Federal Airports Corporation Readies for Launch

The implications for the industry are substantial since the level of debt the FAC must service will have a large impact on the level of landing fees it must impose on the industry. If the level of debt is $600 million instead of $200 million, for example, the difference of $400 million at 15% is $60 million per year, compared to a total current recovery in landing fees on FAG airports of $75 million.

“The level of debt that the FAC inherits is going to be fundamental to its future ability to expand its capital base to provide new facilities, as well as costs on the industry,” Mr Swingler said.

In the current economic climate, the Government must be sorely tempted to increase the level of debt on the corporation so that a return in interest on the debt flows to the government.

For future capital expenditure, the Corporation will have to establish ‘hurdle rates’ for required capital expenditure and will look at each project on a business-like basis.

“Each project will be evaluated financially on its merits and appropriate decisions taken”, according to Mr Swingler.

Mr Swingler does not anticipate a major difference in FAC operating costs compared to the Department of Aviation in terms of dollars per employee but a review of manning levels and staffing needs may lead to “a somewhat leaner organisation than currently exists. ”

“The economies of operating the FAG will be in more flexibility in hiring and firing and matching manpower with workload,” Mr Swingler said.

Some economies will flow from the shift from the current three-tiered structure of the Department with a central office in Canberra, various regional offices and individual airports to a two-tiered structure with small FAC head office and individual airport ‘profit centres’.

The Department of Aviation has identified about 1600 positions within its system for which the FAC will take responsibility. Of these, 127 are currently vacant and Mr Swingler will initially use these to recruit other necessary skills. As attrition whittles down the original work force, he will review the need to retain staff levels in various areas.

“There have been indications, on a first pass basis, that an appropriate staffing level which we might target for in a couple of years is about 1200 people – so we are talking about a 25% reduction in total staff.

“I cannot go straight there and cancel the 127 jobs as we may have a skill deficiency have to use them to recruit skills, so we can look at trimming a little further down the track. ”

The FAC is obliged to offer a job to the 1600 Department staff but they have the right to refuse and go on the unattached list instead. Mr Swingler does not wish to discuss publicly where cuts may be made but the FAG brief covers safety and traffic officers, ‘grounding’ and engineers. A lot of maintenance work is already contracted out and the FAC will be free to use contractors where there is an economic case to do so-subject to redundancies and making provision for people currently employed.

“One of the biggest problems in staffing will be matching skills needed against people transferring from the Department,” he said.

“A number of functions the FAC will undertake will be insufficiently funded in terms of people thrown up from the Department.

“We will need to operate our own financial systems- general ledgers and accounts receivable and payable, payroll – and since we are not getting any staff from the Department to cover those type of functions they will have to be recruited externally. ”

Functions carried out by the Departments of Finance and Treasury, which took money into consolidated revenue, will also have to be replaced. Mr Swingler admits that the FAC will not be as free from Government influence as most people would like but he claims it will be “fairly autonomous”.

“Hopefully we are freer of government decisions than we might have been in the past,” he said.

“For instance, the new Brisbane airport would not have happened under the circumstance of an FAC. ”

If the Minister wants to direct the FAC to do something he must hold an inquiry and publish its results, then meet any financial loss the FAC might suffer. All results will be published in annual reports and with a high level of public scrutiny on efficiency.

One of the FAC’s largest and most pressing problems will be Sydney’s Kingsford Smith Airport which carries more of Australia’s air traffic than all other Australian international airports combined, receives almost two out of three tourists visiting Australia and over half its international air freight.

Community pressure from marginal federal and State electorates surrounding KSA have prevented the expansion of the airport but with economic fallout from snowballing delays reverberating around the country, pressure for further development is growing strongly. The federal Coalition, with support from State colleagues, has firmly promised an immediate start on an extra runway on return to government.

Although the Federal Government is adamant that all future Sydney airport development will take place at Badgery’s Creeka good hour’s drive west of the city even in light traffic – it would take at least a decade to build and informed industry punting is that there will never be a major airport on that site.

The Sydney Chamber of Commerce, which last year established an airport development task force, believes that the only solution is to build a third international runway at KSA and a completely new international terminal – but there are other, cheaper alternatives.

The simplest and quickest measure to increase the number of passengers moving through KSA without having to spend any money on runways would be to exclude small aircraft carrying few passengers which require a similar runway time for each movement as the big jets.

Neville Wran as NSW Premier would never countenance any suggestion that the small aircraft should be pushed out of KSA and sent to Bankstown, but Mr Unsworth, as the newly and narrowly elected member for Rockdale, which is right under a KSA flight path, is already suggesting such a move.

In fact he campaigned on the idea – but Mr Abba’s (Chairman of the Sydney Chamber of Commerce) task force has already targeted for its own campaign in marginal country electorates including Calare, Eden Monaro, Hunter, Albury, Bathurst and Armidale, should the State Government take any action which would disadvantage country air travellers.

