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Aircraft queue at Sydney's Kingsford Smith. Airports such as this are crucial to the economic wellbeing of the entire nation and to the FAC as we know it. However, without the economic clout of the major airports, the bulk of Australia's secondary aerodromes, and certainly all of its vital GA ports, will be sacrificed for nothing more than short-term financial expediency. In the end, this policy could cost the Government dearly as it inherits unprofitable airports and prove the straw that broke the camel's back for an already struggling General Aviation sector. (Rob Finlayson)
Reece
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GA to Get Slaughtered by Airport Selloff
Last month’s Reece bemoaned the fact that breaking up the existing Federal Airports Corporation (FAC) network of 22 airports to just sell off the three big money earners was, to put it bluntly, a pretty dumb idea. Our argument followed the lines of logic and the fact that the Government would indeed do better by instead keeping the FAC intact, forgiving its “invisible” debt, and then privatising what would by any margin be a grade-one investment.
Breaking up the FAC would not only be a bad idea from almost every angle but could also prove the death knell of much of General Aviation (GA) as we presently know it. This is a far-reaching statement, but one that could prove all too real if Aviation Minister Laurie Brereton gets his way and sells off Sydney, Tullamarine, Brisbane, Adelaide, and Coolangatta just to kickstart the “Working Nation” jobs initiative.
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In this Reece, we have produced a table which shows the total earnings of each of the 19 FAC profit centres (representing 22 airports), their outgoings, their profit or loss, and the amount earned via aeronautical and non-aeronautical activities. What quickly becomes apparent is that in 1992/93, just three of the 22 airports were truly big profit centres. All of the GA airports lost money, while the 11 non-profitable centres lost a total of $11.8m before interest charges and a massive $33.7m after interest.
While the current FAC debt is physically illusory (a device by which the Government makes extra revenue for itself), this impost will become real once the airports are sold to a third party. If the Government takes the “gold” from Sydney, Melbourne, and Brisbane, who pays the piper for the remainder? It is unlikely to be financed by anyone other than those using the secondary airports—General Aviation.
The Impact on General Aviation
Over the past decade, GA has been slugged with fuel charges, GAIT charges, and the “Safety Tax.” Now, they may be asked to make these loss-making airports profitable or face their potential closure.
Who would want to take over Mt. Isa airport, a crucial but red-inked facility that costs three dollars to operate for every dollar earned? Who would wish to take over Jandakot or Parafield, while even heavy jet territory such as Darwin, Alice Springs, Hobart, and Townsville are a long way from being fiscal stars?
The FAC has managed these national assets wisely. It is an internationally competitive entity with charges that are the fourth lowest in the world according to a recent analysis of 40 major airports. In contrast, it costs about a third as much to land a 747 at an FAC airport as it does at the privately operated Cairns airport.
A Plea to the Government
Our plea to the Government is simply not to break up the FAC. Privatise it, yes, but do not just sell off the “crown jewels” to appease a lust for short-term cash flow. Damage the financial ecosystem of these 22 airports, and all Australians will needlessly pay the price for decades to come. Properly managed, a float of the existing FAC structure should be able to attract more than $2bn—more than the Government will ever get by just selling off the major money spinners.
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