An unexpected side effect of airport privatisation has spawned a growing dispute between Australian cities and private airport operators over the apparent immunity airports enjoy from local land use controls.

Sydney is urging other Australian cities to join it in a legal challenge to the federal government's approval of unlimited development at airports. This is not the typical dispute by residents complaining about airport noise, but from local governments claiming that non-airport uses on airport property should not be exempt from local planning, building or zoning codes.

Airport development plans still require federal approval, but so far the Australian government has not seen a plan it did not like. It has approved more than two dozen and rejected none.

Airports have already won the first round in this dispute. In a recent case brought by shopping centre owners, a court ruled that Brisbane airport could develop a direct factory outlet on its land without regard to local planning laws or requirements for developer contributions to street improvements. The judge ruled that shops and even a golf course were allowed under federal law as a development incidental to the airport's primary purpose of aviation.

That decision, which was not appealed, has encouraged airports and developers to consider more uses on airport land, ranging from specialty shops to supermarkets not connected to the airport terminals. The current dispute in Sydney stems from airport plans to build on-site car parks and office buildings.

Australia completed the privatisation of its major airports three years ago when it sold a 99-year lease of Sydney airport to a group lead by Macquarie Airports. The immunity from local laws that airports typically enjoy has prompted the planning minister of New South Wales, where Sydney is located, to liken Sydney airport to Vatican City.

So far Canberra has vigorously resisted efforts by the media and property owners to see the leases it entered when it privatised Australia's airports. The secrecy surrounding these leases has fuelled speculation that it was able to boost airport prices by agreeing to compensate lessees if it unreasonably withheld approval of their airport development plans. The confidentiality of Sydney's airport lease is already the subject of a separate lawsuit.

Source: Airline Business