Regional Priority

Regional Priority: Aviation route development Funding sought $1.6 million per year per new route, over 3 years, for the attraction of direct flights from China, Singapore and other parts of Asia These funds will be used to contribute to the first 3 years’ operational start-up costs of airlines adding new routes into Cairns, support expanding marketing programs through airlines and wholesalers, and provide incentives for sales and marketing initiatives for route development Proponent Cairns Airport Pty Ltd (CAPL) Partners / co-contributions CAPL currently contributes over $2 million per year to encourage and incentivise new airlines and routes, and the expansion of existing services The current Queensland Government committed $8M over 3 years (2012 – 14) across the whole of state. Economic return Direct international flights three times per week would generate on average: an additional 23,712 new visitors per annum to the region (using conservative load factors); an additional $35 million per annum in gross regional product; and an additional 386 new jobs in the region. Once these flights can be grown to a daily service, they would generate on average: an additional 55,328 new visitors per annum to the region (using conservative load factors); an additional $86 million per annum in gross regional product; and an additional 667 new jobs in the region. Commentary Cairns Airport is a key economic driver for Tropical North Queensland generally, and particularly for tourism. Cairns Airport’s vision is to position Cairns as Australia’s gateway to the Asia Pacific as an aviation and commerce hub. Cairns Airport has airport land holding development plans which will see a $1B investment over the next 20 years that include providing the aviation sector with opportunities to establish new operations or grow existing operations, generating significant flow-on effects through investment attraction, employment and skills development opportunities and contribution to the regional economy. A 2011 study showed airport operations and industry activities dependent on the availability of air services through Cairns Airport directly and indirectly generate approximately 30,000 jobs or 22% of the region’s employed workforce, and $2.5 billion of value added revenue for the regional economy or 21% of economic activity.1 Failing to build airport throughput, particularly tourism throughput, misses the best opportunity to help strengthen and diversify the regional economy. The regional economy will continue to languish. Direct international services from Singapore, China, Korea, Taiwan and other Asian countries into Cairns, offer excellent potential for significant growth in total international visitor numbers from key source markets. They also offer new potential for commercial and business development opportunities. Airlines demand incentives to provide such additional services, and there are significant costs in building, stabilising and maintaining the attraction of new routes. As an example, one airline previously engaged by Cairns Airport in negotiations regarding a new direct service to Cairns requested an incentive per year that was in excess of the $8M, committed by the Queensland Government for international airline incentives across the whole state for 3 years. Cairns Airport, Tourism Tropical North Queensland and the wider local business and tourism industry are aligned on what is required to attract new direct international services to Cairns which will provide a significant injection into the local economy and create much needed employment. These outcomes can only be achieved by working together, pooling resources and committing the necessary funds to ensure this region is on an equitable footing with its competitors. A small Federal Government investment would help to bring more international flights to Cairns and provide substantial ROI through benefits to the regional economy, and therefore the national economy. In addition to Cairns Airport’s own comprehensive aviation business development program which allocates $2 million per year to encourage and incentivise new airlines and routes and the expansion of existing services, and other regional private sector investment, the regional tourism sector and Cairns Airport seek direct Federal Government financial assistance to secure new international services by: Supporting expanded marketing programs through airlines and wholesalers; Contributing to first 3 years’ operational start-up costs of airlines adding new routes into Cairns; and Providing incentives for sales and marketing initiatives for route development. The Airport is prepared to further contribute, by foregoing significant aeronautical revenues in the first three years of operations for each new direct international service. This has already been demonstrated through Cairns Airport’s successful negotiations with China Eastern Airlines to secure direct services from Shanghai to Cairns. This has required significant incentives from Cairns Airport and the Queensland Government as well as discounted aeronautical charges from Cairns Airport and marketing support from both Federal and State Governments. The route still poses all the challenges of an immature market requiring education and careful management to develop to a year round service. While financial support is crucial there are also opportunities for the Federal Government to provide significant support to the Tropical North Queensland economy through aviation and tourism related regulatory reform. Cairns Airport is ready to work with the Federal Government and all relevant parties to achieve these reforms that will generate positive outcomes of increased jobs and revenue for the Tropical North Queensland economy. These could include: Establishing more streamlined visa processes to allow easier and quicker access to visas for Chinese tourist visitors. This will encourage higher visitor numbers from this key market. Developing an equitable regime for federal charges at non-capital international airports such as Cairns Airport or the rebate to regional airports of the difference between capital city and regional international airport charges. Permitting cabotage to increase the uptake and potential for success of international carriers through regional international airports such as Cairns Airport. Removal of Passenger Movement Charges at non-capital international airports such as Cairns Airport to help them retain international services. By providing international carriers with more regulatory and financial incentives to fly into Cairns Airport, the Federal Government would also be assisting in reducing aviation traffic congestion at Brisbane Airport and thereby delaying the need for extensive infrastructure and resources upgrades such as a new runway and expanded Airservices Australia and border protection operations, required to service existing traffic and projected growth. Reference documents Economic Impact of the Cairns Airport, Cummings Economics, Nov 2011 Estimating the impact of additional flights on the regional economy, Cumming Economics, Nov 2011 Regional Priority: Facilitate the development of a super yacht charter industry Policy request Investigate the removal of the import requirements for international super yachts wishing to undertake chartering activity in Australia for a period of up to 12 months. Key stakeholders Superyacht Australia Superyacht Group Great Barrier Reef Inc Economic return Australia currently attracts 1.2% of the world’s Superyacht charter fleet, representing approximately 60 superyachts with an expenditure of up to $200 million each year. Approximately 10% of the value of a superyacht is spent each year on maintenance and services. Attracting another 1% of the global superyacht fleet would increase revenue for the Australian economy by $170 – 200 million. 12 commercially operating superyachts in Oceania/Asia Pacific region can generate up to US$280,000 in charter fees each week. Cairns currently attracts between 35 and 50 superyachts each year. Commentary Currently most superyachts are bypassing Australia for other more attractive Asia Pacific destinations. A key reason for this is limitations in the Australian charter regulations. Even though superyacht owners are high net-worth individuals, they are still conscious of the high costs of owning a superyacht. Most owners when they make a decision to go to a destination, particularly one as far away as Australia, wish to recoup some of the cost by chartering the vessel while it is there. Generally owners do not travel with the superyacht. The crew bring the boat to Australia and the owners will fly in for a period of time with their guests and then fly out after the cruise. The crew remains with the boat. When the owners depart they want to be able to recoup some of the expenses of bringing the boat down to Australia by chartering the yacht for short periods until they wish to re-join the vessel. The captain, crew and everything else on the boat remains exactly as if the owner were still on board. These superyachts only charter for a maximum of 12 guests. Fees for chartering can be anywhere in the vicinity of $50,000 per week to $250,000 per week. Generally if an owner brings a boat as far as Australia they would be looking to stay for around 12 months doing a couple of charters within this period. Currently, if a superyacht wishes to come to Australia they must apply for a control permit which allows them to cruise in Australian waters for up to 12 months. They are

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