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The air traffic provider wants to more than double weighted-average charges over five years. Airlines say the numbers need tougher scrutiny before travellers foot the bill.

Australia’s airlines face an unwelcome climb. Unfortunately, this one comes without extra legroom, a window seat or even a complimentary biscuit.

Government-owned Airservices Australia has proposed a 103.2 per cent cumulative rise in its weighted-average charges for air traffic control and aviation rescue and firefighting services over five financial years, from 2026–27 to 2030–31.

The proposal is before the Australian Competition and Consumer Commission (ACCC). It has not been approved, and it does not mean airfares will double. But airlines warn that another steep rise in essential operating costs could put pressure on ticket prices, regional connections and Australia’s appeal as an aviation destination.

At the heart of the dispute is a question with no simple answer: how does Australia modernise its aviation system without pricing some of its users out of the sky?

A steep ascent, spread over five years

The ACCC says Airservices is seeking an average annual weighted-price increase of 15.2 per cent in nominal terms, equivalent to 12.3 per cent a year after inflation. Over the full period, the proposed rise totals 103.2 per cent in nominal terms, or 78.4 per cent in real terms.

The three service lines tell their own story. Under the pricing plan, enroute navigation charges would climb a cumulative 88.6 per cent, terminal navigation charges 81.3 per cent, and aviation rescue and firefighting charges 180.8 per cent.

An airline can’t sensibly shop around for these services. Airservices is Australia’s monopoly provider of air traffic control. Aircraft approaching airports need controllers; airports need emergency capability. Competition does not suddenly appear because a customer dislikes the invoice.

That is why the ACCC must assess the proposed increases, and why the regulator’s scrutiny matters well beyond airline head offices.

Why Airservices wants the money

Airservices says the charges would help fund a major investment program after years of relying on ageing infrastructure. Its plans include the OneSKY air traffic management program, modernisation of enterprise communications, new facilities and services at Western Sydney International Airport, and upgrades to aviation rescue and firefighting capability.

The provider says its prices have fallen by about 24 per cent in inflation-adjusted terms since 2015–16. It argues that new technology and equipment are essential to keeping services safe and reliable as traffic grows.

In the longer term, Airservices says the investment should improve traffic flows, reduce delays and holding times, and help airlines save fuel. Those are attractive promises. Nobody benefits from a modern terminal and a state-of-the-art aircraft if the airspace above them runs on yesterday’s equipment.

But projected benefits are not the same thing as delivered benefits, particularly when the bills arrive long before the improvement can be measured.

Airlines are asking awkward questions

Airlines for Australia and New Zealand (A4ANZ), whose members include Qantas, Jetstar, Virgin Australia, Rex and Air New Zealand, accepts that Airservices must recover the efficient cost of safe services. Its October submission nevertheless opposes increases of the proposed scale.

A4ANZ wants the ACCC to examine the necessity, timing and value of capital spending, along with the risks that passengers could end up funding project delays or costs that have not been adequately justified.

Qantas has gone further. In its 9 October submission, the airline group contends that approximately $2 billion of proposed expenditure is inefficient and should be excluded from the regulatory asset base used to calculate future charges.

That is Qantas’ position, not an ACCC finding. It is nevertheless a serious challenge to the spending program and deserves a considered response.

Virgin Australia also supports investment in a safe, modern network. But it warns that a rise of this size could affect capacity, flight frequency and the routes it can viably serve, especially where passenger demand is thin.

This is not a quarrel over whether Australia needs air traffic controllers or fire crews. It is an argument over how much customers should pay, when they should pay it and what they should receive in return.

A $900 million gap that needs explaining

One revealing point in the submissions concerns the regulatory asset base: the value of assets on which Airservices seeks to earn a regulated return and recover costs.

A4ANZ’s submission says the asset base rose from about $1.2 billion to $7.3 billion over five years. Airservices’ own October response projects an increase from $1.2 billion in 2025–26 to $6.4 billion by 2030–31.

