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Crash landing: COVID sends Queensland regional airports into financial freefall

Statewide

Emerald airport is facing a $1 million revenue hit due to COVID, but unlike the emergency funds thrown at airlines, its operator is not expecting a bail-out any time soon.

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Central Highlands Regional Council Mayor Kerry Hayes says he will have no other option than to raise rates next financial year if losses incurred at Emerald airport during the Covid downturn can’t be recouped.

And he’s putting the blame on any potential rate rise firmly on the Federal Government, which has knocked back his administration’s calls for assistance on account of the council’s otherwise sound financial position.

“We’re a victim of our own success,” he said.

Emerald is home to one of regional Queensland’s busiest airports, moving more than 200,000 passengers a year on average through its terminal pre-Covid, before the global pandemic sent air travel plummeting at the start of this year.

As airlines such as Qantas, Virgin and Rex all successfully lobbied for government assistance at various levels to stay afloat amid the turmoil, Emerald airport saw passenger numbers crash by more than 40 per cent by the end of October.

And the losses continue to mount, which Hayes is expected to chronicle during a livestream address to council this morning (Wednesday December 9).

For example, from July 2019 to October 2019 the airport carpark recorded 14,561 cars parked. For the same period in 2020 the cars parked were 6170, a fall of almost 58 per cent.

According to Hayes, when all the sums are tallied, his administration is facing a projected $992,000 cash loss to the end of this month, in addition to the airport’s surplus it would normally generate in an average year to offset other council operating costs.

“In reality, we’re looking at up to $3 million wiped from our operating budget,” he said.

“That’s the difference between meeting our obligations to the Queensland Treasury and running at a loss, purely through no fault of our own.”

Central Highlands Mayor Kerry Hayes.

Emerald is among a handful of regional centres in Queensland with council-owned airports.

Locations that have local councils own and maintain their airports include Bundaberg, Gladstone, Hervey Bay, Horn Island, Kingaroy, Rockhampton and Proserpine.

Tourism bounce helps

InQueensland has been unable to ascertain if other councils are facing similar financial stress in regard to their airports.

Darren Everard, the deputy mayor of Fraser Coast Council, which runs Hervey Bay, said the Covid downturn had been a “blessing in disguise” because it had allowed the council to complete major upgrades to its runway six months ahead of schedule.

Whitsunday Council’s chief operating officer of airports and tourism, Craig Turner, said Proserpine airport went from 26 flights passenger flights a week from the east coast capitals to zero at the start of the pandemic.

That has caused a 60 per cent drop in airport revenue, prompting council to call on all its reserves to maintain operations, he said.

While government support would be welcomed, he said, council preferred to focus its efforts on restoring business by bringing more tourists to the region.

The plan appears to be working, he said, with the region now registering 30 flights week, higher than the airport’s pre-Covid levels.

As a mainly leisure destination, Proserpine is expected to directly benefit from the expected bounce in Queensland tourist numbers, especially as overseas travel remains off limits during the upcoming peak holiday season.

Central hub ‘vital’

In contrast, Emerald is a major commercial hub, particularly for Central Queensland’s powerhouse industries – mining and agriculture – that fire the State’s economy and have been touted as central to the State’s ‘unite and recover’ post-Covid revival.

The majority of passengers are ‘fly-in-fly-out, workers connected to the Bowen Basin coal mines.

As the only public-use commercial and general aviation airport servicing the greater Central Highlands region from Rolleston in the south, to Clermont in the north, Alpha to the west and Duaringa to the east, Emerald also plays a vital role in aero-medical services, facilitating 164 emergency flights from July to October alone.

Central Highlands Regional Council did apply for a ‘Covid-19 Regional Airlines Funding Assistance’ grant, a program established in March under the administration of the Deputy Prime Minister’s Department of Infrastructure, Transport, Regional Development and Communication.

The objective of the program is to assist air service operators in regional and remote locations “to continue to remain financially viable through the unprecedented downturn in aviation due to the impact of the Covid-19 pandemic”.

The government funds, however, are described as a “last resort” option, “when all other reasonable strategies to manage an air operator’s position have been undertaken”, according to the program’s webpage.

Hayes said Central Highlands Regional Council was knocked back on its request for grant money because its overall financial position was sound.

“It essentially means that through no fault of our own, and due to our prudent financial management, this community off-set that our airport provides, so that we don’t have to keep asking our ratepayers for more money, is effectively gone,” he said.

“All of our operations have tightened up as a result and no doubt we’ll need to look at a further tightening of expenditure to compensate for the loss.”

Hayes is adamant services at the airport, however, will not be compromised.

“We don’t have the luxury of rolling back our airport’s operations to cut costs,” he said.

“The airport is far too critical for agriculture and our resources industries, which are just vital for the economy.”

Emerald airport is currently undergoing a $6 million terminal refurbishment to comply with new passenger screening changes that have been legislated by the Commonwealth Government. This project began in July 2020.

Hayes said he and his senior officers had been in discussions with State Government and Federal Government authorities about the cash shortfall since the crisis deepened in May.

Those discussions, he said, have so far gone nowhere.

“It’s frustrating when you see subsidies given to airlines and selected air routes, but the operators of the infrastructure that allows those flights to happen, are given no support and unfortunately, it’s our communities who will ultimately have to carry the load,” he said.

InQueensland has contacted the offices of Deputy Prime Minister Michael McCormack and State Transport Minister Mark Bailey for comment.

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