Sydney airport indecision threatens Australia’s economic future

Issues & Trends – July 2013

Sydney airport indecision threatens Australia’s economic future

Tony TylerAUSTRALIA punches above its weight in world aviation but is at risk of losing vital connections to Asia unless it urgently resolves Sydney’s airport issues.

That was the blunt warning delivered by IATA director general Tony Tyler in an address to the National Aviation Press Club earlier this month.

Tyler also depicted the country’s Passenger Movement Charge (PMC) as a counter-productive tax burden causing economic losses that exceed the revenue collected.

In other comments, Tyler com-plained about the “pitiful” return on investment earned by airlines and reiterated the case for introducing IATA’s New Distribution Capability (NDC).

He pointed out that discussion on growing Sydney’s airport capacity dates back to the 1970s.

“The government has commissioned yet another study. To be frank, the challenge is to break out of the endless cycle of studies, make a decision and get on with it,” he said..

“We have seen major new aviation infrastructure development almost universally across Asia over the last two decades – new terminals in Singapore and Taipei, new runways and terminals in Tokyo and Delhi; and  whole new airports in Seoul, Osaka, Nagoya, Hong Kong, Bangkok and Kuala Lumpur – and the most massive airport construction program ever seen across China …

“Australia needs to do business with Asia. But if it does not have the capacity to connect with its trading partners, that is going to be difficult.”

He estimated that the country has two decades “to select a site, sort out all of the necessary approvals, acquire the land, upgrade surface transport, get the airport built, and, of course figure out how to pay for it all”.

He warned: “That is not a lot of time … It will be a decision with significant long-term consequences.

And if we don’t make it soon, the Australian economy will most certainly miss important opportunities to grow.”

• “The Australian economy has more to gain from removing the PMC than from keeping it in place,” Tyler claimed.

He cited an IATA study that calculates the PMC adds about 3.5 per cent to the cost of travel from Australia.

“If it were removed we would expect a 2.5 per cent boost to traffic. That would add $1.7 billion to the Australian economy and generate some 17,000 jobs,” he said.

• According to Tyler the world’s airlines generated a net profit margin of 1.1 per cent last year. “It’s a pitiful return,” he said.

“The industry bottom line is, how-ever, improving – slightly. In 2012, the $2.50 per passenger that airlines earned was enough to buy a cup of coffee …

“This year we expect … on average $4 per passenger. That may be enough for a sandwich – but it is nowhere near the returns that our investors expect.”

• Tyler said the NDC is being developed to enable travel agent channels to provide consumers with the same rich shopping experience
they get from XML-based airline websites.

He stressed: “NDC will operate within the same privacy laws that govern every other business. … By giving travel agents more information, there will be greater transparency.”


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