A recent review of NSW intrastate air services by a committee appointed by the State Government concluded that country air services in small commuter aircraft should ‘hub’ at outlying centres where passengers could transfer to larger aircraft which could then reduce the pressure on Sydney by bringing in more people in fewer, larger aircraft.

This proposal – and other recommendations in the report – brought screams of protest from country airlines and their passengers. The State Government has taken no action so far – but it can change its licencing of intrastate airlines and routes at the stroke of a pen if it cares to bite the political bullet.

Many US airports already discourage small aircraft – particularly in peak hours – by differential pricing of movement charges. Peak-hour prices can be raised for all aircraft to encourage more off-peak movements, or the minimum price charged during peaks could be equivalent to a 50-seat aircraft, for example. The FAC will soon find this problem rapidly shuffled into its in-tray from the too hard basket of other State and Federal bureaucracies.

Because it has been charged by the Federal Government with operating airports on a largely commercial basis and faced with a major capital expenditure to develop new airport facilities, it will obviously be tempted to introduce differential pricing in an effort to spread the load and get better use out of existing resources.

Building a second major Sydney airport at Badgery’s Creek would only repeat similar horrendously expensive mistakes overseas.

The only rationale for a second airport would be political, not economic and with airport development being distanced from political influence with the creation of the FAC, which is expected to apply commercial management criteria, no major development is likely. Experience clearly shows that whenever a shiny new airport is built some distance out of town to supplement an overloaded downtown airport, it becomes a white elephant from the day it opens.

Because of the inconvenience of getting to the new airport, ever more passengers and airlines continue to crush into the tired old airport, regardless of congestion, leaving the new airport empty and echoing.

Two prime examples are Washington National, which still carries more traffic than the newer but outlying Dulles airport and little used Mirabel, which was supposed to take over from Montreal’s old faithful Dorval.

There is no technical problem with extra runways at KSA – either inside or outside its current fences. The only problem has ever been politics.

Although the hours of the 11pm-6am curfew are never likely to be changed, rationalisation of the rules is likely to allow modern jets – which are quieter than many propeller aircraft now allowed to operate during curfew – to operate night flights over Botany Bay, away from residential areas. New runways do not have to be kilometres long and several metres deep to handle the big jets.

Smaller aircraft require shorter and lighter runways which are much less costly than the big runways built to stand the continuing arrival of jumbos often weighing well over 200 tonnes.

Such runways could be built within the existing boundaries of KSA although some buildings might have to go and optimum results would require a fairly modest amount of further reclamation in Botany Bay.

Aviation officials are reluctant to make any comments which go against current government policy but some privately admit that their preferred solution is for parallel light and short runways for light aircraft which could be operated simultaneously with large aircraft on the main runway.

Many overseas airports operate permanently with two parallel runways for all aircraft and it is common when arriving overseas to find yourself flying in formation with another large jet landing on a parallel runway about a thousand metres away. Development of lighter and shorter runways for light aircraft at KSA as an interim measure would not preclude further development of longer and heavier parallel runways. Some smaller aircraft can takeoff in not much more than the length of a 7 4 7 – or less than an airport carpark – and can climb steeply to minimise noise over nearby communities.

A number of US airports allow smaller aircraft and even some specially built STOL (short takeoff and landing) aircraft carrying up to 50 passengers, to operate off designated taxiways simultaneously with movements on the main runways.

Everyone involved in aviation has their pet theory about what could be done to improve the congestion at KSA but most of these would have marginal effect compared with either increasing runway capacity or rationalising its utilisation.

Sydney’s radar is one of the oldest of major Australian airports and new generation radars which provide controllers with data about aircraft altitude and flight numbers should improve safety flow. Controllers say, with some justification, that if flight standards permitted them to reduce separations between aircraft, more movements could be achieved, but gains would be modest unless separations were reduced below average international standards.

Some improvements have been achieved by allowing aircraft to land on a converging course on one runway and holding short of the intersection of the crossing runway where another aircraft is taking off or landing – but this can generally only be done in good weather.

One well placed aviation official with long and bitter experience of political prevarication over KSA summed up:

“The most significant single thing you can do is either get rid of the small aeroplanes from KSA, or get them out of the way of the bigger aeroplanes by some other means. That gives you a bigger gain in terms of costs involved than any other measure so far identified. People can point to a number of things – radar, separations, ATC procedures – and there is something in all of them, but they would really not do a lot.

“From work that we have done time and again there is no question where the big gain lies – it is doing something – whatever – with those small aeroplanes. ”

Airport task force chairman, David Abba, added: “The problem at the airport is not the airport or the requirement to upgrade. The problem is marginal federal and State electorates which surround it which are owned by Labor at the moment. Until they get above party political concerns Kingsford Smith Airport will always be the political bunny that it has been for the last decade. “