That is a $900 million difference. The documents do not establish that the two numbers are prepared on an identical basis or reflect the same stage of revised spending plans. They should not be treated as interchangeable.

Airservices says it has deferred $1.1 billion of capital spending beyond the current pricing period after considering industry feedback. It has also proposed a $450 million reduction in OneSKY capital expenditure included for regulatory pricing purposes.

That $450 million adjustment is not an independently established saving or an admission that every excluded dollar was wasteful. It changes the proposed cost base for the pricing assessment.

For the ACCC, the challenge is to test the latest figures, establish which costs are justified, and clearly explain what airlines are being asked to fund.

What happens to a passenger’s airfare?

According to estimates supplied by Airservices and published by the ACCC, its average cost to airlines on major domestic routes would rise from about $8 to $15 per passenger by 2030–31. For international flights, the estimate rises from roughly $13 to $23 per passenger.

Those amounts are expressed in 2026–27 dollars, which removes the effect of general inflation. More importantly, they are projected airline costs, not confirmed additions to an economy-class fare.

Airservices separately estimates that each proposed annual increase would represent about $1.50 per passenger on an average one-way airfare, or roughly $1 on a regional airfare, if airlines passed the full increase through.

Whether an airline can recover those costs depends on demand, competition and its ability to absorb other expenses. Some passengers may see higher fares; others may see the effect through flight schedules or route choices. No one can reliably calculate the final impact on ticket prices from these figures alone.

Airline accountants, alas, cannot pay invoices with reassuring averages.

Regional routes face a sharper test

A4ANZ and Virgin Australia argue that thin regional services could be particularly sensitive to compulsory cost increases.

The economics are straightforward. A full aircraft between two major capitals can spread costs across far more seats than a small aircraft serving a regional community. On marginal routes, even modest cost changes can matter.

Regional aviation is also much more than a holiday service. It links residents with specialist health care, education, employment, family and vital freight. Tourism businesses depend on it to bring visitors into towns that cannot count on a motorway or a daily train.

Industry submissions warn that additional charges could weaken route economics and eventually affect fares, frequencies or capacity. Those outcomes are risks, not established consequences of this proposal. No particular service cancellation should be attributed to these charges without evidence.

Still, regional operators have good reason to watch the regulator’s deliberations closely.

Tourism cannot ignore the bill

The stakes extend to international tourism. Airlines choose where to place aircraft by weighing demand, revenue, operating costs and available capacity. Australia’s distance from many visitor markets already presents a challenge.

Higher compulsory navigation charges would be another factor in that calculation. It does not follow that international carriers will leave Australia, and the proposal alone cannot explain future network decisions. But a country competing for inbound visitors has a clear interest in keeping its aviation system both efficient and affordable.

For hotels, tour operators and regional attractions, the result is practical rather than theoretical. A destination needs flights before it can welcome the guests.

The regulator has the next move

Airservices submitted its draft notification in April. The ACCC published it in July, issued an issues paper on 14 August, and followed up with an addendum on 11 September to examine pricing and cost-allocation information further.

The ACCC extended the consultation deadline to 9 October. Industry submissions, including those from A4ANZ, Qantas, Virgin Australia and Airservices, appeared on the ACCC website on 23 October.

As at 26 October 2026, the ACCC lists the matter as ongoing. It can decide not to object, not to object to a smaller increase, or object to the proposed increase. It does not itself give final ministerial approval.

That assessment must balance the cost of a safe, modern aviation system against the obligation to demonstrate that spending is prudent, efficient and fairly recovered.

Australia needs reliable air traffic control. Airlines need credible costs. Travellers need affordable connections. None of those interests can be waved away by pointing to an impressive-looking infrastructure plan.

Aviation is accustomed to steep climbs. This one, however, still needs a convincing flight plan before anyone signs off on the ascent.