Ways to improve the sustainability, competitiveness, efficiency and safety of the sector have been proposed by the federal government in its Aviation White Paper.
Among the recommendations was an ombudsman to force airlines to pay compensation to travellers for delayed or cancelled flights and guidelines for customer treatment.
The government was going down the right path, but more could be done to address the country's highly concentrated aviation market, Australian Travel Industry Association chief executive Dean Long said.
Increased aviation competition would 'improve on-time performance, and value for passengers'. (Mick Tsikas/AAP PHOTOS)
"It's a step forward, not a leap," he told AAP.
Though there had been a focus on cheaper airfares, Mr Long said the best indicator would be the value travellers get.
Improved competition at Sydney Airport through slot management reforms and compensation were welcome changes, he said, but they might not always prevent cancellations and delays.
In jurisdictions such as the European Union, on-time performance has not significantly changed despite the introduction of compensation schemes.
"We want better on-time performance, we want to make sure that there's strong competition for people to access fares ... we want people to be able to pick airports that might be in different locations," Mr Long said.
"You can only do that if you have market settings that encourage new entrants, that give them the runway and actually set a business up to compete."
Reforms should consider the nuances of delays and cancellations, because they were not always caused by the airline but staff shortages within air services or airport issues, he said.
Some countries compensate passengers for inconvenience or distress caused by disrupted flights. (Bianca De Marchi/AAP PHOTOS)
There are concerns the government's vision might not require carriers to pay passengers more than their travel expenses and airfare refunds, which Australian Lawyers Alliance spokeswoman Victoria Roy says falls short of international standards.
The EU, Canada and other jurisdictions have simple flight delay compensation schemes that require airlines to refund or reorganise travel arrangements, while offering extra compensation for inconvenience or distress.
Ms Roy noted travellers who sustained a psychiatric injury or experienced sexual assault had been left without clear rights to compensation in Australia.
"Passengers deserve a clear right to compensation ... (they) need certainty and better protections now," Ms Roy said.
Though it is designed to guide the sector through to 2050, RMIT Aviation Academy director Lea Vesic says many of the white paper's suggestions provide short-term solutions to systemic issues such as workplace shortages.
"The Aviation White Paper seems to reactively address systemic problems in the aviation industry, rather than presenting a robust vision for its future," she said.
Singapore Airlines is the first international service to sign up to use the Western Sydney airport. (AP PHOTO)
The release of the white paper on Monday came as the government said Singapore Airlines would be the first international carrier to fly out of Western Sydney Airport.
The airline has signed a commercial agreement to start developing operations at the Badgerys Creek site, ahead of the airport's opening to the public in late 2026.
Prime Minister Anthony Albanese says the airline deal is significant for western Sydney.
"This investment will connect Badgerys Creek to Marina Bay, it will boost jobs, investment and opportunities in western Sydney," he said on Tuesday.
Construction on Sydney's second airport is 80 per cent complete and is expected to welcome 10 million passengers each year.
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