CARTER, Mr Norris, Chief Executive Officer, Hobart Airport [by video link] COOPER, Ms Katie, Chief Executive Officer, Launceston Airport GRACE, Mr Martin, Aviation Manager, Launceston Airport [12:36] ACTING CHAIR: Welcome. I understand that information on parliamentary privilege and the protection of witnesses giving evidence to Senate committees has been provided to you. I now invite you to make short opening statements. We'll start with Launceston, and then we'll go to questions. Ms Cooper : Good afternoon, chair and committee members. Thank you very much for the opportunity to appear before the committee today. Launceston Airport serves as an essential transport and infrastructure asset for northern Tasmania. In the financial year of 2025, we handled more than 1.4 million passengers, which has been our busiest year on record. For Tasmania, as an island state, aviation is not merely a convenience; it is a necessity, with almost 90 per cent of interstate travel occurring by air. Launceston Airport contributes $81.7 million to Tasmania's gross state product and supports 678 jobs. Tourists arriving through our airport contribute more than $1.3 billion to Tasmania's economy. We also serve as a critical hub for emergency services, including companies like the Royal Flying Doctor Service and also support vital freight operations for our agriculture, aquaculture and seafood industries. Tasmania's aviation network comprises multiple airports working together to serve the state's connectivity needs. Alongside my colleagues from Hobart Airport that are appearing with us today, the state is also served by smaller regional facilities here where we are in Burnie Wynyard, on Flinders Island and on King Island. Tasmania's aviation network faces unique challenges, which create natural constraints on route economics, on frequency and on aircraft capacity. The challenges we face here are reflective of many of the issues that are affecting regional Australia across and throughout Australia. I would like to highlight three key themes from our submission. Firstly, the airport charges represent a modest component of overall domestic airfares. The majority of ticket prices are reflecting the airline's operating costs. Effective policy responses to affordability concerns need to consider the full spectrum of cost drivers, and that is to deliver the meaningful outcomes that we're all seeking for customers. Secondly, regional airports face structural financial challenges. We must meet the same federally mandated safety and security obligations as larger facilities, yet these compliance requirements represent a disproportionate cost burden for airports with limited commercial revenue. Thirdly, the termination of the Commonwealth's security screening support has created real financial pressures. Security screening imposes substantial fixed costs regardless of passenger volumes, and for smaller airports these costs can create a significant barrier to entry and significant barriers to service viability. Our submission makes seven recommendations to support regional aviation sustainability, covering infrastructure funding, security cost support, workforce development and appropriate regulatory thresholds. We welcome the opportunity to answer your questions. Thank you. ACTING CHAIR: Thank you, Ms Cooper. Mr Carter, I invite you to make an opening statement. Mr Carter : Thank you for the opportunity to appear today. I'm sure over the course of this inquiry you've heard how vital aviation connections are in Australia, and this is especially true for us here on our island state of Tasmania. Hobart Airport is the primary aviation gateway connecting Tasmania with the mainland and the world. Two-thirds of the people coming to and from Tasmania each year pass through our terminal. We welcome about 2.9 million passengers each year, and this is forecast to grow to 3.5 million by 2030. While Hobart Airport is classified as an inner regional airport, the success of Tasmania's visitor economy and the necessity of air travel over the Bass Strait means we probably have more in common with our major airport counterparts like Adelaide, Canberra and Cairns than our regional counterparts like Burnie, Devonport and King and Flinders Islands. From Hobart Airport, you can fly to all of Australia's capital cities except Darwin; to Newcastle and the Gold Coast; and internationally to New Zealand and the Wilkins ice aerodrome in Antarctica. After our recent runway upgrade, we're now working to establish a direct international service to an Asian hub such as Hong Kong or Singapore, which is forecast to bring over $122 million of additional economic activity for Tasmania's tourism and export sectors. While some of our routes are thin or seasonal services, we have found that once established they've proven to be sustainable and competitive in the long term in line with the size of each market. Hobart Airport doesn't connect to any of Tasmania's intrastate regional destinations with passenger services, but we do recognise that aviation access to Australia's regional and remote communities is absolutely essential for economic and social wellbeing. So, while we don't really encounter