A missed opportunity? The Aviation White Paper and northern Australia’s regional aviation challenges

The Strategist

by Anna Alexander

The Australian government’s Aviation White Paper—Towards 2050 outlines a vision for the future of civil aviation. While the White Paper represents a significant step forward, particularly in terms of decarbonising the aviation sector and enhancing consumer protections, it falls short in addressing the critical needs of regional Australia, particularly northern Australia.

With its vast distances and dispersed population, northern Australia relies on aviation in a way that urban Australia does not. For many remote and rural communities, aviation is the only means of accessing essential services such as healthcare, education and employment. It is a crucial enabler of economic activity, linking remote regions to the broader national economy.

While the White Paper acknowledges the significance of regional aviation and its role in supporting closing the gap for Australia’s First Nations populations, it does not propose sufficient targeted measures to support and sustain these vital services. The lack of immediate, actionable measures leaves regional Australia in a prolonged state of uncertainty, waiting for an outcome that should have been prioritised from the outset.

The viability of regional airline services has been a persistent challenge in northern Australia. High operational and compliance costs, low passenger volumes and the geographic remoteness of many communities create a complex and often unsustainable operating environment for regional carriers. These elements have caused the collapse of more than 20 regional airlines in Australia since deregulation of the industry in the 1990s. Moreover, the adverse influence of dominant market operators and increasingly stringent regulatory requirements not designed for remote operations further exacerbate the challenges. They all must first be understood and addressed before any sustainable policy settings can be established.

The recent voluntary administration of Rex Airlines, a major provider of regional air services in northern Australia, underscores these issues. Rex’s struggles, albeit exacerbated by an ambitious but ill-fated expansion into inter-city routes, have put the essential services it provides at risk. With few other operators remaining that can fill the gap left should Rex ultimately fail, the current situation is parlous. The White Paper’s response to Rex’s situation is limited and requires a braver dive into the inner workings of this broken industry than the document sets out.

Recommendations such as extending support measures like the Remote Airstrip Upgrade Program (RAU) and reviewing regional airfares through the Productivity Commission are to be welcomed. However, these actions are more reactive than proactive, suggesting the government is limited in its thinking.

The strategic importance of northern Australia has been clearly articulated in the Defence Strategic Review. A strong and resilient regional aviation industry is critical to supporting a Whole-of-Government approach to investment in northern Australia. Achieving this will require financial support through tailored subsidies and incentives for airlines servicing remote and regional areas. This will ensure these services remain viable in the long term. Furthermore, continued investment in regional airports and airstrips is also necessary to improve safety, accessibility and resilience against climate change. Finally, infrastructure upgrades that accommodate new aviation technologies, such as electric aircraft and hydrogen refuelling stations, should be prioritised to align with the transition to net zero emissions.

Northern Australia is well-positioned to become a significant player in the Sustainable Aviation Fuel (SAF) industry. The region’s vast agricultural resources provide a strong foundation for producing the biomass feedstocks required for SAF, such as tallow, canola oil and other agricultural residues. These resources are crucial for developing a sustainable and locally-sourced supply chain for SAF production. Doing this will reduce reliance on imported fuels and contribute to energy security.

Importantly, northern Australia’s strategic location offers advantages for both domestic and international distribution of SAF, particularly to markets in the Asia-Pacific region, where demand for low-carbon aviation fuels is expected to grow significantly. The region’s proximity to key export markets positions it as an ideal hub for SAF production, especially as global airlines and governments increasingly commit to reducing aviation emissions.

Realising this potential requires significant investments in infrastructure, research and development, and the right policy environment. The region will need dedicated SAF production facilities, blending infrastructure and logistics networks tailored to its unique conditions. Additionally, targeted government support, including financial incentives and regulatory frameworks, will be essential to attract investment and ensure the success of SAF initiatives, such as that of Jet Zero’s Project Ulysses in Townsville.

Policy innovation is also required to explore new models of regional air service delivery. Public-private partnerships or community-owned airlines will ensure that essential air links are maintained. To make this sustainable, certain operational standards will need to be relaxed that may be disproportionately burdensome for small regional carriers and remote and rural airports.

While the Aviation White Paper is a positive step, it currently lacks the specific regional focus necessary to fully leverage northern Australia’s potential. Expanding the policy framework to include tailored support for the region is crucial for maximising its contribution to the nation.