Virgin Australia (VA, Brisbane International) is not using the slot regime at Sydney Kingsford Smith Airport to prevent smaller competitors from growing their market share there, according to the airline's chief legal officer, Susan Schneider.

Responding to questions from parliamentarians during a House of Representatives Standing Committee on Economics hearing in Canberra on June 30, Schneider argued the controversial slot system at the airport was "working well."

Both Virgin Australia and Qantas (QF, Sydney Kingsford Smith) have continually refuted long-running allegations they are sitting on unwanted slot pairs at Australia's busiest airport to prevent smaller rivals from taking them up. Airport Coordination Australia (ACA), which manages slot allocations, requires airlines to use their slots 80% of the time or risk losing them, the so-called 80/20 rule. Virgin Australia and Qantas, who have a 90% domestic market share, are frequently accused of abusing the system by allocating flights to slots only to cancel those flights at short notice. Cancellation rates at Sydney Airport consistently exceed cancellation rates at other major Australian airports.

Earlier this year, Sydney Airport CEO Geoff Culbert claimed the two airlines ask for more slots than they need, only to cancel flights. He says this decreases competition at the airport. Sydney Airport plays no role in the slot allocation system.

"There might be some improvements to be made," Schneider told the committee, "but I don't think we would agree that any changes to the 'use it or lose it' or 80/20 rules are necessary. Sydney is a complex airport to fly from. It has many operational or regulatory restrictions, including a curfew, hourly landing limits and runway limitations."

Schneider says Virgin Australia has a slot portfolio at Sydney Airport that allows it to be competitive against the larger Qantas Group. "We think we are the only viable alternative to that very dominant group and that anything that restricted our ability to do that or took away from that is just going to reduce the competitive constraint against Qantas," Schneider said. "So, whilst we have participated in the review in relation to the Sydney Airport Demand Management Act and there are some changes that we have been in discussion about and agree with, changing the 'use it or lose it' rule is not something we think is necessary."

One of the more persistent critics of the current slot regime is Rex - Regional Express (ZL, Wagga Wagga), which has extensive jet and turboprop operations at the airport but would like to grow further. Ironically, Rex's current deputy chairman, John Sharp, was the architect of the current regime, putting the rules in place when he was Australia's transport minister. He now regrets implementing the 80/20 rule that is impeding Rex from securing additional peak time slots.

Startup Bonza (Sunshine Coast) does not presently fly into Sydney Airport, more a function of cost than access. "Whilst there might not be peak Sydney slots available right now, there are absolutely non-peak slots, and you do have an ability to get into the slot system in a non-peak slot; that does aid your ability to then shift as peak slots become available," said Schneider.

Other airlines operating scheduled domestic flights to and from Sydney include FlyPelican (FP, Newcastle Williamtown) and Link Airways (FC, Canberra), although both are small carriers with a minimal footprint at the airport. The far larger Jetstar Airways (JQ, Melbourne Tullamarine), which has extensive operations at Sydney, is part of the Qantas Group.

Schneider says one of the biggest impediments to doing more business at Sydney Airport is not slot access but cost. "We have difficulties constantly negotiating any element of a reasonable price with a number of airports," she said. "We would like there to be an intervention mechanism there for us to be able to have someone like the Australian Competition and Consumer Commission help us arbitrate discussions and negotiations with airports... It is something that is not only beneficial to incumbent carriers; it would also absolutely be of benefit to new entrants."