significant obstacles in attracting and maintaining sustainable services, we are sympathetic to the challenges that more regional and remote airports face in accessing and maintaining reliable, affordable aviation services for their communities. Thanks again for the invitation to appear today, and I look forward to answering your questions. ACTING CHAIR: Thank you both. We'll go to Senator Lambie. Senator LAMBIE: Is there any indication of any further international movement from the Hobart airport? I know you've got New Zealand coming in now. Is there anything else for the future that might look viable for international? Mr Carter : We're talking to Singapore Airlines in Singapore and Cathay Pacific in Hong Kong about flying. Now that we've upgraded the runway, they can fly non-stop, which makes the economics workable. The airlines have expressed interest. They understand Tasmania very well: they understand both the tourism and the produce export opportunities. The challenge that they're telling us they have is the availability of fleet. There have been supply chain constraints with the aircraft manufacturers since COVID that they haven't recovered from yet. All the airlines around the world are waiting for new aircraft to arrive. It's certainly the case that it is very competitive. We're competing with almost every other airport in the Asia-Pacific region and beyond for that airline capacity. That said, we are having fruitful conversations, and those are progressing. Senator LAMBIE: What about any deals on products and produce coming straight from Tasmania? Have we got any better at that yet? Mr Carter : That is something both airlines are interested in. We are exploring, particularly with Cathay, the potential to get some freight charters over the summer, getting things like lobsters and cherries into Hong Kong and China. The real opportunity is passenger aircraft, because 90 per cent of the world's airfreight goes in the bellies of passenger aircraft. The economics of those two—both passengers and freight—together on the same aircraft are quite compelling. Senator WHISH-WILSON: Ms Cooper, you mentioned that the airport's costs are only a small percentage of the fare costs. In your submission you said independent analysis by InterVISTAS demonstrates that aeronautical charges represent only 7.6 per cent of domestic airfares. How close would that be to the case for Launceston as an airport? Ms Cooper : The independent analysis which was commissioned by the Australian Airports Association and was undertaken by InterVISTAS demonstrated that the aeronautical charges only represent that 7.6 per cent. The breakdown of that showed that 82 per cent of that is based on airline fares, because they obviously have operating costs—crew wages, fuel, aircraft leasing, et cetera—then 2.3 per cent is for ancillary aircraft charges, and there's 8.9 per cent that is for government taxes and fees. That would be what we think is about an industry standard, and we're— Senator WHISH-WILSON: And that makes up the 100 per cent of the fare costs, and consequently discounting probably would be difficult to bring into that in terms of modelling— Ms Cooper : Yes. Senator WHISH-WILSON: depending on what a standard fare might be. Are airports regulated at all in terms of the costs you charge? Ms Cooper : We're not regulated in the sense of a regulated market, but we do have to report on that through the ACCC—not so much regionals, I should say. But, no, we're not a regulated price. Mr Grace : As you may be aware, the federal government has aeronautical pricing principles that we comply with when we're engaging with airlines to set our pricing structure, so it's not regulated, but there are guidelines. Senator WHISH-WILSON: The airlines would be pretty tough to negotiate with, wouldn't they, on some of these? Mr Grace : Yes, absolutely. I can concur with that. Senator WHISH-WILSON: For example, your partner is Launceston City Council. Remind me: are they 49 per cent? Ms Cooper : No. We're owned by a parent company, and there is a financial interest of 10 per cent through Launceston, but it's not an equity share. It's a different type of arrangement, but it's a similar principle. Senator WHISH-WILSON: So they don't share the same returns that you do, as a 10 per cent equity holder in the airport—would that be fair to say? Ms Cooper : To be clear, they're not an equity holder. They have a financial interest in the airport, but it's not actually equity. It's— Senator WHISH-WILSON: It sounds complicated. Ms Cooper : Yes. If we make a return and if we pay out a dividend, then they get an equivalent amount, but it's called an interest payment. Senator WHISH-WILSON: I was thinking, broadly, if you're making a return and the council or local government is a partner, there's at least some benefit there to ratepayers and to— Ms Cooper : If we achieve a payment out, yes. Senator WHISH-WILSON: What's the situation with Hobart Airport, Mr Carter? Mr Carter : We have three shareholders, and when we make profit we pay dividends or other distributions to them. Senator WHISH-WILSON: And Hobart city council is not a shareholder? Mr Carter : No, it's not. Our shareholders are: