ABSTRACT
The Australian airline market is closely regulated. The ‘two-airline’ policy affecting trunk routes is well known, but less appreciated are state controls imposed on regional and local aviation. These controls exist in four of the six states; Victoria and South Australia are the exceptions. This distinction between the states was of little consequence prior to 1979. Until then the Commonwealth government also controlled regional air transport using powers under the Air Navigation Act of 1920. But in 1979, as a result of the Domestic Air Transport Policy Reviews, the Commonwealth decided not to hinder the development of competition in regional air transport (BTE 1981, p. 113). The result has been a much more competitive environment in both Victoria and South Australia.3
