Economic impact of Canberra Airport: 2010 to 2030 Prepared for Canberra Airport October 2011 Reliance and Disclaimer The professional analysis and advice in this report has been prepared by ACIL Tasman for the exclusive use of the party or parties to whom it is addressed (the addressee) and for the purposes specified in it. This report is supplied in good faith and reflects the knowledge, expertise and experience of the consultants involved. The report must not be published, quoted or disseminated to any other party without ACIL Tasman‟s prior written consent. ACIL Tasman accepts no responsibility whatsoever for any loss occasioned by any person acting or refraining from action as a result of reliance on the report, other than the addressee. In conducting the analysis in this report ACIL Tasman has endeavoured to use what it considers is the best information available at the date of publication, including information supplied by the addressee. Unless stated otherwise, ACIL Tasman does not warrant the accuracy of any forecast or prediction in the report. Although ACIL Tasman exercises reasonable care when making forecasts or predictions, factors in the process, such as future market behaviour, are inherently uncertain and cannot be forecast or predicted reliably. ACIL Tasman shall not be liable in respect of any claim arising out of the failure of a client investment to perform to the advantage of the client or to the advantage of the client to the degree suggested or assumed in any advice or forecast given by ACIL Tasman. ACIL Tasman Pty Ltd ABN 68 102 652 148 Internet www.aciltasman.com.au Melbourne (Head Office) Canberra Perth Level 4, 114 William Street Level 1, 33 Ainslie Place Centa Building C2, 118 Railway Street Melbourne VIC 3000 Canberra City ACT 2600 West Perth WA 6005 Telephone (+61 3) 9604 4400 GPO Box 1322 Telephone (+61 8) 9449 9600 Facsimile (+61 3) 9604 4455 Canberra ACT 2601 Facsimile (+61 8) 9322 3955 Email [email protected] Telephone (+61 2) 6103 8200 Email [email protected] Facsimile (+61 2) 6103 8233 Email [email protected] Brisbane Level 15, 127 Creek Street Brisbane QLD 4000 Sydney GPO Box 32 Darwin PO Box 1554 Double Bay NSW 1360 Brisbane QLD 4001 GPO Box 908 Telephone (+61 7) 3009 8700 Darwin NT 0801 Telephone (+61 2) 9389 7842 Facsimile (+61 7) 3009 8799 Facsimile (+61 2) 8080 8142 Email [email protected] Email [email protected] Email [email protected] For information on this report Please contact: David Greig Contributing team members: Telephone (03) 9604 4414 Dr Yuan Chou Rowena Hodges Email [email protected] Denise Ironfield Dr Peter Johnson Guy Jakeman Economic impact of Canberra Airport: 2010 to 2030 Contents Executive summary viii 1 Introduction 1 1.1 Study objective 1 1.2 Study scope 1 1.3 Report structure 1 2 Study methodology 3 2.1 Overview 3 2.2 Data collection 3 2.2.1 Data from Canberra Airport Pty Ltd 3 2.2.2 Survey of airport tenants 4 2.2.3 Data from published sources 4 2.3 Economic modelling 4 2.3.1 Input-output analysis and general equilibrium analysis 4 2.3.2 Tasman Global CGE model 7 2.4 Analysis of wider economic benefits 7 3 Canberra Airport today 8 3.1 Overview of the airport 8 3.1.1 Location 8 3.1.2 History 9 3.1.3 Facilities 10 3.2 Airside activities 10 3.2.1 Destinations served 10 3.2.2 Passenger traffic 11 3.2.3 Aircraft movements 12 3.2.4 General aviation and military operations 13 3.2.5 Freight activity 14 3.3 Landside activities 14 3.3.1 Canberra Airport estate 14 3.3.2 Terminal businesses 15 3.3.3 Brindabella Business Park 16 3.3.4 Majura Park 16 3.3.5 Fairbairn precinct 16 3.3.6 Other airport precincts 17 3.4 Current economic contribution of the airport 17 3.4.1 Airport aviation-related activity 17 3.4.2 Tourism impact 18 iii Economic impact of Canberra Airport: 2010 to 2030 3.4.3 Airport non-aviation activity 20 3.4.4 Total impact 21 3.4.5 Impacts on the aviation sector 22 4 Catalytic benefits 24 4.1 Economic benefits 24 4.2 Personal benefits 27 4.3 Competition 27 4.4 Quantification 29 5 Economic impact of the AirVolution project 31 5.1 Investment in Canberra Airport since 1998 32 5.2 „AirVolution‟ project description 33 5.3 Economic impacts 35 6 Canberra Airport as a freight hub 38 6.1 Overview 38 6.2 Advantages of Canberra Airport 38 6.3 Current freight activity at Canberra Airport 39 6.4 Expansion of domestic freight activity 39 6.5 International freight activity 42 6.6 Development of associated infrastructure 42 6.7 Economic impacts 43 6.8 Potential impact of a curfew 46 7 Canberra as a second Sydney airport 48 7.1 Need for a second Sydney airport 48 7.2 Economic case for Canberra Airport 48 7.3 Congestion at Sydney Airport 49 7.3.1 On time performance 49 7.3.2 Capacity constraints 50 7.3.3 Future growth at Sydney Airport 51 