Capital expansion

“At peak times it is a bit too crowded particularly in the baggage arrivals (area and) certainly in terms of the Qantas Club, it’s a bit crowded,” managing directory Stephen Byron told ABC Radio Canberra on February 25.

To cope with growth the airport recently announced terminal expansion plans, while other signs of investment at the airport abound, from the ever expanding carparks to the recently Airport Pty Ltd, which was in turn owned by the Snow family, who had prominent business interests in the ACT.

The airport, officially Canberra International Airport even though no international flights currently operate to the capital, is still controlled by the Snow family. The airport’s chairman is Terry Snow with his son-in-law Stephen Byron managing director of the airport’s management company Capital Airports Group. Other Snow family members have been involved in the business too.

Since its privatisation, there has been significant growth in the number of flights and destinations being served by airlines operating into Canberra. These range from direct flights to capital cities beyond Sydney and Melbourne through to regional centres around New South Wales.

Qantas is the airport’s biggest tenant and has long had a strong presence in Canberra, in part because of Canberra’s importance in being awarded corporate government travel accounts. Today Qantas and QantasLink operate over 20 return flights a day to Sydney, and as well as serving Melbourne flies direct to Brisbane, Perth and Adelaide from the CAPITAL EXPANSION AUSTRALIAN AVIATION | APRIL 2008 lengthened main runway, and to the ever growing office parks and retail centres.

However, not everyone has been happy with the expansion of the airport, with a number of GA operators leaving the airport as its focus has turned to lucrative passenger services and commercial buildings.

The airport has come a long way since it was first established in the 1920s. In 1939, the airstrip was taken over by the RAAF and originally named RAAF Base Canberra. Following the nearby crash of a Lockheed Hudson carrying James Fairbairn, the Minister for Air and Civil Aviation, the base was renamed RAAF Base Fairbairn in 1940.

In 1989 the western side of the airport including the passenger terminal was transferred to the Federal Airports Corporation under a crown lease. The eastern side of the airfield remained a RAAF base and continued to be home a number of ADF units, including the VIP 34 Squadron.

A key turning point for the airport came in May 1998 when it was privatised as part of the Howard government’s first round of airport sell-offs. The airport was sold to Canberra International national capital.

QantasLink’s Sunstate operation has a pilot base at Canberra and bases three Bombardier Dash 8-Q400s at the airport, which allows increased frequencies to Sydney. More recently, the airline has committed to more Canberra-Sydney jet services to supplement the Q400s in a competitive response to Virgin Blue’s new Canberra-Sydney operation.

Virgin Blue’s new ‘Capital Jet’ Canberra-Sydney services launched in early February. Using its new Embraer E-170s jets (and soon E-190s), Virgin flies to Sydney eight times daily in a bid to attract government and business passengers.

Virgin first flew to Canberra in June 2003 but soon found that the competition from Qantas for the premium market was too much for the carrier to handle. It withdrew from the Sydney- Canberra route in the last quarter of 2004 but continued to serve the ACT from Melbourne and Brisbane.

The E-Jet Sydney services represent a doubling of Virgin Blue’s Canberra schedules. Another route was due to join the Virgin network on March 4 with a daily Canberra-Gold Coast E-170 service.

Although the flight is a ‘back of the clock’ service, Virgin expects that the combination of cool and warm climates at each end will appeal to tourists.

February was a big month for Canberra as it also saw Australia’s newest low cost carrier, Tiger Airways, commence services from Melbourne.

Tiger’s daily service is aimed squarely at leisure travellers, a market Stephen Byron expects will remain relatively small, but he still expects there will be sufficient growth opportunities for the leisure airlines.

Byron is particularly keen to link Darwin and Hobart with the nation’s capital, and he hopes that the leisure airlines may be the ones to make it happen.

Tiger in particular could offer a service to Darwin, with the possibility of linking up with its flight to Singapore.

