Reece

One real-world reason why secondary airports such as Bankstown, Moorabbin, and Essendon are not profitable is simply that the Government, in its eternal lust for our dollars, has put such high valuations on these establishments that it is almost impossible for them to turn a profit in the current economic climate with the high annual interest charges placed against them.

The Government has a problem: it desperately needs cash to reduce a budget deficit that really needs to abate if long-term interest rates and, consequently, inflation are to be held successfully at bay. It needs cash, and quick, so what does it now propose? You guessed it: sell off a few high-profit airports and bag the gold. Do I sound cynical? Probably, but watch this space and see if we are wrong.

All of this, of course, would sound simple to a politician like Laurie Brereton who has, by previous performance, little interest in the wellbeing of aviation. Indeed, his performance shown in recent years rivals that of Gary Punch as somebody that apparently would prefer to see all aircraft grounded perchance they should offend somebody with their mere presence.

So, with the cash register revving, Minister Brereton and Cabinet have pushed successfully for the selling off of Tullamarine, whilst a scoping study by the Departments of Finance and Transport is to report on the final viability of this action by September. The figure going the rounds is $378m—a not unrealistic value considering that Tulla last year delivered 21% of total FAC revenue and some $31m of its $89m net earnings.

Tullamarine, Brisbane, and Sydney KSA are the jewels in the FAC’s crown; without them, the Corporation would be unable to fund continuing development and infrastructure work at the remaining airports, most of which find it difficult to turn a net profit. However, the idea of selling off just the major money-making airports is totally irrational. If the Government wants money, why not simply privatise and sell off the entire FAC as it is today?

If the Government forgave the FAC its current debt (which, after all, is merely a paper debt contrived to deliver the single shareholder a massive return via interest payments, and in the process place a significant cost impost on every aviation operator in Australia), the FAC would have to be one of the most sought-after floats in history, anywhere in the world. To say that a debtless FAC would be a gold mine would be to underrate the true potential of this incredible monopoly. After all, it’s the closest thing yet devised to a “licence to print money.”

Years ago, we said in jest that if the FAC was privatised, every sane GA operator should rush out and sell their Baron, Chieftain, or Titan and buy shares in their former “enemy” and retire to the Gold Coast in a luxury penthouse whilst living off the dividends. Whilst said in jest, the truth may not be that far off the mark—so why begin to sell off an individual key airport for short-term gain when you can do it properly via a managed privatisation in 1995 that would allow all Australians to invest in what are their airports?

And this is the rub. The front-runners in grabbing control of Tullamarine are mostly foreign-owned. It appears that our Government, for all its nationalistic bleatings, would quickly trade off yet another Australian-owned asset to overseas interests for mere short-term fiscal relief. Minister Brereton and Co. may well feel happy with that, but we most certainly don’t.

For all its bad press over the years, the FAC has done a good job given the burden of having to be little more than a till for its political masters. It was created solely to generate cash for the Government and, in spite of this, has brought in an era of change at Australia’s airports, big and small, that nowadays sees them looking better than ever. The only problem the FAC has in real terms with its clients is that, through the Government “cash cow” mentality, it is forced to charge a regime of pricing that naturally makes it difficult for many of its tenants to make a viable return. That could all change if the invisible debt was made just that, and the organisation was thrown over to private (and Australian) ownership.

Is this too much to ask? Probably, but let us all live in hope. Maybe just once the Government will do the smart thing and either leave things alone or take the decision to make more money in the long term by throwing a profitable, strong, and properly managed FAC open to Australian ownership.