CareSuper, which was a TasPlan which then merged to become Spirit Super and CareSuper; QIC, which is the Queensland Government's investment arm; and the Royal Schiphol Group, which is the Dutch airport operator. Senator WHISH-WILSON: Obviously, every state has security issues at airports, but we in Tassie in particular have a very strong emphasis on biosecurity. Is it an extra cost for Tasmanian airports to comply with our biosecurity regime here? Ms Cooper : There is an additional cost as far as that we need to comply with additional regulations in Tasmania compared to, perhaps, some other states, but other states also have biosecurity rules, so it is quite dependent. Senator WHISH-WILSON: You don't see sniffer dogs at every turntable when collecting your luggage in Melbourne Airport, for example, or Sydney, but you do in Tassie. Ms Cooper : Correct. Senator WHISH-WILSON: So that's state government regulation. Ms Cooper : State government regulation. Senator WHISH-WILSON: Okay. Do they provide any assistance in terms of meeting those costs? Mr Grace : It's all met by the state government. We don't— Senator WHISH-WILSON: So they don't put any of it onto you— Mr Grace : No, they don't. Senator WHISH-WILSON: and that doesn't get passed on in tickets at all? Mr Grace : No. Senator WHISH-WILSON: Okay. In submission 59, you recommend developing a national regional aviation infrastructure strategy aligned with the Aviation white paper to provide coordinated planning, shared learning and effective targeting of government support across Commonwealth, state and local governments. Could you just tell us a little bit more about that. Mr Grace : Sure. Absolutely, we would very much advocate for a national aviation infrastructure strategy, ideally a tiered approach where the more passengers you have, perhaps, the less support that you get. But, at the moment, there's a very strict cut-off. Launceston Airport, for example, doesn't meet any of the criteria for the RAP or the RAU Program, so we don't get any assistance under those programs. Of course, we still have challenges in being able to provide appropriate infrastructure for air services to operate. As you'd be aware, particularly in the post-COVID environment, the cost of supplying infrastructure everywhere—but particularly at airports—has gone up significantly. So it's challenging to put together those business cases you require to be able to upgrade and meet the demand levels that we're experiencing at the moment. We talked a bit before about pre-COVID versus post-COVID passenger numbers, and I'm happy to say that Launceston Airport was one of the fastest airports in the country to get to and exceed pre-COVID passenger levels. We're currently on track to hit about 1.45 million passengers this financial year, which is substantially above the pre-COVID levels. But to expand capacity, to still continue to grow, is a challenge—we're constantly trying to juggle how those things are funded. Senator WHISH-WILSON: You make a number of interesting suggestions for policies: provide dedicated Commonwealth support for security compliance costs, presumably not biosecurity but other costs; direct a portion of the revenue from the passenger movement charge towards regional aviation infrastructure et cetera; and set a passenger number threshold, such as one million passengers, for entry to the Aviation Consumer Ombuds Scheme, to ensure proportionate obligations for smaller and regional airports. Could you just tell us a little bit more about that last one. Then I've got one final question about all of them. Ms Cooper : I think one of the challenges is that when you're in a small regional airport—and, to be clear, we're above the one-million threshold— Senator WHISH-WILSON: You would be—okay. Ms Cooper : so we wouldn't get the benefit of that. How we see it, from an industry perspective, is that the overhead costs of some of those schemes are prohibitive. Some of the regional airports operate with one or maybe two staff running the whole facility. They're currently doing compliance activities, safety activities and security activities, so them having that impost of additional reporting for the customer is, we think, prohibitive. For larger airports, we can appreciate it. For smaller ones, we think it's really challenging. Senator WHISH-WILSON: In relation to the passenger movement charge and the possibility of directing revenue from the charge towards regional aviation infrastructure and security, I understand that the charge is around $70 per person ticketed at the moment. It's only for passengers leaving Australia. Are you proposing that we do that internally? Ms Cooper : No. That $70 PMC, for international guests, currently goes into general Treasury. We're suggesting that a proportion of that, federally, is actually funding— Senator WHISH-WILSON: I see. It gets earmarked for— Ms Cooper : The security requirements that airports are obliged to comply with are really a national security issue. Rather than putting an additional fee onto all passengers because they're travelling, we're saying that there's already a collection of passenger money coming into general Treasury, so can we put a portion