But Australia’s largest leisure orientated airline, Jetstar, has so far avoided flying to the capital. The airline has largely ignored Canberra due to the high yields its parent Qantas makes on a number of routes from the capital.

But Byron remains hopeful that the orange star will make its way to Canberra in the near future. “We’d love to see photo – Paul Sadler CANBERRA AIRPORT AUSTRALIAN AVIATION | APRIL 2008 Jetstar and we talk to them when we can.

I think once they bed down their international expansion they’ll find some time for us,” he said.

On the regional front one of the most notable achievements has been the growth of Brindabella Airlines, which emerged from a local charter airline to become a successful regional airline focused on services to ports in New South Wales.

Brindabella started regional flights in 2001, and from Canberra currently operates to Newcastle and Albury. A Qantas aligned regional, it recently introduced its first 29-seat BAe Jetstream 41.

At the same time as a number of services have grown, the airport did suffer significantly from the collapse of Ansett in 2001. This effectively saw the number of services to the capital city halve overnight. Ansett operated a substantial schedule from Canberra in support of its government travel business, with subsidiary Kendell operating a high frequency service to Sydney.

In 2002, Regional Express tried to regain the position which Ansett/Kendell once had on the Sydney-Canberra route, but competitive pressure from Qantassaw Rex withdraw from Canberra in December 2004.

Although domestic expansion has been strong over recent years, the airport is keen to establish regular international services.

Canberra did have an international connection briefly in 2004 when Air Pacific operated a weekly 737-700 service to Nadi. Although strongly promoted and supported by the airport, and the strong attractions of Fiji during Canberra’s cold winters, the service only lasted six months.

Instead Byron said that sustained international services are likely to come from premium carriers such as Qantas, Emirates and Singapore Airlines flying to hubs in Asia. The high yielding traffic these airlines would attract suggests that the airport may get a three times weekly service from any of these carriers.

The growth in long haul low cost airlines has also attracted the attention of the airport. With AirAsia X focusing on the Australian market, Byron is hopeful Canberra will come under consideration.

“We do see AirAsia X as an exciting prospect but that’s down the track,” he said.

Defence & Vips

Despite no longer being a RAAF Base, Canberra still has an important military presence.

Once called RAAF Station Canberra, the airfield played an important role during World War 2, with anti-submarine patrol aircraft stationed there, as well as three squadrons from the Netherlands East Indies (modern day Indonesia).

Since the late 1950s Fairbairn has been home to 34 Squadron, which is tasked with VIP transport duties flying the Prime Minister and senior ministers, the Governor-General and on occasion the Royal Family.

But in 1998 a defence review had found that the Fairbairn base was no longer required and it became part of the lease sold to Capital Airports. After the sale, the Department of Defence continued to occupy the base under a five year ‘pepper corn’ lease to allow the various operations and units based at Fairbairn to move out, such as the ADF Helicopter School.

After the lease ended in June 2003, the base was officially decommissioned, but Defence maintained a small unit known as Defence Establishment Fairbairn. This is the home of 34SQN which currently operates two Boeing BBJs and three Bombardier Challenger 604s. (A new hangar being built for 34SQN collapsed in May 2003 injuring 12, and a replacement had to be built. ) The Fairbairn side of the airport also plays regular host to a number of VIP aircraft for visiting heads of governments, ministers, military officials and other dignitaries. During last year’s APEC conference, for example, a number of VIP aircraft carrying foreign delegations chose to park in Canberra. The biggest of these was the Russian contingents, with two Illyushin Il-62s taking up residence in Canberra during the conference.

Most recently US Defence Secretary Robert Gates’s USAF E-4B (a military 747) visited in February.

ADF aircraft also use Fairbairn when visiting or transiting Canberra.

On the other side of the runway Qantas Defence Services undertakes maintenance on RAAF C-130s in a hangar Qantas inherited when it took over Impulse Airlines (and originally built with ACT government financial incentives).

