a bit of optimism. Mr Westaway : You've got to be optimistic. Senator GROGAN: I'll take South Australia as an example because I am a South Australian. We saw Qantas pull out of services to Mount Gambier a couple of years ago. We saw them stop their smaller planes and retire that fleet and bring in larger planes, which then caused a lot of challenges for some of our small airports in terms of the requirements that come with having a larger passenger set. At this point in time, if, looking across the board, we're seeing greater challenges, fewer flights and less amenity in those regional areas—and, again, I'm talking for South Australia here—how do you see us overcoming that? With the challenges that the airports particularly have when they sit in that bucket of not necessarily being wildly viable from a financial perspective but actually desperately requiring the service for taking people not just to and from or for tourism but also for health needs, how do you see that playing out? Because it's not working as well as you might like, what are the developments, that you can see that may change that without resulting in significant increases to customers and therefore less fraternisation on those routes? Mr Westaway : It's a fantastic question. We put a detailed submission to the Productivity Commission as part of the determinants of regional airfares inquiry. Commissioners are flying around the country at the moment, taking on additional information, and we hope some good outcomes come out of that PC inquiry. To the direct point of your question: it's about a partnership in growth. It's about the Commonwealth playing a role in that partnership and having sustainable infrastructure funding that's available over that longer-term period. In our AAA submissions, we repeatedly talked about the ability to have these grant programs in place from an infrastructure perspective. The Commonwealth can obviously directly support communities, but it's about having some longevity around those so that these individual airports and the regions and communities associated with those assets can work through what the right model is for them. In some cases, including in your great state, it may not mean more RPT services but rather the ability of that airfield to be upgraded or sustained so they can take more medical aircraft—the RFDS could expand if they're at a particular airfield, because they're at multiple airports, as you're aware, around the country with their various bases—and agriculture aircraft and the like. Also, similarly, you allow the community to then strategically plan the best use of that asset. We've got some wonderful airport members around the country. Basically, every fully operational airport's a member of ours, and there are some fantastic working models, which we're happy to share, that are looking through what their future state is, and it may not necessarily be passenger services. A number of our airports don't see a passenger flight for dust, but what they do have is a lot of other aircraft that come in and out. They need to engage with that and keep their infrastructure modern and compliant to meet that need. Senator GROGAN: It would be very helpful if you could share that with us. Could you expand a little on sustainable fuels. What do you see as the timeframe, the challenges and the opportunities in that sphere? Mr Westaway : I'm going to pass to my colleague Sybilla, who is our head of policy and is very strong in this area, to provide some input. I can add any extra value. Ms Grady : Over the next decade, sustainable aviation fuel will be the most important pathway for reducing emissions in aviation, particularly for long haul and other hard-to-abate segments, but it is also a major economic opportunity for Australia. With the right settings, we can build a domestic SAF industry that supports fuel security, regional development and jobs rather than become a net importer. We welcome the government's $1.1 billion commitment, but sustained policy support will be needed to remain competitive internationally. That includes clear long-term demand signals such as a SAF target or mandate that grows with domestic supply alongside production incentives and financing mechanisms to derisk investment. From an airport perspective, we are key enablers through infrastructure, storage and logistics, but those costs in the broader supply chain need to be recognised in policy design. SAF isn't just an emissions story; it's about productivity, investment and positioning Australia competitively in a global aviation market. We have a lot of airports working together through the AAA Sustainability Working Group—that is, environmental and sustainability professionals from across the country coming together on a regular basis to talk about how we achieve these objectives. At a recent one, there was a whole-of-industry gathering that included airlines, producers, grain stock and airports, of course. We're getting ready, and we certainly see it as a key pathway over the next decade, but we need that long-term policy signal—targets and mandates—to unlock that investment. Senator GROGAN: Great. That's very helpful. Thank you so much. CHAIR: Senator McKenzie? Senator McKENZIE: Thank you so much for your evidence today. I wanted to go to the impact the fuel crisis is having on aviation services. Could you give us some of the impacts that you're seeing with your members. Mr Westaway : Supply is currently stable. The MSO is at 30 days, which is around 26 per cent above the minimum required. It was around 38 per cent above the minimum required at the commencement of this crisis, the beginning of March. As you can see, we have dipped in a little bit. Supply is stable. Flow is getting through, for want of a metaphor, be it through the remote airports or through the regional gateways and our major airports. The issue and the challenge moving forward is the cost of that fuel coming into the system. The airports are working really closely with government, as are the airlines. We're very collaborative, and there have been