16 June 2026
Travellers and businesses across regional NSW are paying more to fly, while policy gaps and funding settings continue to limit access to reliable air services in the Illawarra.
The warning follows the release of Business NSW’s new policy paper, Keeping Regional NSW Connected: The Future of Our Airports, which calls for long term reform to strengthen regional aviation and improve connectivity across the state.
Business Illawarra Director, Coralie McCarthy, said the situation at Shellharbour Airport highlights the real impact of these pressures.
“As it stands today, there are no commercial passenger flights operating from Shellharbour Airport following the suspension of services in May,” Ms McCarthy said.
“Our region has effectively lost its direct air connection overnight, and that has an immediate impact on businesses, tourism and broader economic activity.”
The report shows regional passengers across the state are paying up to 52 per cent more than city travellers, while more than half of regional airports operate at a loss and many routes rely on a single airline.
Ms McCarthy said these challenges are playing out locally. “To expect the local ratepayers of Shellharbour LGA to foot the bill for this regionally significant asset is simply not a long term plan,” she said. “The reality of Shellharbour Airport reflects exactly what the strategy is highlighting, rising costs, fragile airline markets and policy settings that don’t match how regional airports actually operate.”
Despite serving one of the largest and fastest growing regional population catchments in Australia, the airport remains underutilised. “That is a missed opportunity for jobs, tourism and business growth in our region,” Ms McCarthy said.
A key issue is the airport’s classification as a ‘metropolitan’ airport for funding purposes, despite functioning as a regional airport. This excludes it from funding programs available to comparable airports such as Newcastle, creating a clear imbalance.
“Shellharbour Airport is being treated like a metropolitan airport on paper but operates like a regional one in practice and that is actively undermining the viability of a critical asset for our region,” Ms McCarthy said.
“The impact is real. It affects our community, our visitor economy and the airport’s ongoing role across essential activities, including passenger travel.”
Shellharbour City Council Mayor Chris Homer said the current environment presents an important opportunity to better support regional airports.
“Looking ahead, there is a clear opportunity to better recognise and support airports like Shellharbour,” Cr Homer said. “Stronger integration and fairer access to funding will help unlock the airport’s potential and support the region’s growth, connectivity and essential services.”
Business NSW’s policy paper calls for a 10 year aviation strategy, a dedicated infrastructure fund and improved service reliability. Ms McCarthy said these reforms are critical for the Illawarra. “When access drops and competition falls away, regional travellers and businesses wear the cost immediately through higher fares, fewer options and less reliable connections,” she said.
Despite the loss of passenger services, Shellharbour Airport continues to play an important role, supporting emergency services and aeromedical transfers, organ transport, disaster and bushfire response, as well as pilot training, charter services, aviation tourism and local employment. It also presents future opportunities for aviation related industries, including maintenance and repair operations, aerospace and emerging technologies, if the right infrastructure and policy settings are in place.
Local businesses at the airport continue to remain open, including the Greenacres café, an inclusive social enterprise supporting employment for people with disability, which continues to operate with coffee, grab and go options and catering services.
Ms McCarthy said community support will be critical while services are restored and businesses like Greenacres remain operational.
“This isn’t just about flights, it’s about backing a critical local asset and the people and businesses that rely on it,” she said. “The café is still open, it’s still employing local people, and supporting it sends a strong message that this airport matters to our community.”