“I think we’re partly to blame for why people think Sydney Airport is full. Some of the inefficiencies are our fault, some the airlines fault, some are the government and Airservices Australia’s fault.
There’s a lot we can do collectively to make the airport experience better for our passengers because there is still latent capacity there,” Charlton said.
Peak slots
There’s been a lot of talk about the archaic slot demand management scheme which governs when aircraft can take off and land at Sydney Airport. One of its biggest critics has been Sydney Airport itself. Its executives have long lobbied federal governments to modernise the rules to free up capacity and prevent anticompetitive behaviour by the major players.
But Charlton says the slot system is in a much better shape than it was before the pandemic.
“We’re obviously very positive about the government legislating the Harris Review which will clean some of the slots issues up, but there’s already a lot about the slots system that has been cleaned up. We only use 65 per cent of the slots overall,” he said.
The lack of available slots in busy peak periods, particularly in the mornings, is one of the reasons aspiring domestic airlines have found it difficult to survive against Qantas Airways and Virgin Australia, which collectively fly more than 95 per cent of the domestic travelling public.
Charlton said there’s enough demand to sustain more than two airlines in the domestic market despite the financial woes of Regional Express which entered voluntary administration in August, mere months after the collapse of Bonza. He added there are many comparable routes to Sydney to Melbourne that are flown by up to seven airlines overseas, but conceded it’s unrealistic that a third airline would commence flying with the same capacity as Virgin.
The Sydney to Melbourne route was travelled by 9.3 million people in 2023 across four airlines. China’s Beijing to Shanghai route carried 8.4 million people over the same period across six airlines, while the Jeju to Seoul route in South Korea was flown by 13.7 million people across seven carriers.
“Peak slots are an issue but if we could get more efficient use of the airspace we think there’s room for more competition, and it would change the way airlines fly,”
Honestly, I think the pandemic amplified the 5 per cent the aviation sector disagrees on to the point we forgot there’s 95 per cent of alignment.
Sydney Airport boss Scott Charlton
Australian airlines are forced to navigate a higher-cost base than many of their overseas peers but also benefit from a lack of alternate transport options, and their domestic margins are often higher. Qantas’ domestic arm delivered $1.4 billion in underlying earnings before interest, tax, depreciation and amortisation in the 12-months to June 30, with an EBIT margin of 14 per cent across Qantas and Jetstar.
The reduction in business travel since COVID-19 has meant demand for domestic flights to Melbourne and Canberra has been softer. That’s why Charlton is so focused on growing the international market. He is convinced Sydney Airport has been too complacent about its position as the country’s biggest hub and needs to get more aggressive.
“I think we’ve lost a bit of market share to Melbourne and Brisbane in the past because we’ve just rested on being Sydney. We are now very focused on fighting for every passenger and working hard to ensure we’re getting the right outcomes for our airline partners,” he said.
The looming opening of new rival Western Sydney International Airport in 2026 has made this goal all the more pertinent, but Charlton doesn’t seem worried. He says he’d rather have a small part of a huge pie than a big part of a smaller one.
“I think Western Sydney International is good for the city and will be a serious competitor. We need to up our game and fight for every passenger and every bit of freight. But at the end of the day, it’s a secondary airport like any other in the world,” he said.
He says his airport has the geographical advantage of being located where more than 85 per cent of Sydney’s current travelling public live but Western Sydney’s modern regulations which will allow it to operate 24/7 and benefit from new technology are enviable.
“When you’ve travelled through this airport for 30 years, there are a lot of things that don’t make sense. When I became chief executive they actually made less sense, not more as I had expected. There are things the whole industry has to work together on to fix the inefficiency” he said.
Given the major players in aviation tend to be at loggerheads on seemingly innocuous decisions, Charlton’s optimism about collaboration is stark.
“Honestly, I think the pandemic amplified the 5 per cent the aviation sector disagrees on to the point we forgot there’s 95 per cent of alignment. To fix anything we need collaboration,” he said.
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