great levels of engagement and information flow. But the reality check is that the fuel that's coming through is coming from other sources, not necessarily that traditional source that it was coming from pre March. Those costs are washing through the system. We're seeing Qantas and Virgin, through their market updates, provide reductions in capacity to the market. For Qantas Group, it was six per cent in the last quarter of this financial year. For Virgin Australia, it was a lower percentage—around two per cent, from memory. That varies a little bit around the markets. They have pulled some capacity out, and some routes have been suspended or put offline until such a time as conditions change. We've seen a number of changes in the international market. The Chinese mainland carriers have probably been the big one. They've flipped back on capacity. The other issue is obviously the Middle Eastern carriers. We saw a significant reduction at the time of that issue. We basically went from around 156 flights a week down to zero. Now that's back up to around a third, and we're moving more towards about half of that capacity being returned into the market. That gap was obviously significant for our travel industry as well as obviously on every single assessment around how our market works. I hope that's a bit of a snapshot of where we're currently at. Senator McKENZIE: Yes, thank you. I just want to understand the impact of cancellation and delays on the productivity of airports and what this committee could make some recommendations around to assist with driving productivity of airports and the aviation sector more broadly. Mr Westaway : Any unscheduled airline cancellation creates an impact on people, on the operations and obviously on productivity. I will give a bit of a shout-out to some of the good work that's been done collaboratively across the network. I know, Senator, that Airservices Australia is a passion point of yours. One area where we are working closely as a broader sector is the way the major airlines and major airports— Senator McKENZIE: Passion? Painful—I would say! But we're getting there. Sorry. Airservices Australia? Mr Westaway : In terms of what is happening, I'll just give a good example. Particularly over the holiday peak periods, up until March, we had record volumes of people travelling through our airports. International travel popped for outbound—as Australians—as the borders were reopened. It took a while for the inbound to come back, but we saw record after record after record internationally up until obviously the commencement of this crisis. We've had to, as an industry, work well together around how we manage really heightened peaks, which are obviously around that Christmas, New Year and January period. A lot of planning went into the Easter period and the like. So there are some good examples there. We are seeing fewer cancellations through the system. I'm not here to speak for the airlines, but we've seen a three per cent uplift in on-time performance and a similar uplift as well in terms of fewer cancellations. Senator McKENZIE: Mr Westaway, we want to be making recommendations that make airports and the aviation sector more productive, and I want to know what the top three things are that you would do tomorrow. Mr Westaway : Can I do three plus one? The top three would be the border modernisation process— Senator McKENZIE: So Home Affairs? Mr Westaway : The first step is removing the yellow arrivals card out of the system to go to digitised processing, the ATD. That is fundamentally key. Senator McKENZIE: Right. No. 2? Mr Westaway : No. 2 is red tape reduction. Senator McKENZIE: Give me some detail on the red tape reduction. Mr Westaway : I'll give you a fantastic example. Senator McKENZIE: We hear 'red tape reduction' and our eyes glaze over. We want to know exactly what red tape you want reduced. Mr Westaway : We need to maybe put some different colours to it to get people more attracted to it! But I think the key area to look at would be major development planning at airports. Currently, any proposal that's above $25 million—to cut to the chase—requires a very detailed process around assessment. Senator McKENZIE: So the master plan that has to be signed off by the minister? Mr Westaway : Yes. For any development proposal at an airport—it may well even be an upgrade of the parking facilities for the Uber drivers and taxidrivers at one of our major airports—if it's above $25 million, you've got to go through a detailed process with the department. If we even had that $25 million lifted up to $100 million, which is what the AAA proposal is—we'd certainly like it to be higher—that would take away a lot of paperwork, clean up some productivity within the department, allow people to be more focused on some other areas and, importantly, allow the airports to get on with good infrastructure upgrades to keep our airports moving. That would be an amazing change if we could get it, and, given the airports are investing $44 billion in fresh infrastructure over the next eight to 10 years, we think that would be an amazing uplift. The third area would be in competition. Senator McKENZIE: Competition—amen. Can I just ask you a question on master planning? Once a master plan is signed off by X minister, should changes to that master plan also require the sign off of the minister, or should airports just be allowed to, as long as they've done a bit of consultation locally, tick it off? I'm thinking about Moorabbin. Mr Westaway : I'd like to take that on notice, not to avoid the question but to give an accurate response. Senator McKENZIE: I would like the answer to that, because I think the act needs to be changed. There's no provision for, say, Minister King, to say, 'I don't agree with that. I'm not allowing you to do that,' once the original's been signed off. If you could take that on notice, that would be great. Thank you. CHAIR: Senator Ananda-Rajah. Senator ANANDA-RAJAH: Mr Westaway, with regard to regional airports, can you go back to basics. How many are there? Mr