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Economics and Industry Standing Committee Inquiry Into Regional Airfares in Western Australia 31 August 2017 at Kalgoorlie Contents

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Economics and Industry Standing Committee Inquiry Into Regional Airfares in Western Australia 31 August 2017 at Kalgoorlie Contents REGAIR Sub 119 Rec'd 27/09/2017 KALGOORLIE-BOULDER City of Kalgoorlie-Boulder presentation to Economics and Industry Standing Committee Inquiry into Regional Airfares in Western Australia 31 August 2017 at Kalgoorlie Contents Introduction ...............................................................................................................3 Overview of Kalgoorlie-Boulder and its Economy ................................................. 4 Performance of Kalgoorlie-Boulder Airport ........................................................... 6 Key Issues Affecting Kalgoorlie-Boulder ............................................................... 7 Major Effects of High Airfares in Kalgoorlie-Boulder ............................................ 8 Local Government Airport Charges ........................................................................9 Government Support .............................................................................................. 1 O Possible Solutions .................................................................................................. 11 Conclusion ..............................................................................................................12 Attachments ............................................................................................................13 1.Airport Capital Expenditure 2017 - 2027 ................................................................ 14 2. Report to Council Regarding Landing Charges 28/08/2017 "Airfares and Airport Fares" ....................................................................................................................... 15 3. Estimates of Local Government Charges as a Percentage of Airfares ................. 20 4. Summary of Recent Airfares Kalgoorlie - Perth and Perth - Kalgoorlie ............... 21 Economics and Industry Standing Committee Inquiry into Regional Airfares in Western Australia 31August2017 2 of22 KAT--GOORUE·llOULDER Introduction The City of Kalgoorlie-Boulder is delighted to be able to present to the parliamentary inquiry and outline its concerns relating to regional airfares. Our views were broadly outlined in the combined submission from the Western Australian Regional Capitals Alliance that has already been lodged with the inquiry. Today's submission will focus on issues relating to Kalgoorlie-Boulder and highlight the detrimental affect that the often exorbitant and always high airfares have on the City broadly and particularly its residents who undoubtedly carry the brunt of the problem. Economics and Industry Standing Committee Inquiry into Regional Airfares in Western Australia 31 August 2017 3 of 22 Overview of Kalgoorlie-Boulder and its Economy The City of Kalgoorlie-Boulder was formed in 1989 after it was decided that the two separate Shires were to amalgamate. It is located in the heart of the Goldfields­ Esperance Region of Western Australia (WA), approximately 600kms east of Perth. The City of Kalgoorlie-Boulder is WA's largest inland city and Australia's largest outback city responsible for an area of 95,575km2. The town site of Kalgoorlie-Boulder is 70 km 2 which is made up of residential, industrial and commercial businesses. The City includes the suburbs of Kalgoorlie, Boulder, Hannans, Karlkurla, Lamington, Piccadilly, Williamstown, South Kalgoorlie, Somerville, West Kalgoorlie, Victory Heights, Broadwood and South Boulder. The remaining land is utilised for primarily Mining and Agricultural purposes. The mining sector is the largest industry in Kalgoorlie-Boulder and is pivotal to the financial sustainability of Kalgoorlie-Boulder. Our lands are rich in ~inerals. As per the 2016 Census, Kalgoorlie-Boulder had a population of 32,638. The population is a young demographic with an influx of young adults into the mining industry. The median population age is 31 years. The City is a family friendly City. As per the 2011 Census, 69% of residents identified that they were living in a family unit. Of the families in Kalgoorlie-Boulder, 27.5% had two persons in the family unit, 20.75% had three persons, 27.2% had four persons .and 24.6% advised there was five persons or more in their family unit. The City of Kalgoorlie-Boulder has a culturally diverse population with residents originating from across the country and from overseas attracted to the lustre of the Gold and Commodities Industries. Kalgoorlie-Boulder is considered to be culturally diverse with 34% of the population identified as being born overseas and 6.9% of the population identifying themselves as Aboriginal or Torres Strait heritage (ABS 2011 ). Kalgoorlie-Boulder is a major contributor to the WA economy with a Gross Regional Product (GRP) estimated at $7.9 billion in 2015-2016, representing 3.2% of WA's Gross State Product (GSP) of $248.6 billion. Kalgoorlie-Boulder is rich in two of Australia's most dominant resource commodities, gold and nickel. Over recent years, there has also been a significant exploration program and investment into mining another commodity, lithium. Increases in global demands for lithium can be explained by an increase in global production of Lithium ion batteries used in devices such as smart phones, laptops, cars and power systems. Mining accounts for approximately 57% of the total output within the Kalgoorlie­ Boulder's economy with around 27% of the workforce employed in the industry. Other commodities of interest and economic value also include uranium and iron ore. Economics and Industry Standing Committee Inquiry into Regional Airfares in Western Australia 31 August 2017 4 of22 KALGOORUE·BOULDER Kalgoorlie-Boulder has built on its strengths in the mining sector enabling the emergence of a number of other significant industries. The manufacturing services industry is a key supplier to the mining industry and has become the second largest sector in terms of economic output. Education is also a substantial sector in Kalgoorlie-Boulder including Curtin University's Western Australian School of Mines (WASM) and a TAFE campus. This sector is a key contributor to the economy and the community. Other industries which have also become important contributors to Kalgoorlie-Boulder include tourism, creative industries and population based services such as retail, professional, health and social support services, all of which provide significant economic and social contributions. The City of Kalgoorlie-Boulder strives to address both economic and societal factors that drive socioeconomic development. It cannot drive major initiatives on its own and has created a sphere of influence through effective advocacy, governance, networking and partnerships to ensure there are sustainable and positives outcomes for our City and its community for many generations to come. Economics and Industry Standing Committee Inquiry into Regional Airfares in Western Australia 31 August 2017 5of22 Performance of Kalgoorlie-Boulder Airport Unlike some other Western Australian regional airports, Kalgoorlie-Boulder has reasonable passenger numbers, is efficient, employs relatively low staff numbers, is fully compliant with all regulations and is profitable. In 2016/17 the airport returned a net operating profit of $1.88m after a return on investment was paid to the City, full depreciation provided and corporate overheads allocated. After capital expenditure of $834k, the total surplus was around $1 m. It should also be noted however, that $1.278m of revenue at the airport is derived from ancillary services rather than airline charges including advertising, vehicle rental leases, car parking (newly introduced) licence fees and grants. Over the next 10 years capital expenditure of $13.4m is planned to ensure the airport is maintained to an acceptable level (see attachment 1 ). Whilst all costs are met by the City of Kalgoorlie-Boulder and it carries all risk, the airport services an area broader' than Kalgoorlie-Boulder as it is a regional hub used by surrounding local government areas and towns, mining companies and support services including substantial government use. It is essential that the airport remain viable and profitable in the long term in the interests of our rate payers who carry the risk in economic:Jl{~llli~C--- ~ Given the airport at Kalgoorlie-Boulder receives ar nd 250,000 passengers er year and is able to be run successfully, it is staggering t the airline also make adequate returns off this route without charging the fares they do. Understanding the profitability of this route would be useful. Economics and Industry Standing Committee Inquiry into Regional Airfares in Western Australia 31 August 2017 6of22 Key Issues Affecting Kalgoorlie-Boulder There is only (1) key issue that needs addressing today and that is the high and/or exorbitant airfares that are charged to those people not travelling on corporate or negotiated airfares or travelling on a ticket that has no onward connections and who cannot book substantially in advance on flexible days. In short, these are the people who live and work in the region or who have a need to visit Kalgoorlie-Boulder for family or business reasons. Travelling by air to and from remote locations for family, health, business or soci ~ reasons is extremely expensive. Yield management practices of airlines mean thW after factoring in contract and through fares and advanced purchase fares, those people that need to travel are paying the highest prices and in Kalgoorlie return fares of between $800-$1200 per person are common. Such fares are difficult for individuals
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