7.4 Sydney airport development 53 7.5 Potential opportunities for Canberra Airport 54 7.6 Newcastle Airport versus Canberra Airport 55 7.7 High speed train 57 7.8 Canberra as a potential regional hub 59 8 Canberra Airport in 2030 61 8.1 Aviation activities 61 8.1.1 Development of international air services 61 8.1.2 Expansion in domestic and regional air services 63 8.1.3 Facilitation by expanded ground transportation services 65 8.1.4 Passenger projections 2011-2030 65 iv Economic impact of Canberra Airport: 2010 to 2030 8.1.5 Freight activities 66 8.2 Business activities 66 8.2.1 Expansion in terminal business activity 66 8.2.2 Expansion in Brindabella Business Park 66 8.2.3 Expansion in Majura Park 67 8.2.4 Expansion in Pialligo precinct 67 8.2.5 Expansion in other airport precincts 67 8.3 Modelling assumptions 68 8.3.1 Airport businesses 68 8.3.2 Airport operator 68 9 Economic contribution of the airport in 2030 69 9.1 Medium scenario 69 9.1.1 Airport aviation-related activity 69 9.1.2 Tourism impact 70 9.1.3 Airport non-aviation activities 71 9.1.4 Total impact 72 9.2 High scenario 74 9.2.1 Airport aviation-related activity 74 9.2.2 Tourism impact 75 9.2.3 Airport non-aviation activities 76 9.2.4 Total impact 77 10 Conclusion 80 10.1 Current economic contribution 80 10.2 Future economic contribution 80 10.2.1 Investment in airport infrastructure 80 10.2.2 Overnight freight hub 81 10.2.3 Second Sydney airport 81 10.2.4 Economic contribution in 2030 82 10.3 Wider benefits 82 References 84 A The Tasman Global model 85 B Glossary 91 v Economic impact of Canberra Airport: 2010 to 2030 List of boxes Box 1 Input-output tables and multipliers 6 Box 2 Modelling output metrics - definitions 17 List of figures Figure 1 Economic growth and population assumptions used in the reference case 5 Figure 2 Location of Canberra Airport and major road network surrounding the airport 8 Figure 3 Current destinations and weekly flight frequencies 11 Figure 4 Passenger movements (inbound plus outbound) at Canberra Airport, 1985-86 to 2009-10 12 Figure 5 Aircraft movements (inbound plus outbound) at Canberra Airport, 1985-86 to 2009-10 13 Figure 6 Key areas and precincts at Canberra Airport 15 Figure 7 Employment generated or enabled within Canberra and surrounding region by the Canberra Airport Precinct by activity type, 2009-10 21 Figure 8 Value added (GRP) generated or enabled within Canberra and surrounding region by the Canberra Airport Precinct by activity type ($ million), 2009-10 22 Figure 9 Benefits of airports and aviation – forward and backward linkages 25 Figure 10 Aerial view of ‘AirVolution’ project under construction 32 Figure 11 Canberra Airport ‘AirVolution’ project – Southern and Western Terminal concourses 35 Figure 12 Annual increase in GRP of Canberra and the surrounding region due to ‘AirVolution’ project, 2009 to 2012 ($million, 2010 dollars) 36 Figure 13 Annual increase in employment in Canberra and the surrounding region due to ‘AirVolution’ project, 2009 to 2012 (FTEs) 37 Figure 14 Current freight routes from Canberra 40 Figure 15 Potential future freight routes from Canberra 41 Figure 16 Key locations for current and future freight operations at Canberra Airport 44 Figure 17 Annual increase in the GRP of Canberra and the surrounding region due to freight hub, 2010 to 2030 ($million, 2010 dollars) 45 Figure 18 Annual increase in employment in Canberra and the surrounding region due to freight hub, 2010 to 2030 (FTEs) 45 Figure 19 Proportion of departures that are on-time, July 2009 to March 2010 49 Figure 20 Average system delays (minutes), 2008/09 50 Figure 21 Runway demand as a proportion of operational agreed capacity 51 Figure 22 Projected hourly aircraft movements on a busy day in 2029 52 Figure 23 Projected international air services from Canberra 63 Figure 24 Projected domestic and regional air services from Canberra 64 Figure 25 Projected ground transportation services to Canberra Airport 65 Figure 26 Employment generated or enabled within Canberra and surrounding region by the Canberra Airport Precinct by activity type, Medium scenario, 2030 73 vi Economic impact of Canberra Airport: 2010 to 2030 Figure 27 Value added (GRP) generated or enabled within Canberra and surrounding region by the Canberra Airport Precinct by activity type ($ million), Medium Scenario, 2030 74 Figure 28 Employment generated or enabled within Canberra and surrounding region by the Canberra Airport Precinct by activity type, High scenario, 2030 78 Figure 29 Value added (GRP) generated or enabled within Canberra and surrounding region by the Canberra Airport Precinct by activity type ($ million), High Scenario, 2030 79 List of tables Table 1 Current economic impact of Canberra Airport’s aviation-related