UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK MARKET ANALYSIS AVIATION - AUSTRALIA AUGUST 2017 UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK INTRODUCTION The general aviation in Australia is characterised by large distances and the fact that Australia is an Island making more than 90% of visitors to come by air. Due to the large distances between the territory capital citities there is a very effectice regional service in Australia. In the years to come all of the airports in the Australian capital territory cities are expecting large growth rates in passengers per years. The total forecasted passenger movements will increase significantly from 2016 with 155 million passengers up to 279 millions in 2031. This in turn, puts a lot of pressure on the existing airports as well as support the building of a new Western Sydney Airport set to be operating in 2026. Besides domestic tourists and international travel to Australia, other key drivers of the sector includes price of crude oil and the real household income. The domestic airline industry have during the last few years been characterized by strong price competition between the two big carriers Virgin and Qantas. All airlines operating in Australia have an air operator´s certificate, which is issued by the Civil Aviation Safety Authority (CASA) as the government body. Source: Research Report 133, Aviation, Bureau of Infrastructure, Transport and Regional Economics. 2 UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK HISTORIC PASSENGER MOVEMENTS From 2002 to 2016 the total number og passengers travelling in and out of australian airports have experienced a doubling of passengers from 80 million to almost 160 million by the end of 2016. Total passenger movements 1985-2016 - Australia 180 160 140 120 100 80 passengers passengers (millions) 60 40 20 Number Number of 0 Source: Airport Traffic Data 1985-2016, Aviation, Department of Infrastructure and Regional Economics. 3 UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK TOP 10 BUSIEST AIRPORTS IN AUSTRALIA 45 40 35 30 25 year year (millions) 20 15 10 Passengers Passengers per 5 0 Source: Airport Traffic Data, January 2017. Bureau of Infrastructure, Transport and Regional Economics 4 UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK LARGEST AIRLINES IN AUSTRALIA The biggest airlines operating in Australia measured by number of passengers moved is Qantas Group and Virgin Australia who dominates the domestic market. Both of them have bought smaller airlines to retain big market shares as seen below*. Fleet size: 124 Fleet size: 110 Destinations: 85 Destinations: 54 Discount carrier: Jetstar Discount carrier: Tigerair Qantas domestic market share:39% Virgin domestic market share: 30% Jetstar domestc market share: 20% Tigerair domestc market share: 6% Total domestic market share: 59% Total domestic market share: 36% Sources: Planespotters.net, qantas.com, virginaustralia.com *Data from 2016: www.anna.aero/2016/10/20/qantas-is-averaging-30-percent-passenger-share-in-its-top-international-markets/ 5 UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK REGIONAL AIRLINES IN AUSTRALIA Both Qantas and Virgin operate regionally but many other airlines fly in Australia. Top 10 regional airlines excluding Qantas and Virgin Operator Main hub Founded No. Of aircrafts Destinations Regional Express Airlines Sydney, NSW 2002 52 54 (REX) Fly Tiwi Darwin, NT 2008 30 9 Airlines of Tasmania Hobart, Tasmania 1978 19 2 Sharp Airlines Hamilton, VIC 1990 14 9 Air North Darwin, NT 1977 13 22 Seair Pacific Gold Coast, QLD 1985 11 7 West Wing Aviation Townsville, QLD 2000 8 14 Maroomba airlines Perth, WA 1985 7 Hinterland Aviation Cairns, QLD 1984 7 11 Fly Corporate Brisbane, QLD 2016 5 8 Sources: Planespotters.net, airfleets.net 6 UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK AIRPORTS IN AUSTRALIA Over the past five years airports in Australia have seen an expansion. This expansion is highly concetrated around the capital cities especially Sydey, Melbourne and Brisbane. The expansion is highly due to the rising number of visitors from Asia and an increase in low-cost international airlines. One of the main issues due to the rising passenger movements is congestion around the big airports which have become a major issue. This issue has in part led to big projected investments in many of the biggest airports across Austraila Sources: IBISWorld, Report I5220, December 2016. 7 UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK CURRENT AND FUTURE PROJECTS Sydney Sydney airport is looking to expand and redevelop significantly in the future. This is mainly due to the rapid growth from Chinese and North Asian passengers by 23% as well as a solid domestic growth of 3.8%. The airport is undertaking more than 200 capacity projects which are expected to increase the number of jobs by 200,000 by 2034. The projects include expansion of T1, improved access to the airport as well as greater focus on premium passengers and more hotel capacity. Sydney Airport are looking at new designs, best-practices, smart technology solutions and other valuable knowledge to apply to their expansion. Furthermore, they are focused on waste management creating opportunities for Danish suppliers. New Western Sydney Airport will be build by the Australian government. The airport is expected to generate around 20,000 direct and indirect jobs by the early 2030s. As the airport grows, more jobs will be generated. The Western Sydney Airport will begin operations in 2026. Melbourne The second biggest airport in Austraila, Melbourne Airport, is working on a 20 year plan and are set to invest up to $10 billion in that period. This includes a multi-level transport interchange, new aircraft bases, a new security screening area, new entrance to the airport, a new T4 terminal that are currently home to the airlines of Jetstar, Tigerair and REX. Besides this, they are looking to reduce the airports total emission by up to 30 percent. A new $7-billion proposal for a new commercial airport in the South-East with an estimated size of the airport of Canberra with roughly 2.8 million passengers per year. Sources: Westernsydneyairport.gov.au, sydneyairport.com.au, Melbourneairport.com.au 8 UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK CURRENT AND FUTURE PROJECTS Brisbane Brisbane Airport (BNE) is investing $3.8 billion over the next decade to both develop as well as expand the airport. The investments include both airside, landside, terminals, building projects, hotels and a new runway. BNE aim to more than double number of passengers, jobs and investment in the coming 20 years. The biggest project is set to be Brisbane´s new runway opening in 2020 running parallel to the existing runway and will be 3.3km long and 60m wide. Perth The western airport of Forrestfield-Airport Link in Perth together with the State Government have several investment plansm and are looking to expand the infrastructure needed to meet the increased demand from passengers. A total of $2 billion will be invested in construction of rails, tunnels, stations and other associated infrastructure. Adelaide Australias fifth largest airport have big plans of expanding the current airport. A total of up to $1 billion expansion plan for Adelaide Airport have been approved by the Federal Government in 2015. Three major projects will be undertaken: Terminal expansion, expansion of the international arrival halls and additional arrival gates. Managing Director of Adeliade Airport, Mark Young, expects the investments to grow up to 38,000 jobs within the 20-year forecast. Sources: Brisbane Airport, bne.com.au. Major Development Plan, Forrestfield-Airport Link. Adelaide Airport´s $billion expansion, Adelaidenow.com.au, January 2015. 9 UDENRIGSMINISTERIET, MINISTRY OF FOREIGN AFFAIRS OF DENMARK CURRENT AND FUTURE PROJECTS Newcastle Newcastle Internatiol Airport have recently revealed plans of big investment projects. The airport is planning a big extension to its existing immigration area, with the aim of speeding up the arrival process for passengers travelling from Asia. A total investment of up to $5 million. Besides the immigration area, the airport is seeking permission from the Newcastle City Council to extend its passenger departure lounge. The total investments should amount to $30 million over the next few years also including a new radar system and improved digital signage in the check-in areas. A new masterplan has also outlines the airport´s developement plads up to 2030 and are looking at increasing the number of jobs associated with the airport from its current 7.800 to 10.000 by 2030 Source: www.newcastleairport.com 10.