A change to Sydney Airport’s flight slots would encourage more competition between airlines and benefit customers, Australia’s competition watchdog says.

Proposed reforms for flights at the country’s busiest airport would penalize airlines that deliberately cancel services to preserve valuable slots at terminals.

Qantas executives questioned over allegations the airline misused its slots; The carrier denied acting improperly.

Matthew Shroder of the Australian Competition and Consumer Commission said the level of competition at Sydney Airport was “less than we would like”.

“Sydney is the main international gateway, but it is also the main domestic gateway to many routes. “So access to Sydney is critical,” he said.

“That’s why we support reforms to the slots regime because we think it will be more competitive.”

Qantas Group and Virgin Australia currently serve 98 per cent of domestic passengers.

Sydney Airport Chief Executive Scott Charlton said current rules were contributing to the problems.

“We will see more people returning home to their families earlier, fewer missed appointments and fewer canceled meetings,” Mr Charlton said.

He said the proposed changes would limit delays and cancellations and improve performance across the entire national network.

Mr Charlton said the compliance committee, which examines whether slots were being misused, had not met for five years until recently.

He said the legislation would give new entrants more opportunities by increasing the number of slots allocated to them, which would give passengers more options.

Qantas Domestic CEO Markus Svensson said flights departing on time have increased by 10 percent in the last six months.

“We are not submitting applications without any intention of operating slots… We categorically deny that we are hoarding slots or attempting any games,” he said.

Asked whether Qantas supported the changes, Mr Svensson said there were “some good things”.

“It’s good to have more movement in case of an outage.

“Transparency is a good thing.”

Mr Svensson said he did not have data on how many allocated Sydney places were regularly affected by cancellations.

Australian Airports Association chief executive Simon Westaway said the proposed changes would “lead to greater transparency” and help deliver better outcomes.

Opposition transport spokeswoman Bridget McKenzie said she was concerned Virgin Australia had not come forward ahead of the inquiry.

“Qantas has come under a lot of public criticism for its use of the current slots system and it shows that you are actually taking advantage of the pre-pay… I wish Virgin would do the same,” he said.

Senator McKenzie said the allegation against Qantas was that it was “gaming the system”.

“Gaining that system was part of your business plan, and you were very successful at it because you are the gorilla in the room… and you use that power to your advantage,” he said.

Slots at Sydney Airport are limited to 80 takeoffs and landings per hour.

Under the proposed legislation, the federal transportation department would be responsible for the slot management program and have the authority to compel airlines to provide information about alleged abuse.

The legislation will allow the number of flights per hour to be increased at Sydney Airport during bad weather conditions.

If flight landings or takeoffs are affected by weather conditions, the upper limit will be increased to 85 flights per hour for two hours.