Jun 27 2019
Sydney Airport Limited and Australian Pacific Airport Corporation Limited, which trades as Melbourne Airport, are anticipated to experience significantly higher passenger numbers over the next decade. This trend poses a significant challenge to Sydney and Melbourne airports, as their facilities currently operate at functional and infrastructural capacity. In 2015, in a bid to meet the growing demand, Melbourne Airport extended its facilities with a low-cost terminal, providing additional room for budget airlines such as Jetstar, Tiger and Regional Express Airlines. A third runway is planned and expected to be functional by 2023, and the existing east-west runway is anticipated to be lengthened by 2027, to support the projected 70 million passengers a year by 2038. Melbourne Airport has also proposed a large-scale redevelopment project for its T2 terminal, which includes a four-storey retail precinct, increased seating for the main International Departures level and five new airline lounges. Melbourne Airport made $969.5 million in revenue (including revenue from car parking fees) for the 2017-2018 financial year, which represents a 5.5% increase from the 2016-2017 financial year.
Sydney Airport is the busiest airport in Australia, with more than 44 million passenger movements through the airport in the year ending December 2018. The company is expected to generate $1.5 billion in revenue from its airport operations in the year ending December 2019. This trend is primarily due to Sydney Airport being a main port of entry for international travellers. Strong growth in the tourism sector has also bolstered passenger numbers and provided a significant revenue stream, with the airport charging airlines per-passenger for use of its terminals and airfields. However, similar to Melbourne Airport, infrastructural and operational capacities have continued to constrain Sydney Airport’s revenue growth.
The $5.3 billion, government-owned Western Sydney Airport is anticipated to be finished by 2026, and will not affect Sydney Airport’s revenue over the next five years. The airport will likely relieve pressure on Sydney Airport and support the growing passenger base over the next two decades.
Companies such as SpaceX and Uber are pioneering new technologies to enter the point-to-point travel market. However, airports in Australia have already established core market share and ownership of prime locations for large-scale air travel operations. If Sydney and Melbourne Airports can effectively support the growing demand for air travel with larger, more optimised facilities, they can continue to dominate the Airport Operations sector in Australia.
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