of that towards supplementing those regional airports so that that gets funded for them? Senator WHISH-WILSON: Certainly, some of these suggestions could be really useful. We heard from Burnie Airport this morning and heard about problems at Devonport. I'm interested in something overall, with all of these suggestions. If some of these funding streams were set up to help meet funding gaps and reduce pressure on airports in Tassie, would it ultimately—for example, through Launceston Airport or Hobart Airport—get passed on to the customer? You're for-profit organisations, and this is government funds. How do we ensure that we get cheaper fares to get people here? Ms Cooper : I'll answer your question in two parts. We are a for-profit airport. That's noted. I think most airports are, because we reinvest in our businesses, and that money keeps up our maintenance and standards. But the security charges we get are recovered on a cost-recovery basis; there are pass-through costs to the airlines. We make zero profit on that. I want to be really clear that the security charges we charge—we wouldn't be making profit if it was funding for a security program and we don't make profit off it now. Senator WHISH-WILSON: Thank you. ACTING CHAIR: Senator Dolega. Senator DOLEGA: Thanks for coming along today. Mr Carter, in relation to the cancellations of flights and late departures for Hobart Airport, do you know the difference in those statistics compared to the national averages? Mr Carter : I'm not 100 per cent sure on the comparison with the national averages, but we saw a sample of some statistics since January 2025, so about the last year. We had 25 of what we call 'terminators', which are the last flight in of the day, cancelled for various causes—we don't know—and 13 of our first flights out of the day cancelled, which I think was due to about half crew availability and half engineering. That's, overall, about two or three per cent, which is reasonably consistent with the national average—and that was for Qantas. Senator DOLEGA: Would you be able to provide us the latest up-to-date figures of cancellations, departures leaving on time and arrivals delayed of Hobart versus the averages of Canberra, Cairns, Townsville, Darwin, Newcastle and any other similar sized airports? I appreciate that you might need to take that on notice. Mr Carter : Yes, I'll see what I can do. I can certainly provide ours and I'll check what data we have available about the others. Senator DOLEGA: Thank you very much. When you're looking at that, would you also be able to look at the average fare cost of Hobart Airport compared to Canberra Airport, Cairns, Townsville, Darwin and Newcastle as well? Mr Carter : Okay. I'll see what we can get on that comparison. Senator DOLEGA: Thanks very much. ACTING CHAIR: I just want to come back to the concept of national management infrastructure, which the minister was talking about previously. Do you believe that the data available would enable a viable or a credible forward infrastructure plan and demand for aviation across the country? Do you think that that level of work and planning would exist, particularly for regional Australia? Ms Cooper : Norris, I can jump in here if you like. I think my answer on that is variable, and the reason is that I can't answer for all regional airports. I think there are a lot of airports that have a good pipeline of what their capital requirements are in their life cycle. We would certainly have some good indication of what our forward capital plan looks like for 20 years. We have that when we do our negotiations with airlines. I couldn't comment on some of the smaller regionals, but I know, having been in regional and even smaller regional and remote airports in a previous life, that we always had a forward capital plan. It might not be for the full 20 years, but it certainly was for five or 10, because you're generally working that far in advance that you pull something together. It might not be precise, but it would be a very good indicator. Mr Grace : Yes. It partly depends on the trigger points, which you would need to put on a piece of infrastructure. We are actually undergoing a trigger modelling process at the moment with an aviation consultant to work out what point we need to do, say, an upgrade to arrivals or apron size—whatever it might be—so that we have a better idea of when infrastructure might be required over the next 20 years as our passenger numbers grow over time. It's certainly, I think, a very common thing amongst airports of our size to do that sort of process. ACTING CHAIR: I think you've recently added the first piece of new apron infrastructure for a long time. Ms Cooper : That's right. ACTING CHAIR: That was opened a few weeks ago. I also asked the minister about aircraft types and what was happening with respect to the redundancy of existing types that are no longer being manufactured. What impact is that having on the planning that you're doing with respect to what you might need to provide in an infrastructure sense and also what might come at you in a regulatory sense? Ms Cooper : It's a good question. I think that there is an industry challenge at the moment