Nov 13, 2012

Address to the Australian Airports Association: Australian Airports Investing And Growing

Last month I attended the RAAA’s annual conference in Coolum and I also spoke at the TTF Leadership Summit at Parliament House, so it is no surprise that I can see some familiar faces here today.

Before we get down to business, I was reading recently that in the 1930s when Sydney airport was little more than a gravel runway and planes in Melbourne were confined to the grass at Essendon, one of best places for air travellers was Sydney’s Rose Bay.

That’s where Australians with pockets deep enough and a taste for adventure grand enough could hop on board a flying boat and over nine days, be carried to London in a luxury unlike anything seen before or since.

These wide-bodied flying boats were operated by QANTAS Empire Airways and their prime purpose was to carry Her Majesty’s mail between Australia and the Mother Country.

But they were also set up to carry 15 paying passengers who could play quoits and mini-golf to pass the time, and at night were tucked up in their own beds.

The cost of the trip was the equivalent of the then average annual wage, around $70,000 in today’s dollars.

Sadly, the winds of change in the form of World War Two ended those glorious days.

The flying boats were requisitioned for the war, and apparently all that’s left of that era is a small plaque by the sea wall at Rose Bay that notes their passing.

Air travel has certainly been transformed since those days.

Not least of all are ticket prices which are now five times more affordable than 20 years ago – let alone 1930!

Our airports have also been transformed and it’s a real pleasure to be invited to speak to you today about changes and developments affecting your industry.

As the Government asserted in the National Aviation Policy White Paper, there is no doubt about the importance of aviation to our national economy.

The sector now contributes some $7 billion to our economy, and employs 50,000 Australians directly and a further half million indirectly.

Our airports now handle some 137 million passengers, double the number of just 15 years ago.

And on that note, I congratulate your association for the tremendous work you’ve undertaken looking after the best interests of our airports as they’ve grown into major transport hubs.

 

BITRE REPORT

All the evidence suggests that this growth will only continue.

I am releasing this morning the latest report from the Bureau of Infrastructure, Transport and Regional Economics which looks at 20 year forecasts for passenger movements.

The report updates previous BITRE forecasts and, for the first time, includes statistics for our non-capital city airports including — Newcastle, Cairns, the Gold Coast, Townsville and Launceston.

BITRE says air passenger movements will double to 279 million a year within 20 years.

It says this figure would vary only slightly, even in the face of global economic fluctuations, oil price and exchange rate movements.

Other recent BITRE work reveals the continuing growth in the ‘fly-in, fly-out’ task.

Its examination of the charter sector shows how closely it is tied to Western Australia’s mining industry.

But the growth is not just confined to mining.

The latest Tourism Forecasting Committee reports growth of 8.0 per cent in visitor nights in regional areas over the past two years.

The value of tourism in Australia is likely to exceed $95 billion this year.

With almost half of domestic tourism dollars spent in regional areas, our regional airports stand to capture a sizeable share of this market.

 

INTERNATIONAL MARKETS

It is not just greater numbers of Australians taking to the skies.

BITRE tells us that total international traffic through our gates grew last year by almost five per cent, to a record-breaking 29 million passenger movements.

According to BITRE, this number of people would fill the SCG more than 600 times.

It is growth figures with our neighbours that are particularly interesting.

The Prime Minister recently released the Australia in the Asian Century White Paper and if any evidence is needed that our national orientation is indeed turning towards Asia, our aviation patterns confirm it.

With 70 airports under construction in China as I speak, growth in traffic from that market alone is expected to grow at more than 7 per cent annually to at least $6.7 billion by the end of this decade.

Last year we negotiated a landmark open-skies style agreement with Japan.

We’ve also vastly expanded seat capacity with many of our neighbours including both Indonesia and China, and more recently Thailand.

In fact we have now negotiated similar agreements with every ASEAN nation.

Such opening up of the skies is paying real dividends.

Eleven of the top 20 countries choosing to visit Australia are from Asia.

Over the last year, arrivals from China grew at 16 per cent and Indonesia, 13 per cent.

A decade ago, only three Chinese carriers offered just 11 services per week from China.

None of our airlines flew there.

Now there are 71 weekly flights between our two countries, with both QANTAS and Jetstar flying into China.

This is good news for our tourism sector, particularly across northern Australia.

There are now 50 international flights per week operating from Cairns, compared to 39 each week a decade ago.

This will rise to 56 per week from December when China Eastern and China Southern extend flights to Shanghai and Guangzhou respectively.

There are now 28 international flights per week operating from Darwin, compared to only nine a decade ago.

I note that Darwin International Airport is embarking on a ten year, $100 million investment upgrade program to service this impressive growth.

 

INVESTING IN INFRASTRUCTURE TO MEET FUTURE DEMAND

Meeting demand will require significant private investment, particularly to upgrade our gateway airports.

Almost $9 billion in necessary upgrades and improvements is in the pipeline over the next decade.

This investment pipeline is only possible because of the regulatory certainty that benefits the sector.

Most major airports have now been successfully in private hands for at least a decade.

The Productivity Commission last year found our airports compare favourably with international benchmarks on pricing, revenue and service levels.

It also found they are investing appropriately in their aeronautical assets.

As we all know, airport financing is becoming more complex in the post GFC environment.

The scale of projects is increasing too.

That is why the Government is helping major airports to raise finance in Australian and international markets through tripartite deeds.

Sydney, Melbourne, Brisbane and Perth airports have raised around $4 billion in Australian and overseas markets since March 2011.

Major developments planned or under construction include:

  • New terminals in Perth, Melbourne and Canberra;
  • a new parallel runway in Brisbane.

I welcome the news that here in Melbourne, serious planning has begun for public consultation on a proposed additional parallel runway.

