The Australian government has released a competitive tender calling for a slot manager at Sydney Kingsford Smith as part of widespread reforms to the airport's slot system following years of criticism of the current arrangements and the recent failures of two airlines, Rex - Regional Express and Bonza, which were unable to secure any or enough peak hour slots at the country's busiest passenger airport.

The government wants prospective managers to demonstrate how they will deliver on reforms announced earlier this year, following recommendations from the Harris Review and the Australian Competition and Consumer Commission. The competitive process will also require prospective tenderers to show how they manage and mitigate conflicts of interest.

"Our reforms to the slot system at Sydney Airport are an important part of improving competition and significantly increase transparency," said Australia's federal minister for infrastructure, transport, regional development and local government, Catherine King.

A private company, Airport Co-ordination Australia, has managed and allocated slots at Sydney for over two decades. The company is majority-owned by Qantas (QF, Sydney Kingsford Smith) and Virgin Australia (VA, Brisbane International), which control about 90% of the country's airline market. Eighty aircraft movements per hour are allowed at the capacity-constrained airport, though for various reasons that ceiling is rarely reached.

Currently, between 0600L and 1100L, Qantas has 103 slots at the airport, Virgin Australia has 57, Rex has seven, and the now-defunct Bonza had none. Rivals have accused the two big airlines of slot-hording, a charge both deny. Under the current regime, 80% of slots allocated to an airline must be used or risk forfeiture. Both Qantas and Virgin Australia have been accused of scheduling flights to use the slots, only to cancel them at the last minute, thereby not falling afoul of the rules but not acting in the interests of passengers. Again, both airlines deny they do this.

Bonza, which was never able to secure slots at Sydney during peak times, consequently elected to bypass the airport entirely. Bonza went bust in late April 2024 after around 14 months of flying B737-8s on mostly skinny regional routes. The airline is now in the process of being liquidated.

Too late to help Rex

Rex has an established presence at Sydney but has been a consistent critic of the slot regime. However, its current chairman, John Sharp, was the federal transport minister at the time the current regime was approved and played a key role in the approvals processes. Later, as a member of the Rex board, he came to regret that decision. Rex filed for voluntary administration last week after an ill-fated foray into B737-800 operations. One of the reasons the venture failed was that it could not get enough slots at Sydney at the peak times people wanted to travel. Because of its in-administration status, Rex was unable to comment on the slot reform announcement. ch-aviation also approached Sharp for comment.

Rex continues to operate its turboprop flights after administrators secured a loan from PAG Asia Capital, the Singapore-based lender that financed its now-ended B737 venture with an AUD150 million Australian dollar (USD97 million) convertible note. Reportedly, PAG is looking to convert that debt into equity and may emerge as the airline's new majority owner. The size of PAG's new loan has not been disclosed. Rex also owes Westpac, a major Australian bank, around AUD200 million (USD130 million) and has left a trail of supplier debts, including at small regional airports and fuel suppliers, some of which had been financially stung by Bonza's demise. While the slot issues were not the only reason for Rex's slide into administration, a source with knowledge of affairs at the airline told ch-aviation, the proposed reforms were a case of too little, too late.

King says the slot tender is part of a suite of reforms to the Sydney airport slot system announced earlier this year, some of which have already been implemented. They will be finalised with forthcoming legislation and will include changing the allocation process to free up more slots and changing the definition of ‘new entrant’ to make it easier for new airlines to obtain slots.

"We are serious about making long-term reforms to aviation in Australia that are much needed after a decade of neglect," King said.