Australian Airports Liability and Compliance Guide Carter Newell Lawyers is a leading dynamic Queensland-based law firm providing specialist advice to Australian and international corporate clients. Carter Newell provides services to the aviation industry through their specialist areas of Insurance, Construction & Engineering, Corporate & Commercial and Commercial Dispute Resolution. This enables Carter Newell’s aviation lawyers to represent many leading national and international companies associated with the aviation industry throughout the Asia Pacific region. Our values, culture and strategic plan are aligned to enable us to be recognised as a premier provider of specialist legal services. The firm has been recognised nationally for the quality of its services and has been awarded: ■ 2009 Brisbane Law Firm of the Year Finalist Macquarie Bank ALB Australasian Law Awards ■ 2008 Queensland Law Society’s Employer of Choice ■ 2008 Brisbane Law Firm of the Year Mettle ALB Australasian Law Awards ■ 2008 Independently recognised as a leading Brisbane firm in the following practice areas: Insurance | Building & Construction | Mergers & Acquisitions | Energy & Resources ■ 2007 Brisbane Law Firm of the Year Finalist Mazda ALB Australasian Law Awards ■ 2007 Best Small Law Firm in Australia Finalist BRW-St.George Client Choice Awards ■ 2006 Best Small Law Firm in Australia BRW-St.George Client Choice Awards Carter Newell is a member of TAGLaw, an international privately run network of law firms which provides Carter Newell with the opportunity to work with over 150 law firms in 100 countries. With business today being transacted throughout the world, we consider this network gives us the global reach necessary to ensure we are able to meet our clients' needs. NB: Due to the extensive nature of this publication and the pace of reforms and judicial consideration there may be an absence of reference to a recent case or some references to legislation and its provisions which are no longer current, yet proclaimed, amended or repealed. The publication attempts to draw out the most significant points in the relevant legislation. Whilst all care has been taken to ensure that the most up to date information has been included, not all cases or aspects of the legislation have been considered. The material contained in this publication is in the nature of general comment only, and neither purports nor is intended, to be advice on any particular matter. No reader should act on the basis of any matter contained in this publication without considering and, if necessary, taking appropriate professional advice upon his or her own particular circumstance. The content of this publication is current up to and including 30 April 2009. © Carter Newell Lawyers 2009 Australian Airports Liability and Compliance Guide Contributors Paul Hopkins Glenn Biggs Shannon O’Hara Beau Mollinger Sadia Stathis Nick Hart Teresa Dwight John Whitehill Scott Goodridge Cameron Rodgers Catherine Humphery Carter Newell Publications "RISBANEs3YDNEYs-ELBOURNE Carter Newell Lawyers PREFACE Airports are a complex and highly regulated aspect of the Australian economy. In their simplest and most basic of functions, they facilitate the conversion between ground and air, between landside and airside. In a world economy driven by speed and efficiency, airports funnel the aviation requirements for domestic and international travel into the aerodrome or ‘terminal’ experience. Via a web of greater urban design, passengers are drawn towards a sophisticated airline and airport industry. Often oblivious to it, these passengers move through delicate and complex balances struck between environmental, safety, commercial and aviation concerns at airports. As air travel becomes more popular and wide reaching, this influences the greater need for growth, new technology, more efficient infrastructure, larger aircraft, and, of course, heightened airport regulation. Whether described as a microcosm, airport city or metropolis, these descriptions all characterise the same fundamental conglomeration of densely-situated diverse airport interests. With such varied and dynamic points of exchange, a complex and quasi integrated regulatory and liability environment is a natural effect. As with many business disciplines, an airport’s function is not only influenced by domestic and regional government regulation, but driven also by greater social and commercial developments. The airport industry is particularly attuned to and affected by advances in technology, world economics, aircraft capacity, tourism, disease, political unrest and terrorism. With airport privatisation, or at least the impetus for privatisation around the world, comes new business pressures. Capacity constraints, noise and environmental restrictions and stakeholder interests are all barriers to maintaining and improving access to many airports. Three recent international examples which span the full spectrum of such business drivers reveal this very challenge. The first example is of the small but embattled United States airport of Oceanside in California. Oceanside had almost succumbed to immense local government pressure to close down, before Californian-based company, Airport Property Ventures was awarded a 50 year ‘development lease’ on the basis of its promised USD$21 million spend on airport improvements over 25 years. The decision is expected to turn a once ailing airport (that was on the verge of being sold), into a thriving business community supported by the Oceanside Airport Association and other airport users. Oceanside’s success was even supported by the Federal Aviation Administration’s decision to deny attempts to sell 15 acres of adjoining airport land, preserving the opportunity for airport expansion in the future. This phenomenon is by no means localised to the United States and is common to many regional airports which teeter on the balance of prosperity supported by a small local community, versus obliteration by redundancy and the economies of scale of larger airports. The second example comes out of the United Kingdom (UK) where the British Airport Association (BAA) (which itself was privatised in 1987) owns and controls seven of the UK’s airports. There has long been a murmur of discontent that BAA has supposedly abused its monopolistic control over London airports, in particular, by ignoring the needs of airlines and the travelling public. The UK’s Competition Commission (the equivalent of the Australian Competition and Consumer Commission) has now signaled the break up of BAA’s airports when it called for the company to sell three of its seven airports, including two in London. One of the Competition Commission’s key concerns was the provision of adequate airport capacity to meet an expected growth in demand. The BAA Airport Inquiry Group found that after some 20 years of private control, there was inadequate runway capacity. The inquiry has laid the blame for the BAA’s competition problems on its common ownership of the seven airports and says the regulatory regime needs to be modernised. Carter Newell Lawyers And finally, at the other extreme, we see the $1.1 billion spend by the Indianapolis International Airport, which is said to be the first major American airport designed and constructed with ‘9/11’ in mind. This airport was designed for the specific purpose of creating a safe, efficient and less stressful experience – for which even psychologists were utilised in developing airport plans. Among its features are a shopping mall in the heart of the terminal, more than 50 e-ticket machines, seven security lanes, two full-body image machines using millimetre wave technology, and a $25.6 million luggage-sorting system with 3.5 kilometres of conveyors using thousands of photo cells to track luggage movement. These three international examples reveal only a minor aspect of the complex context in which ‘sustainable development’ can be achieved at an airport. By sustainable development, airports seek to expand with sufficient capacity to meet a growing market, with stakeholder interests in mind across a range of safety, security, environmental and shareholder values. While some of these forces can be difficult to predict and manage in the short to longer term (such as sustainable airport capacity, land development, open ended planning, and the dynamics of population shift), other factors can be the subject of good risk management, planning and control. The challenge remains for airports to cost-effectively manage strategic, operational, financial and compliance risks, whilst focusing on current needs and future demands. Despite this, the regulatory environment is becoming more onerous, rendering the task of compliance and monitoring of airport regulations a major undertaking. Indeed, with the December 2008 National Aviation Policy Green Paper revealing literally dozens of government proposals for new regulation, this task will only become more arduous in the future within Australia. The inaugural edition of the Australian Airports Liability and Compliance Guide provides a number of tools to assist in this emerging challenge of regulatory compliance for Australian airports. This Guide provides a detailed review of the four key areas for Australian airport liability and compliance risks including: airport design and development; operations, services and pricing; safety and security; and environment and culture. Those key to ensuring airport compliance are airport operators, operational and risk managers, consultants, tenants