ANALYSIS: Sydney's airport dilemma

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Australia’s announcement of the site for Sydney’s second airport may end a decades-long debate, but it is only the first of many questions still facing one of the country’s most contentious projects.

Sydney offers lessons for any airport authority considering a new facility and a reminder to airlines of what to expect.

Arguments have raged for years over whether, where, and when to build a second Sydney airport. As it is Australia’s biggest hub, everyone knows that decisions affecting Sydney are critical to Australian aviation – indeed, to the nation’s economy. Whether and where are questions that have now been resolved in favour of a greenfield site at Badgerys Creek, 55km west of the city. When and exactly what are still open questions.

Qantas chief executive Alan Joyce keeps urging lawmakers to get on with it. Yet managers of the current Kingsford Smith airport, a mere 15km south of central Sydney, dispute studies warning that all peak-hour slots at the current airport will be allocated by next year and that it will hit full capacity by 2025. They claim any second airport is a “white elephant” because Kingsford Smith could operate for at least another 20 years by relaxing its curfew and lifting its cap of 80 aircraft movements per hour. Add a third runway and another terminal, they stress, and it could last even longer. This, of course, is a declaration of war to local residents, who have the ear of elected officials and have even formed a political party to oppose further expansion.

This would all sound familiar in Toronto, where Porter Airlines is asking for a longer runway at Billy Bishop airport on an island near the city centre. Inner city airports everywhere face these kinds of battles between passengers who like the convenience of a close-in airport and residents who would like it to go away. Porter, which only operates turboprops, wants Transport Canada to extend Billy Bishop’s single runway and lift the ban on jets so it can operate CSeries airliners. Air Canada wants better access to Billy Bishop regardless of expansion, and WestJet wants in too. Conversely, city officials want a cap on passengers and flights.

Even after decisions are made, issues remain over what happens in the interim. If work started tomorrow on Sydney’s second airport, it could still be years before Badgerys Creek opens. Meanwhile, Kingsford Smith’s annual passenger traffic, already over 38 million, keeps growing at 3.5% per year. How much more must the airport expand to keep pace with traffic, if only during the interim before Badgerys Creek is ready?

Sydney residents might consider the experience at Quito. The Ecuadorian capital’s new airport was finished and ready to go in 2011, but sat idle for months because airlines resisted the move and local officials did not like the access roads. Then there is the potential for what might be called the Berlin nightmare. The new Brandenburg airport was due to open in late 2011, at which point Tegel would close. Airlines added flights in anticipation of the opening, but Brandenburg is still not finished and the latest estimates are that its first flight will not land before 2016. Meanwhile, Berliners endure more low-flying aircraft and passengers describe overcrowded Tegel as “a disaster”.

The big question facing Sydney now is what type of airport to build on the Badgerys Creek site. Once that is resolved, other answers will fall into place. But few people seem to have given this much thought. Specifically, no one has undertaken for Sydney what airport planners call a market potential analysis.

Lufthansa Consulting’s Marnix Groot is just such a planner. “A market potential analysis, or MPA, is not the same thing as a traffic forecast,” says Groot, adding: “A traffic forecast is an extension of historic data. An MPA is more optimistic. It represents a less constrained model. A new airport’s potential can be more than a prediction based on traffic at the old airport.”

Groot notes that the MPA depends on what is contemplated for the new airport. He calls this “the concept”. Is the new airport intended to be a hub? How much of its traffic will be origin and destination (O&D)? Will it replace the old airport?

For the purposes of a study on the economic effects of a second Sydney airport, the economics advisory practice Deloitte Access Economics assumed that Badgerys Creek would only be a secondary airport. Taking the opposite view, Brett Godfrey, former chief executive of what was then Virgin Blue Airlines, told the Royal Aeronautical Society in Sydney that the best solution would be a new “state-of-the-art supersite”, and that once it opened, Kingsford Smith should close.

Warren Truss, Australia’s deputy prime minister and minister for infrastructure and regional development, simply says “it is clear the Sydney region will need another major airport”, but he does not define what “major” means.

Groot, who has helped plan airports on several continents, stresses that considerations beyond aviation will influence what type of airport to build. An international hub, for instance, works best in “a service-oriented metropolitan area with an export-oriented economy”. It needs good customs and immigration support, and it helps if the area is multilingual. “The common wisdom is that a good hub also needs at least 30% O&D traffic,” says Groot, although “Atlanta does well with only 20%”.

Uta Kohse, managing partner of the Aachen-based Airport Research Center, stresses how important it is to “split passenger segments” in defining the roles of separate airports serving a common metropolitan area. She compares London's Heathrow and Gatwick airports, on the one hand, with London City on the other. “London City is a good example,” she says, “of an inner city airport used by business travellers who are not transferring to other flights.”

Examples of good passenger segment splits, Kohse explains, are low-cost, charter, and short-haul operators, which mostly carry O&D traffic, compared with full-service airlines, which handle lots of transfer traffic. “It is horrible,” Kohse warns, when this latter type of airline must split operations between two airports.

