The Sky Supply Is The Limit For Australian Airports

Thanks to an invitation from Airbiz, this week I attended the one day conference they organized on ‘Next Generation World Airports’ held in association with the Avalon Airshow 2019. The day bought together an excellent array of speakers. Greg Fordham (AirBiz MD) set the scene well for the day with his skillful moderation of the first panel discussion involving Julieanne Alroe (ex CEO of Brisbane Airport, now Chair, Infrastructure Australia), Max Moore-Wilton AC (former Exec Chairman Sydney Airport Corp and Secretary of Department of Prime Minister and Cabinet) and Lyell Strambi (CEO and MD, Australian Pacific Airports taking in Melbourne and Launceston). The caliber of the speakers remained  strong in the sessions which followed.

Of course the value of a great event like that is the insights it provides at the time as well as those generated afterwards from a bit of reflection. I will touch on some of my thoughts here.

In the opening session Greg highlighted the sustained growth in aviation bar two blips - the pilot’s strike in 1989 and the combined effect of ‪September 11‬ and the Ansett collapse. His first question to the panel was ‘Where were you on September 11?’. The responses (in short) were:‬‬
  • Julienne, then CEO of Sydney Airport: Alerted to the coverage at home by a family member, bracing for what was already expected to be the imminent collapse of Ansett and the weeks of turmoil at hers and other airports round Australia,
  • Max: saw the coverage on TV in a hotel in Washington D.C., went downstairs to see the PM (John Howard), because Max was travelling with him as Secretary of the Department of Prime Minister and Cabinet. Got down to see Howard shuffled out of the hotel foyer by the secret service and whisked away by car to the Australian Embassy. Max and others were left to fend for themselves but got to the embassy and spent the rest of the day in the basement as events in the US unfolded. Thanks to an offer from the US Vice-President, Howard and the small entourage were allowed to leave the following day aboard Airforce 2, escorted to Hawaii by two fighter jets since there were on the only passenger aircraft in the sky, and transferred to a Qantas Jumbo which was given permission to fly to Australia. Needless to say the only issue once they hit the ground in Australia was the impact of the collapse of Ansett.
  • Lyell, then head of Virgin Atlantic and conscious that over 90 % of their profit was made on the Atlantic services, said felt like he had been forced to do a bungy jump and on the way down started to realise the rope was too long to pull him up short of the ground.

Greg opened his second question by noting that when the first Boeing 727 jet was introduced domestically, the scheduled flight time from Sydney to Melbourne dropped from 1 hour 30 min (with Electra prop aircraft) to 1 hour 10 minutes. Anyone who flys that route today won’t be surprised with the timetable info Greg then displayed. Today the major airlines operate that service on a 1 hour 35 min schedule. Why asked Greg? The reason was clear in eyes of the panel. Larger airports mean longer taxiing time (particularly in the case of Sydney) and there is now congestion for aircraft on the ground and the air.

And the solution - well not surprisingly, was more - more runways, more parking and presumably more shopping centers (usually put where public transport accessibility is poor) on the periphery of the airports to pay for the expansion. Demand management and congestion pricing of landing slot times did not get a mention. The supply was very much the limit when it comes to Australian airports.

Rail did get a couple of mentions on the day. The decline in airport rail passenger numbers in Brisbane, by close to a factor of two, was interpreted as little more the public voting with their feet, presumably on the accelerator, thanks to the improved car access to the airport and the shopping Centre. Given that airports are major employment and activity generators in urban areas one might hope that the community over time can hold them to higher standards of multimodal access management. Later in the day, as part of an excellent presentation from Gert-Jan de Graff (the current CEO of Brisbane Airport Corporation), in which he reflected on his experience as CEO at a number of airports round the world, the issue of air-rail competition was mentioned. He highlighted that the European mindset is that air is very much a long range issue with mass transit (meaning high speed rail) the preferred option for shorter range distances that might once have been the domain of air. That resonated with a remark Max Moore-Milton made earlier in the morning where he believed that high speed rail in Australia was a real prospect and that would moderate in some way, domestic demand at least in the golden triangle (Brisbane, Sydney and Melbourne).

Tom Ruth (President and CEO of Edmonton International Airport in Canada)  outlined how they are growing their business in a town of about one million residents. Yes it is improved passenger experience with improved processing and retail in the terminal, and oh yes, shopping centers, a car race track and even a new casino and horse race track under construction on the airport. But they have done one better and helped grow an export business right on the airport by leasing substantial space for a 75,000 square metre production and research facility specializing in medicinal marijuana. That $10 billion business puts all its international exports through the airport. The income from the land lease helps the bottom line for the airport and probably also ensures they have the happiest airport employees in the world. I wonder which Australian airport will take up that option  - once demand softens for shopping centres?

Contact: Professor Geoff Rose

Phone: 03 9905 4959