In the adjacent Brindabella Business Park, the Department of Defence is a key tenant, alongside defence companies such as Raytheon and other government departments.

New Terminal

As the airport continues to evolve work is getting under way on a $250 million new terminal development.

“It’s the biggest project ever undertaken by the airport in its 81 year history,” said Byron.

The airport hopes the new, much larger passenger terminal will not only cater for growth but better position it for a resumption of international flights.

Preliminary work on the new terminal started in February this year, with construction due to begin in July with completion due in mid 2010.

Key features of the new terminal will include a doubling of the number of check-in counters to 32, two new aerobridges (there are currently four) and tripling the number of baggage belts.

Car parking bays will double to 2500 and lounge facilities will quadruple in area to6000m2.

While the new terminal will significantly expand the capacity of the airport, it will also serve as a model for environmental sustainability at airports.

“I think one of the really interesting things is that it’s going to be the greenest airport in Australia,” Byron said. “Most importantly it will reduce the CO2 emissions of the current terminal by 75 per cent. ” One of the key elements in reducing the terminal’s environmental footprint is the use of a tri-generation electrical system. This uses a gas powered generator to generate electricity for the building, with the excess heat used to heat and cool the building.

A key factor in the decision to invest in the new terminal was the ACT government’s commitment to upgrade congested Pialligo Avenue, the sole access road into the airport. Capital Airports has agreed to fund part of this upgrade, which will duplicate the number of lanes into the airport and improve overall access to the airport precinct.

Road access to and around the airport has been a point of contention between the airport and ACT government for some years now, as each blamed the other for the area’s traffic woes.

“The roads are absolutely hopeless and we’ve got to fix them and we are fixing them, and they will be fixed by the end of the year – and that’s way too long,” Byron told the ABC.

The new terminal will be a common user facility, with Qantas bringing its flights in under the same roof. In the interim Qantas has committed to upgrading the facilities in its current leased terminal at a cost of $10 million.

These will include increasing the number of check-in counters, adding a third aerobridge, expanding and revitalising the Qantas Club lounge, and opening a new dedicated business lounge.

New facilities for customs, immigration and quarantine will feature in the new terminal, which the airport hopes will help in attracting regular international services.

Separate to the terminal upgrade is Airservices Australia’s plans to build a new control tower, Federal government funding for which was approved early this year. A new base for the airport’s ARFF (Aviation Rescue and Fire Fighting) service may also be built in conjunction with the new tower project.

Sydney’s second airport? As Sydney Airport bumps against its capacity limits, particularly at peak times, Capital Airports has been busy promoting Canberra as an alternative to a new airport in the Sydney basin.

Canberra already plays a key role in the operations of Sydney Airport by handling aircraft which are diverted from Sydney. According to Byron, Canberra handles at least two diversions a month and often more due to weather or aircraft which miss Sydney’s curfew.

Canberra’s proximity to Sydney, terminal facilities and long runway make it an attractive diversion point for aircraft of all sizes.

A 600 metre extension to the southern end of the main runway (17/35) opened in 2006 means the airport can comfortably handle aircraft up to 747/An- 124/A380 size, allowing them to be able to takeoff without weight restrictions.

(Although most of the time Runway 35 operates with a displaced threshold, with the traffic having to be stopped on the road around the airport for full length departures – until a blast shield or traffic lights are installed. ) Diversions aside, Capital Airports is also hoping to promote Canberra as an alternative for both passengers and freight to serve the wider Sydney region and southeastern New South Wales.

This is not the first time that the airport has made a pitch for serving the Sydney area. In 1998, the airport was involved in a plan for a fast rail link between Sydney and Canberra which would have linked the two cities in only 90 minutes and would have terminated close to the airport. That plan was shelved, but Byron said that the airport still holds hope that it may yet be built.

