Home' Future Building Australian Infrastructure Review : December 2010 Contents The decision to introduce the private
sector into the airport arena has seen the
constraints of government funding fall
away. Private capital has taken up diverse
challenges andnew opportunities, changing
the very nature of airport enterprise.
These changes started becoming
apparent soon after the frst wave
of privatisation began in 1997 with
Melbourne, Brisbane and Perth, quickly
followed by Adelaide, Canberra and the
Gold Coast in 1998. By the time Sydney
(in 2002) and Bankstown (in 2004) were
privatised, the benefts of reform were
beginning to crystallise.
According to Chris Woodruff, CEO of
Melbourne Airport, 'Since privatisation,
there has been a record level of investment
in Melbourne Airport's infrastructure,
with extensive expansion of our airfeld
and terminals, road access, car parks,
forecourt, retail area and business park. The
$330 million upgrade of the international
terminal (T2) currently underway is the
biggest upgrade the airport has seen
since it was built in the late 1960s. This
expansion is one of Victoria's largest ever
private infrastructure projects.'
Through privatisation, airports are no
longer constrained by government purse
strings and bureaucratic operating models.
Our larger airports are now becoming
more like mini metropolises, hubs for a
diversity of business endeavours both on
site and in the vicinity. And, of course, the
economic links radiate further out into the
Air traffc in Australia is signifcant by
world standards. The Sydney to Melbourne
air corridor is currently the third busiest
in the world, and while Sydney airport is
‘artifcially constrained in capacity terms by
regulation (movement caps and curfew),'
according to Sydney Airport Corporation
Limited chief executive Russell Balding,
that has not yet stemmed the fow of
investment into the site.
According to Balding, 'Last year the
Australian Government approved the
airport's master plan, which forecasts
passenger growth of 4.2 per cent per
annum, going from 33 million in 2009 to
about 79 million in 20 years. The master
plan sets out how the airport's infrastructure
-- its terminals, hangars, freight facilities and
aircraft parking -- will all be progressively
upgraded over the next 20 years.'
In the past few years, Sydney Airport
has invested more than $500 million in
new infrastructure development, with
signifcant expenditures for the renewal of
the international terminal. This project has
delivered more than 7,000 square metres
of new space and excellent facilities for
travellers. The airport is also undertaking a
signifcant upgrade of its east-west runway
at a cost of $100 million.
Melbourne is also spending up big,
with major works to dramatically boost
both retail and business park operations.
The major retail revamp includes bringing
top notch Melbourne eateries to the site,
including Cafe Vue and Movida.
Says Melbourne Airport's Woodruff,
'Melbourne Airport's extensive capital
development program will deliver a one
billion dollar investment in expansion
projects over the next fve years to remain
ahead of Victorian transport infrastructure
The current $330 million international
terminal revamp is to be followed by
another $1 billion to be spent on the
airport over the next fve years.
In his 2010 stakeholder report,
Melbourne Airport CEO Chris Woodruff
noted that retail revenue grew by 11
per cent to $218 million; a pleasing
result in a restrained market. Property
revenues from both retail and industrial
park premises amounted to some $300
million in 2009-10.
Fundamentally, it's all about getting
people through the airport, and the current
projections for growth of passenger
numbers are very positive. According to
Woodruff, there has been a six per cent
increase to 26 million in the past fnancial
year, with international passengers up 13
per cent to 5.5 million.
Woodruff also forecasts that
international passengers should increase
to between nine and 12 million, and
domestic passengers to between 34 and
42 million in 2027-28. Six domestic and
25 international airlines (26 when Air
India commences soon) use the airport.
The inclusion of Air India is signifcant,
as Woodruff predicts that Asia is to be a
major source of growth in international
It is the international passengers who
spend the most money at airports, so the
move is on to expand retail area on the
'air side' of the customs and immigration
barriers in Melbourne to some 6,000
square metres. The number of shops may
increase from 19 to over 30, and will
include a range of upmarket international
retailers with cutting-edge retail outlets.
Continued on page 8
airports are no
Our larger airports
are now becoming
more like mini
6 futurebuilding DECEMBER 2010
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