Regional Express [Rex] has made Clarence Valley Council’s (CVC) objective of achieving full cost recovery for its operation of Grafton airport just a little bit harder.
The airline has written to CVC saying it “cannot accept any increases to the [landing] charges at the airport”.
In its operational results 2017/18 improvements paper, CVC contemplates strategies to make the airports operation cost neutral, “such as leasing out to a private provider, increasing user fees, selling or closing”.
“Additionally, discussions need to be held with the air service provider regarding landing fees,” the strategy states.
“These have been stagnant for some time and could be increased.”
At last week’s council meeting, councillors adopted the officer’s recommendation to “request [Rex] to continue its Sydney to Grafton air service”.
The Grafton airport currently makes an annual loss of around $300,000; and Rex is making a loss, too, on its Sydney/Grafton/Lismore route.
The amount of Rex’s loss is contained within a confidential document for the eyes of CVC’s executive staff and councillors only.
Meanwhile, at Rex’s Sydney office on September 6, CVC’s general manager and its works & civil director met with Rex’s executive chairman and its network strategy and sales general manager.
According to the report to council, Rex “cannot accept any increases to the airport charges”.
“Rex did state, however, that they would be prepared to continue to provide the current service in the short to medium term at the current rates,” the report stated.
As a result of these negotiations, councillors unanimously supported a stay on the landing fees and to “request [Rex] to continue its … air service and agree to the landing fees of $7/head for up to 15,000 passengers per year and $5/head for all passengers in excess of 15,000 passengers per year, for the 2017/18 and 2018/19 financial years”.
Passenger numbers, however, have been rising steadily over recent years, improving year by year from 12,747 in 2013/14 to 18,103 in 2016/17.
On the option of CVC seeking another provider, Rex has advised CVC if it were to withdraw its Grafton service “they would take their available air space entries into Sydney airport and redistribute these within the Rex network”, the report to council stated.
The upshot of this, “an alternate provider may not be able to offer early morning and late afternoon arrivals to and departures from Sydney airport”.
“Such flight schedule changes may present further risk to the viability of the airport as passengers may not be able to undertake a one day trip to Sydney as arrival/departure times may preclude this current and well used arrangement,” the report stated.