Tension often exists, Groot warns, between airport consultants and local promoters who have grandiose visions that their new airport will become the crossroads of the world. “There is a fine line between being optimistic and realistic”, he says.

In advocating a “supersite” for Sydney, Brett Godfrey not only claimed that the world’s most impressive airports are in cities that have only one airport – he might have cited Singapore’s Changi airport – but he also offered three practical reasons: a single airport avoids expensive ground links to shuttle passengers and cargo back and forth between airports; closing the old airport and selling its site can help fund the new one; and sticking with a single airport avoids airline resistance to a forced move.

Godfrey asked: “Having two airports – who are you going to get to move out to it? Are you going to send Qantas? Qantas won't go. Will Virgin go? No. Are you going to send Regional Express out there?” Because Badgerys Creek is 40km farther from the city than Kingsford Smith, these are not idle questions.

Kohse and Groot agree that airlines generally dislike multiple airports serving the same city. Groot cites Shanghai, where the older airport at Hongqiao remained open after the launch of operations at Pudong. Shanghai-based China Eastern Airlines was forced to split its domestic and international networks, thus frustrating an effective hub. But he also points to New York City, where three airports serve the metropolitan area without much duplication because airlines have decided whether to use JFK or Newark as its hub.

“The argument that selling the old airport site to fund the new airport is sometimes raised,” Groot also says, “but airport planners normally don’t consider this.” For instance, part of the runway at Hong Kong’s old Kai Tak airport became a cruise terminal, but other parts are still being sold, 16 years after flights moved to Chek Lap Kok. As Groot explains: “Proceeds from selling an old airport site can reimburse some costs of the new one, but often long after the fact.”

Sometimes the new airport replaces the old one and the latter closes. This was the fate of Kai Tak, Denver’s Stapleton, and, more recently, Russia’s Rostov, Ecuador’s Quito, and China’s Hefei and Kunming airports.

Kuala Lumpur did a variation on this. After opening KL International, 50km from the capital, the airport authority scaled down Subang by demolishing its international terminal, converting that space into a business park, and limiting Subang to general-aviation, military, and turboprop operations. Qatar’s Doha illustrates another variation. After the opening of the new Hamad International – the soft opening of which took place at the end of April – Doha’s old airport will gradually be phased out. A further batch of airlines, notably Qatar Airways, move over to the new airport on 27 May.

Ramping down the old airport can prove harder than planned. “As the closing date approaches,“ Groot warns, “local businesses start to realise how much they like the convenience of their downtown airport and they’d like it kept open.” Sometimes at the last minute they succeed. He cites Seoul’s Gimpo and Taipei’s Songshan as downtown airports that survived the launch of new airports and now provide downtown-to-downtown flights.

By contrast, Bangkok’s close-in Don Mueang closed but then reopened to take pressure off the newer Suvarnabhumi airport. In 2012, the Thai government ordered all charters and low-cost carriers to relocate to Don Mueang – another example of Kohse’s “splitting passenger segments”. As a result, Asia’s oldest operating airport is staging a comeback.

When a city retains multiple airports, the downtown airport usually handles short-hauls while the newer, more distant facility becomes the international hub. This is the pattern at most of the 30-40 cities around the world that host multiple airports. Exceptions include the suburban airports around Los Angeles, such low-cost airports as Melbourne’s Avalon, and Tokyo’s role reversal where close-in Haneda opened to overseas flights in 2010 and low-cost domestic carriers are creating bases at Narita.

Proponents advance various arguments to justify second airports. One of the most interesting comes from Beijing. Even though its Capital International airport, already the world’s second busiest, has room to grow, the government decided before embarking on more expansion to ask: “What is the ideal size of an airport?”

Answering this question, it decided to build a second airport at Daxing on the opposite side of the city. To reach this decision, planners pondered not only the effects on passengers and air traffic control of expanding Capital Airport even more, but also economic and social effects. The result is a policy called “one city, two airports”.

Groot notes that Capital airport has attracted businesses to the north side of the city, while the less-developed south side “resembles the Third World”. The new policy is designed to disperse to both sides of the city the economic benefits of an airport and avoid some of the congestion that more expansion on the north would spawn.

Airlines are not thrilled. Once Daxing opens as Beijing’s second airport – now slated to happen in 2018 – Chinese carriers may need to double their flights to serve both. If not, pity the poor passenger who must connect from one side of Beijing to the other.

Managing multiple airports brings its own set of issues. London’s major airports are separately owned and operated – and they compete with each other for traffic – but it is more typical for multiple airports serving the same city to share common management.

The Sydney Airport Corporation, which now manages Kingsford Smith, has first right of refusal to manage any new airport built within 100km. The group’s chairman Max Moore-Wilton says it will seriously consider exercising this option. “We will participate constructively,” he says, “if there's a need for a second Sydney airport.” As far as he is concerned, however, it is still a question of whether, as well as when and what. Some airport debates never die.