with regard to aircraft availability, as I think was alluded to, with the manufacturers of aircraft. Their order books are thousands long, and they're years waiting. And that, I think, is something that is holding industry up. I don't know if Martin can add a bit more flavour on how it directly affects us, but having that forward look from the manufacturer and knowing what's available and what's being retired—as in fleet retirement—is really critical. Mr Grace : The Q400 aircraft has been discussed quite widely today. The most recent model of the Q400 was manufactured just prior to COVID, so they're not necessarily an old aircraft. There might be old specimens within that fleet, but it's certainly not an old aircraft type. In fact, there are a few discussions to potentially recommence manufacturing at some stage in the next 10 years or so, so I certainly wouldn't write that off as an aircraft type for the time being, but it's certainly true that there are a range of other aircraft within the regional fleet which stopped being manufactured around the turn of the century. So there are challenges with that, but then there are strategies that airlines can put in place to prolong the life of those assets for a very long period of time, and we see that happening internationally all around the world. In terms of what it means for us as an airport, we actually did take that into account in our trigger modelling process that we went through, where we made certain assumptions as to when we might see transitions from, say, the Q400 to the A220 or from the E190 to something else and so forth. So we absolutely do take that into account in our forward planning model. ACTING CHAIR: How do you manage the impost, if you want to call it that, with respect to the overall regulatory framework—I'll leave for the moment the screening and security; it sits alongside the rest of it—and what requirements there are and how you manage cost in that sense? Ms Cooper : To clarify, the infrastructure, like the CASA regulation type, is what you're referring to? ACTING CHAIR: Yes. Senator WHISH-WILSON: You can add PFAS in there too if you want. I'm sorry to mention the war. ACTING CHAIR: They're the first airport in Australia to have their PFAS cleaned up. Senator WHISH-WILSON: I know. Ms Cooper : We've done a lot of work to clean PFAS up, but we're not the polluter of PFAS, as you would all know. Senator WHISH-WILSON: I know. Ms Cooper : But it is an ongoing problem, and it's going to be a problem that we're actively managing for a very long time. I think PFAS is the elephant in the room for a lot of areas because the cost is significant. We're not the polluter, but we certainly are a responsible party trying to resolve that issue with Airservices and with other government agencies. I think I'm understanding your question correctly, but please correct me if I'm wrong, Senator. Is it: how do we manage our infrastructure costs essentially with the compliance regime? Am I understanding that correctly? ACTING CHAIR: Yes. But you also have a regulatory overlay as well, and I suppose I'm also referring to regulatory creep. Ms Cooper : Yes. It's something we actively manage. Obviously in terms of compliance, we get audited and we make sure we're adjusting for that. We do that through a number of mechanisms. Obviously staff on the day work through an auditing process. We do forward plans and work plans around what that looks like from a compliance point of view, but it absolutely adds an overhead cost to the business. I couldn't tell you how much. I'm not sure if Martin is a better numbers man than me. Mr Grace : In terms of the regulatory costs on us, no, I don't have that figure. I have some data on the regulatory costs to consumers if you're interested. ACTING CHAIR: Yes, that certainly would interest us—and what contribution that makes. Mr Grace : Airservices Australia is responsible for managing the navigation of aircraft both in the air and on the ground, as well as meteorology services and a range of other services. That does get passed through to the consumer. There was an increase in costs at Launceston Airport in 2023 or thereabouts, where costs—particularly for what's called ARFF services, aviation rescue and firefighting services—increased quite a lot at Launceston Airport in comparison to other airports. It was more a per passenger basis across the network. I don't know what the logic was, but it was certainly a lot cheaper out of Launceston previously than it is now. ACTING CHAIR: Was there a change in the pricing regime— Mr Grace : Yes, exactly right. At Launceston Airport, you're talking about increases of more than double in, say, the ARFFS costs applied to the tickets. ACTING CHAIR: Could you, on notice, quantify that for us? Do you have more questions, Senator Whish-Wilson? Senator WHISH-WILSON: Yes, thanks. Are both Hobart and Launceston airports members of the Australian Airports Association? Ms Cooper : At Launceston we are, yes. Mr Carter : Yes, we are. Senator WHISH-WILSON: Okay, great. What about the regional airports association? That's another advocacy group. Mr Grace : Is that the regional airlines association? Senator WHISH-WILSON: Yes, sorry. Mr Grace : We're not a member of that. Ms Cooper : No. Senator WHISH-WILSON: How does it work? Are all airport companies part of the Australian Airports Association? Ms Cooper : Norris, feel free to jump in here, because he's as familiar with it as I am. The Australian Airports Association is a member based organisation, so it's voluntary whether or not airports choose to join it. They have a choice. There's a tiered category of memberships depending on, I think, either passenger numbers or turnover. I'm not sure what the breakdown is now. They provide support for us in a number of areas, obviously policy but also training and industry development. Senator WHISH-WILSON: And advocacy and lobbying too, correct? Ms Cooper : Sure. Senator WHISH-WILSON: I'm just interested in whether any airports go it alone in terms of coming to the federal government to seek what they're after or whether you use these bodies. Ms Cooper : I couldn't answer that on behalf of other airports. We certainly go through them. We obviously do stuff ourselves if we need to, but we're certainly involved and actively engaged with industry. Senator WHISH-WILSON: Perhaps, Chair, the committee could take evidence from these groups, because no doubt they've got some fine-tuned policies and stuff that they're lobbying the federal government for. One such example which was put to us this morning by Burnie Airport and others is a uniform national levy to fund the cost of airport security. Do you, as members, support that? Ms Cooper : As we outlined a little bit earlier, Launceston Airport doesn't support a national levy. At the moment, our fees are between about $7.30 and $8 for a security pass-through cost for passengers. Our concern with a national levy is that our prices will actually go up and our passengers will therefore have to pay more. That's why our recommendation is that we redistribute some of the PMC charge, or, quite frankly, we believe the security of airports is a national security issue which should be funded by the federal government, the same as all other national security requirements are. Hobart might have a different view. Senator WHISH-WILSON: Would you like to add anything to that, Mr Carter? Mr Carter : We've got a similar view. Our security charge is $8.33 a passenger. We work quite hard to keep it competitive and be as efficient as we can. We're not keen on a national levy. That could put prices up for travellers to and from Hobart. But we recognise there could be some mechanism to support the smaller airports, where this is a much bigger issue. Senator WHISH-WILSON: I'm just going to give this a try, because we didn't get you to appear at our interim inquiry into the closure of bases or the hearings into the closure of the Hobart base in particular. Do either of your airports have any kind of official view on the closure of those places? Ms Cooper : At Launceston, it doesn't really affect us. We have a different aircraft type. It's something we don't have a view on. Senator WHISH-WILSON: You don't get staff coming up from Hobart at all? Ms Cooper : No. If the airlines in Launceston have a staffing issue, they'll bring them in from wherever the staff may be, be it Sydney, Melbourne, Adelaide or Hobart. It could be anywhere. It depends on the aircraft type that they've got a problem with, and they'll relocate it. So it's really something we don't have a view on, but I'm sure Norris will probably have a stronger view. Mr Carter : We acknowledge the effect those base closures have had on the individuals and their families, but, in terms of operations at Hobart Airport, we don't see any direct impact on flights to and from Hobart. ACTING CHAIR: Does it have any impact on the economics of the airport? Mr Carter : Not on the airport, no. ACTING CHAIR: What about its operations? So there's no revenue that would come to you from Qantas from having a base in Hobart? Mr Carter : No, because there isn't actually a base. It just means that there are crew who live in Hobart. As I understand it, it means that they clock on for their days and fly from where they start in Hobart and finish in Hobart or somewhere else. The change, as I understand it, is that they will start their days flying somewhere else rather than Hobart. Senator WHISH-WILSON: As a matter of interest, where did you get your evidence, Mr Carter, about it not having an impact on services in Hobart? Mr Carter : I'm just saying we haven't seen any that we could attribute to that change, and Qantas stated that there wouldn't be any changes to timetables or Hobart. Senator WHISH-WILSON: My understanding is that it's not going to happen for a while—potentially up to two years. We've received a lot of evidence—obviously different evidence from Qantas—from a number of stakeholders about how it will negatively impact services out of Hobart. So I would perhaps invite you to have a look at the Senate interim report in that regard. Mr Carter : Okay. ACTING CHAIR: Thank you, all, for your evidence. If you've taken any questions on notice—and I think you might have taken a couple—if we can have that evidence back by 17 March, that would be useful. Proceedings suspended from 13:11 to 14:08 .