Byron admits that the airport will never be seen as a true passenger alternative to Kingsford-Smith due to the distance from Sydney. He cites Newcastle and Richmond as more likely to take growth and offer real passenger alternatives to Kingsford-Smith, but he still sees a niche in some areas for Canberra to assist in relieving congestion at the larger airport.

Freight is one of those niches. Byron sees strong potential for connecting Sydney-bound freight from around the country through a hub at Canberra, where there is no curfew or restriction on night freight operations. Freight could then be trucked to Sydney or flown onwards to regional and major centres along the eastern seaboard, offering the possibility of an efficient, 24 hour freight system.

Byron sees a major role for Canberra for foreign freighter aircraft. He said that current services operated by the major freight carriers such as FedEx, UPS and other major integrators are likely to reach their capacity at Sydney soon, and Canberra would be a natural alternative.

Much of the advantage which Canberra has is from this lack of a curfew or movement cap, as the airport sits on the outskirts of the ACT with the flightpaths largely away from urban areas, which has long been part of the national capital’s strategic plan.

This could change this year with the intention of developers to develop vacant land south of the airport in Tralee in New South Wales. This land is under the current flightpath to runway 35 and according to the airport could be severely impacted by aircraft noise.

If the development is approved,Byron said that it is inevitable that residents will complain about the noise of aircraft coming in to the airport and may campaign for noise sharing.

This could ultimately result in Canberra having a curfew or movement cap imposed on it. This would be a major blow for the airport, and would ultimately scupper its plans to play a leading role assisting the growth of Sydney Airport.

The airport has been actively campaigning against the Tralee development to ensure that it continues to be open at all hours.

General Aviation

While the airport has worked successfully to grow passenger services, a number of operators feel that this has been to the detriment of general aviation.

Higher parking charges saw many GA aircraft based at the airport move to a grass area to the east of the traditional GA hardstand not long after privatisation.

More recently areas around the terminal which were previously occupied and used by GA have now been set aside for car parking, hire car companies and accommodating the terminal expansion.

Byron claims that while GA has had to make some moves to work around the increased airline activity, the airport remains committed to serving its smaller operators. He said that most of his family fly privately (chairman Terry Snow at one stage had his own helicopter and business jet), and that the airport would like to remain open to GA as it grows.

“The general aviation area will stay there for some time but it could move over towards Fairbairn. There’s plenty of room for individual operators,” said Byron.

While the room is there, the facilities at Fairbairn are not currently set up to accommodate GA and would require major investment to do so, as local operator Corporate Air found out recently.

Corporate Air had been based at Canberra Airport for over 30 years but was forced to move most of its operation off the airport last year after the lease on its hangar and office complex expired.

The complex has now been demolished and turned into a carpark to support the new terminal development.

Corporate Air elected to move its major maintenance base out to Goulburn Airport, an hour’s drive away, where it is now building new expanded facilities.

Corporate Air still continues to serve its large customer base in Canberra with its head office recently relocated to Barton, some 10 minutes drive from the airport. While this is not necessarily the most practical arrangement for the company, it has allowed it to continue to serve its charter clients and maintain its nightly freight operation for Australian air Express using its Metro and Conquest turboprops.

Corporate Air’s Andrew Major said that the airport offered his company the opportunity to move its operation to a greenfields site on the Fairbairn side of the airport. Unfortunately, the company was only offered a maximum 12 year lease with no renewal options, and would have been required to fund the building of new taxiway, apron and access roads to the facility along with being charged for leasing the land these infrastructure items would be built on.

Major said that the overall cost of developing a new facility was just not economically viable. “The short term nature of the lease arrangement did not provide enough time to amortise such an investment,” he said.

While Major admits that this has put strain on the relationship with the airport, he sees the problem not so much with the private operator but with the previous federal government’s failure to protect the long term interests of existing airport leaseholders, as had been promised before the sale of the airport.