Westaway : It's a great question. There are around 340 airfields in the country that, in essence, have commercial landings. The airports are tiered, designated tier 1, tier 2 or tier 3. There are many ways of defining it, but your top 14 airports around the country have a million passengers a year or above. The remaining airports have a lot fewer. So it depends how you want it. We could probably give you the exact specifics of which particular tier in what you would want to see. Senator ANANDA-RAJAH: Something high level would be good, just to kind of educate— Mr Westaway : There are a lot of airports around the 200,000 passenger a year mark. Mildura is a good example. It has around 200,000 PAX access. There are a lot in that 180,00 to 250,00 or 300,000 PAX mark per annum. Senator ANANDA-RAJAH: Got it. Are they all loss-making? Mr Westaway : A lot of them are. In our latest research, we collaborated with Regional Capitals Australia, which you had here giving evidence earlier today, and we did a big piece of deep research with ACIL Allen. Our latest findings are that 60 per cent of those airports surveyed—we had a large number who participated—have a consistent annual loss. Senator ANANDA-RAJAH: Could you send us on notice a list of that data. If it has to be in confidence, it's fine. Mr Westaway : We can. We have provided that, but we can absolutely make sure you have all the data that you need. Senator ANANDA-RAJAH: Thank you. How can we boost revenue to these places? Apart from moving people, there's also this issue of moving cargo, right? Yesterday we heard from the startup, Dronamics. It's an unchartered drone. It's a large, unmanned drone. It runs on aviation fuel, and it can drop 350 kilograms into a place. This is just one example, but there are other drone companies that are trying to get a foothold in Australia, and these could be a huge boon to regional communities. What sort of work is going on in that space to facilitate these sorts of innovations? Mr Westaway : It's coming in a few different areas. It's a great question, and I hope you won't mind me answering it this way. When we talked about the need for greater integration and cross-pollination across departments and authorities, I think this is one area that we need to do. CASA has done a heap of work in this space, as these unmanned aircraft move towards a level of commercial operation. At the moment it's about moving goods. To your question, ultimately there are proposals, as you may well be aware, to move people in an aerial taxi a bit like The Jetsons. We're obviously not quite there yet. The reality is this is an opportunity for many of our airports such as those on the city fringe as well as our city metro airports—Senator Mckenzie alluded to Moorabbin before—where you could have some of these operations in place. Obviously they have helicopter operations at these types of airports, so there's no reason why you couldn't just transfer there. I think that's what we were getting to in the idea of the Commonwealth being a partner with us around providing those structures around grant opportunities to allow the owners of these airports, which are traditionally councils, to think about their future planning and what it looks like. Then it's up to obviously up to the ratepayers and the council that owns the asset to work through which direction they'd like to go. B2B commerce aviation activity, which is not necessarily passengers but other activity, is something we want to encourage. There are some great examples around the country, which I said I'm happy to provide for you. Ballarat airport is a good example of what they're doing with manufacturing for agricultural aircraft, for example. They've built a brand new facility there, and they don't do passenger services. Senator ANANDA-RAJAH: Yes, please. Send us some examples. When you said we need to better facilitate this and that CASA is doing some work, what does that entity to facilitate this look like? Is it an interdepartmental, intergovernmental working group? God forbid, another working group! But do you see what I'm saying? Who are the people that we need to convene to make this sort of stuff happen? Mr Westaway : I think it's about having the right connectivity through the ministers and then through the departments, having the right people and the ability to come together in whatever forum. There are some very good forums, by the way, that sit within government. There are that many different committees. The National Passenger Facilitation Committee, which is run through Home Affairs, is co-chaired by industry and the department. That works extremely well. We all come together. We're talking about the border modernisation projects. Sybilla, is there anything you needed to add there? I'd be careful we don't step outside our lane with our triple A current policy, but it's a good question that you've raised. Senator ANANDA-RAJAH: Would a forum like that be one to consider unmanned aircraft? Mr Westaway : Absolutely. Ms Grady : I think an interdepartmental approach would help to ensure that new technologies, like drones, are integrated in a way that complements the existing aviation system, rather than operating in isolation. It's also important that that's done in close partnership with industry, to ensure that the operational realities at airports are reflected in how those systems are designed and implemented. So I would say the focus should be on coordinated system-wide planning that enables innovation while maintaining safety, efficiency and connectivity. Mr Westaway : To add something extra, what's important is also how that process is undertaken and the speed. To give you an example, a number of our airports are using drones as part of security—such as for perimeter fence line management security assessment. We had fantastic innovation with Port Lincoln Airport in South Australia on this approach. In essence, they used a drone out of a box and used AI to circumnavigate to monitor the fence lines, which is a fantastic innovation. They've now got it fully approved, but