 

BRISBANE AIRPORT

Brisbane’s proposed new parallel runway is estimated to cost $1.3 billion, with a seven to eight year construction period.

It will help meet the projected increase in demand for both domestic and international flights.

Demand during peak periods already challenges the airport’s capacity.

I know there are concerns by airlines about Brisbane’s proposed charges to help cover costs during the long construction phase.

It is important that these issues be resolved constructively.

The industry will suffer if key infrastructure projects don’t proceed.

Airports, airlines, passengers and our economy will all feel the effects.

For our part, the Australian Government is doing what it can to address problems at airports that involve the broader community.

We have in place at all our major airports Planning Coordination Forums so that development can better align with surrounding transport and social networks.

These forums allow the community to be involved in airport planning and be kept aware of changes that may affect them and cause problems in the future.

 

INFRASTRUCTURE AROUND AIRPORTS

One growing problem that is not just confined to Sydney’s Kingsford Smith is congestion on roads surrounding our airports.

For example, the strong growth in passenger numbers at Perth Airport from the mining boom has added greatly to the number of vehicles crowding the roads to the airport.

That is why the Federal Government is investing $686 million in Perth’s Gateway project which will vastly improve ease of movement around the airport precinct.

It will bring welcome relief for the thousands of passengers and workers who negotiate the congested roads each day.

 

AIRPORTS AND THE ENVIRONMENT

Let me turn to the extraordinary decision by NSW Premier Barry O’Farrell to approve a new housing development at Tralee, right under Canberra’s flight path.

In so many ways it is absurd.

Firstly, it kills off his personal plan for Canberra to be Sydney’s second airport, however odd that was in the first place.

And then it goes against the advice of his own Planning Assessment Commission.

This decision defies common sense and I have written to NSW Planning Minister Brad Hazzard to ask him to reconsider.

Canberra Airport is unique among our capital cities in that its flight path is free of housing development allowing it to operate 24 hours a day, curfew-free.

This places it in great position for growth, particularly for the increasingly lucrative freight market.

The NSW Government had the chance to avoid the mistakes of the past.

Instead it has chosen to ignore the long-term economic interests of the State and the nation.

 

SYDNEY AIRPORT

On the subject of the need for a second Sydney Airport, we continue to investigate the potential of Wilton as a second airport for the Sydney basin.

Already, Sydney is missing out on its share of international traffic.

For example, Melbourne’s international traffic last year grew more than 7 per cent – twice that of Sydney.

Brisbane, Perth and Adelaide are also outstripping Sydney.

Sydney needs a second airport sooner rather than later.

The Joint Study on Aviation Capacity for the Sydney Region found that by 2060 Australia would miss out on around $34 billion in GDP and around 78,000 jobs if we can’t deliver more airport capacity for Sydney.

This is a national issue.

 

SECURITY UPGRADES

As we emphasised in the Aviation Policy White Paper, the safety and security of the public, airline crews and airport workers remain this Government’s number one priority.

The goal is safer skies for all of us.

For that reason, the Australian Government is investing $180 million across customs, policing and security agencies.

We now have more sensible rules for prohibited items, unaccompanied baggage and oversized duty-free liquid purchases.

No airport is immune from risk and we are rolling out advanced screening technology at all our major international airports.

We have also committed $40 million for better security at our airports.

This afternoon, the Executive Director of the Office of Transport Security, Paul Retter, will talk to you about future security challenges and what we are doing to help you meet them.

 

REGIONAL AND REMOTE AVIATION

We are also continuing the important task of making sure regional and remote facilities and services are up to scratch with $145 million allocated over the six years to 2014.

You’ll agree that this compares favourably with the Coalition’s investment of just $16 million over the preceding six years.

 

AVIATION EMISSIONS ACTION PLAN

Finally, I welcome the news overnight that the European Commissioner for Climate Action is suspending the inclusion of international aviation in the European Union Emissions Trading System (EU ETS) until September 2013.

The Australian Government has consistently opposed the unilateral application of the EU ETS to international aviation and has continued to press our position with the EU at ministerial and diplomatic levels.

The conciliatory action by the Europeans is great news.

It means the International Civil Aviation Organization can continue developing a truly global approach to this issue to what is, after all, a global problem.

On that note, I am pleased to release today Australia’s first Aviation Emissions Action Plan.

This is part of our commitment towards the constructive work of the ICAO.

The Plan presents past, current and projected levels of aviation carbon emissions – and I am pleased to report we’re doing well compared to international benchmarks.

Over the past two decades, our carbon emissions per passenger have decreased by almost 40 per cent.

But there can be no room for complacency.

Right now, demand for air travel is growing faster than efficiency gains and that means our net aviation carbon footprint will continue to grow.

It requires a concerted effort by both Government and the entire aviation industry to manage this task.

Australian airports have an important role to play here.

Parking aprons, aerobridges and gates can all influence aircraft ground running and holding times and therefore engine emissions.

Some airports have already in place systems to curb carbon output.

Sydney, Melbourne and Adelaide Airports have installed fixed electrical ground power units.

Canberra has installed a tri-generation power plant and Adelaide and Alice Springs are employing solar tracking arrays.

 

CONCLUSION

In conclusion, I’d like to acknowledge the contribution of all of you here today.

You are riding a powerful wave of growth that’s showing no sign of slowing anytime soon.

Whether it’s for business, family reasons or a holiday, there’s simply never been a better time for Australians to take to the skies.

Air travel has never been as safe, as fast or as affordable.

This Government has expanded seat capacity with our international neighbours and in return, the growth in both directions is nothing short of phenomenal.

As those responsible for our airports, you are at the epicentre of this momentum.

I look forward to working with you as we manage these challenges together.

Thank you.