He points to the Productivity Commission’s decision not to address GA in its report into airport pricing last year as a disappointing example of this inaction. He hopes that the Strategic Industry Leaders Group Action Agenda set up to examine GA issues will identify key access and pricing pressures facingoperators following privatisation of airports.

Apart from Corporate Air, the only other major GA operator still based at Canberra is Brindabella, which continues to operate its flying school and maintenance business alongside its regional airline operations from the airport.

But unlike Corporate Air, Brindabella was able to agree to terms with the airport on the construction and lease of a new $3 million, 1500m2 administrative and hangar facility. This will allow the airport to demolish Brindabella’s existing facility to make space for other terminal related developments.

Although Brindabella has grown since moving into the regional airline business, managing director Jeff Boyd admits that the GA side of his operation has diminished over time. This has been both as a result of the general decline in GA as well as some of the difficulties of being at a major commercial airport.

“It has become harder to schedule in and work around the airline movements at the airport to continue with flight training,” said Boyd.

Scheduling issues aside, the biggest issue Brindabella faces is keeping up with the security requirements of operating at a capital city RPT airport. Boyd notes that it is possible that with security screening requirements that it could make running a GA operation at the airport extremely difficult.

Of particular concern is the looming requirement that may require all staff and students passing airside to go through security screening. “That would mean that we would have to go through the terminal and be screened,” said Boyd.

A number of GA operators and private pilots would prefer that another dedicated GA airport be built close to the Canberra region, leaving the current airport dedicated to passenger and freight use.

Stephen Byron said that Canberra Airport would also support any move to build a dedicated GA airport. However, this seems unlikely in the near to medium term due to the large investment that would be required, the small base of likely users and difficulties in finding an appropriate site.

Non-Aeronautical

Perhaps more than any other privatised Australian airport, Canberra Airport has capitalised on the large amount of land reserves around it to build a number of commercial office buildings.

“We started this [building program] because the airport had a very tiny and narrow revenue base when we first bought the airport in 1998,” said Byron.

“We couldn’t make those sort of investments [in aeronautical infrastructure such as runway upgrades and the installation of a PAPI system on the airport’s cross runway] and take those risks to grow the city and the airport without an alternate revenue base. It became so tellingly true after Ansett collapsed. It took two and a half years for the passenger numbers to recover at Canberra Airport. ” The result now is two business precincts around the airport – Brindabella Business Park and Fairbairn.

The Brindabella Business Park is immediately south of and parallel to Runway 35, with the first building completed in 2001.

“It’s nice that in building this dynamic commercial hub next to the airport, commercially it works for businesses as well,” said Byron. “We really do see the area adjacent to the terminal as being like the Circular Quay of Canberra . . . and that’s where business wants to congregate. ” Byron is especially proud of the environmental credentials of these buildings.

Many of the buildings have been built from recycled materials, including recycled concrete. They are also powered and heated using the tri-generation system, as the new terminal will be. These environmentally sensitive features made them the first buildings in Australia to achieve a five star greenhouse accreditation.

Office and other buildings have also been developed in the northeastern quadrant of the airport. These are based on the old Fairbairn RAAF base site and mostly use former military buildings, including two heritage listed hangars which have been refurbished.

Tenants in this area include the Department of Defence, the Defence Science & Technology Organisation, the Australian Federal Police and ACT Emergency Services. This is also the area where the Defence Establishment is located.

Another development on the northwestern area under the flightpath has been the Brand Depot factory outlet store. This retail facility was built by Capital Airports in 2006 and houses a number of brand name discount outlets.

Further office space is being built nearby.

Certainly Canberra Airport stands as a strong testament to the commercial vigour and vision that private owners can bring to airport ownership and development.

Expansion of the airport has not been without its GA casualties along the way, but the airport today is near unrecognisable from what it was when privatised a decade ago. No doubt its private owners are extracting a good commercial return from Canberra Airport’s mix of aeronautical and commercial developments, but the co-existence of both has seemingly allowed the airport to prosper in both aviation and non-aviation areas.