there was a long approval process with CASA. It took a long time, well over a year—about 18 months. Part of the problem was—because they're operating that unmanned aircraft above the fence line—how does that impact the airport itself? Even though that airport didn't have that many regular flights. So I would say it's the commonsense test, but obviously you don't want to get in the way of good safety and safe outcomes. That's just an example of where we could better utilise innovation to do things better and be more productive. Senator ANANDA-RAJAH: This actually drives me crazy. We need to get better at this as a country. It's a drone out of a box for goodness sake. It shouldn't take a year and a half. That is genuinely insane. Finally, Mr Westaway, when is Melbourne Airport going to be made better? It's such a horrible experience. Honestly, I feel like I pop grey hairs every time I go there. It's so stressful. Mr Westaway : Well, it actually won some international awards recently. I'm a Melbourne local. I use the airport perhaps almost as much as you do. It's doing a lot right. They're under a significant level of upgrades— Senator ANANDA-RAJAH: It's crazy! Mr Westaway : that are being undertaken at the moment. They're expanding significantly. What they want to do in the near future is to improve the road system. But, more importantly, what we will see is the future terminal upgrades that are occurring there. As you're well aware, there's a future third runway occurring. I actually think they're doing a good job; they're a very efficient airport. But there's a lot of infrastructure underway. They're across that, and I think they're communicating well with the community around that. Senator ANANDA-RAJAH: Dare I ask about airport rail? Are we nearly there with airport rail? Things have progressed, haven't they? Senator McKENZIE: Oh my God, it's been over a decade! Senator ANANDA-RAJAH: I think there's a memorandum of understanding. Mr Westaway : I don't want to touch airport rail. I think we know what the answer is. Senator ANANDA-RAJAH: Let's look at some timeframes. Thank you. CHAIR: I have a couple of questions on SAF. What are the barriers to getting more SAF moving in Australia, outside of government pouring money into it? Mr Westaway : I'll get Sybilla to answer that. Ms Grady : Funding is certainly part of the challenge, but there are a number of other key barriers to scaling SAF in Australia. The first is policy certainty: investors really need clear long-term signals, such as a SAF target or mandate, so that they have confidence that there will be sustained demand. The second is regulatory and approvals complexity, including planning and environmental processes, which can delay project development if not well aligned. The third is feedstock availability and supply chain coordination—ensuring that there's sufficient and sustainable input material to support production at scale. I'd also say infrastructure, including storage and distribution integration into existing fuel systems, which requires coordination across the aviation supply chain. Finally, there is a need for robust accounting and certification frameworks, including guarantee-of-origin and credible book-and-claim systems to ensure the integrity that unlocks investment. We did a report last year with ICF on SAF accounting—it's quite esoteric. I might send that to the committee, if you're interested in some light reading on that. Essentially, it recognises that, as airports are enablers of this, they will be able to account for their role in SAF through emissions accounting at scope 3. I'm happy to send you that report. I hope I've articulated that okay. Funding is critical, but it really is about having a coordinated, end-to-end policy framework that supports production, distribution and uptake. CHAIR: Without government intervention at some point, is it ever going to happen? Ms Grady : We need government intervention. It needs government support, and the government has certainly signalled that that's something it's interested in, with the investment that has come. But, without intervention, the likely outcome is that Australia becomes a net importer of sustainable aviation fuel, and that would [inaudible] fuel costs. CHAIR: If you forget about the funding piece—you talk about building the regulatory architecture and accounting rules. Would SAF come online in Australia if the regulatory framework was there but there was no funding? Mr Westaway : I think you're going to need both. The reality is that the airlines will move there but the price point at the moment for SAF into the plane—it's obviously come back a lot since the crisis, and Delta is reducing, as you're probably well aware, but it's still a long way away. Qantas have well less than one per cent of SAF in the plane currently. That's just that example. We have lots of feedstock. We grow so much canola. I think we just have to sit down and work through what collaboration we need. There has to be a role for government in this, at this stage in its evolution. CHAIR: Are the farmers generally supportive of this? Senator McKENZIE: Yes, very much so. Mr Westaway : We think they are. Senator McKENZIE: It's not just the cane growers up north; it's the grain growers as well. There's a whole lot of waste feedstock right now that can contribute to this industry. Sorry, Simon—they don't need evidence from me on this committee. You go. Mr Westaway : No, that's okay. We agree with you. There's plenty of feedstock out there. We're obviously a food bowl for Asia and the world, and our farming community would get so far behind this. The canola opportunity alone is significant. There are obviously some big corporate players who would love to be providing more feedstock into the system for this opportunity. CHAIR: That's what I figured you'd say. So, effectively, there's been money on the table for some time, but the other architectural things haven't been progressed, have they. Mr Westaway : More needs to be done. CHAIR: Okay. Thank you for being there. You go with our best wishes..