Growing pains

Correspondingly, aircraft movements also are breaking records and have risen by 260 per cent since 1992 to 141,000 a year, prompting a warning in the issues paper about the importance of investment in airport infrastructure, such as runways, to meet the increasing demand.

However, Perth Airport CEO Brad Geatches has poured cold water on the projections, sparking a war of words with frustrated airline executives, who see things quite differently.

Mr Geatches said: “The past is not a good indicator of the future and there are very good structural reasons why we expect the annual growth rate to slow materially.” He argues that much of the demand has been driven by FIFO workers for the construction phase for big projects and this demand will peak around 2015.

“The net effect is that FIFO passenger numbers are expected to flatten and, potentially, decrease for a period after construction activity peaks and the workforce moves from construction to operation.

He claims also that outbound international traffic growth rate for Western Australians, which is above the national average, will slow over the next few years: “The ratio of outbound trips per resident has dramatically increased as a result of LCCs and there is a limit to the number of outbound trips from residents that can occur.”

An airport spokesperson said the airport revised its growth projections each year but refused to release the updated figures citing commercial sensitivity, stating: “The current Perth airport master plan was produced in 2009 and will be updated in 2014. Regular updates enable forecasts to be reviewed and changes incorporated.

“Perth Airport bases its forecasts on a long standing economic model used throughout Australia that involves the analysis of low, medium and high scenarios to ensure that plans can be adapted in the event of growth in excess of forecasts. The forecasts identified in the 2009 Master Plan were consistent with the economic situation at that time.”

But the airport’s downbeat assessment on future growth does not resonate at all with two key airline executives canvassed by Australian Aviation, who were dismayed by the airport’s perspectives.

Neither wished to be identified, saying they had had to deal with the airport on a daily basis.
One contradicted Mr Geatches, asserting that past growth patterns were a better indicator of future trends: “The resource sector growth trend has been very consistent since the Japanese entered the fray in 1970s. I have been hearing the comment that construction will plateau out for at least the last 10-plus years and it is showing no sign of happening.”
The other executive said: “When you put the oil and gas coupled with mining sector projects together, you would have to say that the growth prognosis for the next 20 years will remain very positive. Perth will eventually be bypassed by direct connections from Pilbara to East as the Perth experience is simply too hard.

“Literally all the large miners are investing billions in the same climate. They are taking a positive position with all the associated risks. One of the greatest exposures/risks they face is that the airport will not be able to cope.

“The airport risk [to build an additional runway] is spread over the whole mining and resource sector which is out there doing it — why are they so reluctant to come for the ride?”

The State aviation strategy was commissioned by Transport Minister Troy Buswell to investigate a range of aviation infrastructure issues and whether the relevant parties are making the required investments.

Mr Buswell told Australian Aviation that aviation would play an increasingly important role in the State’s economic development and that “we need to ensure that critical infrastructure issues are canvassed now”. The objectives of the State Aviation Strategy were to “support the economic and social development of Western Australia through the provision of safe, affordable, efficient and effective aviation services and infrastructure”.

Another aim was to provide a sound framework for policy setting and future planning and investment in state international and domestic air services and airport infrastructure.

However, operator Perth Airport Pty Ltd and lies within the jurisdiction of the Commonwalth under a 99-year lease — and several airline executives at Perth Airport suggest that the final report, due later this year, would have significant influence in Canberra.

The major issue for the state is the validity of forecasting and thus of infrastructure investment decisions being adopted by Perth Airport’s operator.

The WA Department of Transport issues paper said: “In the light of the substantial growth of passenger and aircraft movements it is important that investment in airport infrastructure is sufficient to meet the increasing level of demand whilst maintaining appropriate standards. This is particularly the case for Perth Airport as the State’s premier airport.”

Over the past 10 years the airport has fallen far behind growth with its terminal development and is now unquestionably the worst capital city airport in the country in what is the richest state.

On April 2 2008 then Premier Alan Carpenter told State Parliament that Perth’s Domestic Airport was an embarrassment and called on its owners to embark on an immediate upgrade. He said the snaking queues of people waiting to check in and retrieve their luggage was something that needed to be addressed.

Mr Carpenter urged the airport’s owner, then called Westralia Airports Corporation, to begin upgrading immediately: “Because I don’t want to stand in queues with people who are embarrassed if they are Western Australians or very, very unhappy if they are visitors coming to WA and seeing Perth Airport and thinking that somehow or other that reflects upon the state broadly.”
The Premier’s spray brought an immediate response from Mr Geatches, who said he shared the Premier’s concerns and promised an announcement on a major redevelopment within weeks.

ABC Online quoted Mr Geatches at the time as saying: “We’re on the job, there’s is no lack of commitment, there is no lack of preparedness to invest.” And within four weeks the airport launched its Vision for the Future document, which by any measure was flawed.

The airport promised a 40-gate “one of the best airports” in Asia, costing just $1 billion, within five to seven years. But when I questioned them at the time, the airport was forced to back-pedal, admitting the new terminal would have only 25 gates with aerobridges and that it would be the same standard as Adelaide’s new airport.

In stark comparison, Singapore Airport had just completed its truly world class 380,000sqm Terminal 3 with 28 aerobridges costing $S1.75 billion ($1.34 billion), with labour costs at least 30 per cent less than for Australia.

Mr Geatches was also forced to concede that the new terminal would be a “class C” terminal, a standard well short of world-class. It’s rated by the International Air Transport Association as “minimum standard”, according to Richard de Neufville, professor of Systems Engineering and Civil and Environmental Engineering at the Massachusetts Institute of Technology, and defined as having a good level of service and “acceptable” delays.

It is interesting in light of the airport’s latest cool reception to the issues paper that in 2008, at the announcement of its vision for the future, Mr Geatches said: “Over the past five years domestic passenger movements at Perth Airport have increased by more than 85 per cent and in 2007 Perth Airport achieved its passenger traffic forecasts for 2016.

“This is rate of growth is unprecedented for large airports in Australia. This growth is set to continue with low fare carriers Jetstar and Tiger now making an impression on the Western Australian market.”

Over the past 12 months the airport has committed to $750 million of expansion, including:

• A new domestic terminal to service regional Western Australia, which is well under way.

• The expansion of the international terminal with a new arrivals area, check-in hall and expanded departures lounge, which begins this month.

• A new domestic pier for Virgin Australia with a dedicated check-in area, a spacious departure lounge and 12 aerobridges. When the Virgin Pier is ready, Qantas will take over the airport’s T3 common user domestic terminal.

The final stage, expected between 2018 and 2020, is the full integration of domestic and international flights via the redevelopment of the international terminal (T1) to include new piers for Qantas domestic operations.

However, the issues paper warns that Perth Airport’s average annual growth of 3.5 per cent rate used by Perth Airport in its 2009 master plan “would seem to be too low and this will impact planning and investment decisions into the future”.
It added that “to help ensure that the development of infrastructure at Perth Airport keeps pace with passenger growth, planning could take into account differing growth scenarios including a high and low scenario”.

In fact, the 3.5 per cent growth scenario seems far too low when Boeing’s global forecast is five per cent and WA is the richest state in one of the world’s most robust economies.

The issues paper makes the point that WA’s “demography and geography result in vast distances between population centres within the State as well to other centres in Australia and internationally. It is these vast distances that results in there being an absence of modal choice for travel between Perth and other population centres. From this perspective, aviation has a central role to play in both economic and social development of the State”.

The state aviation strategy aims at giving the state the framework for an aviation policy and roadmap. While the Federal Government has its National Aviation Policy White Paper the state has no such vision. The issues paper says only that the state aviation environment “has some unique characteristics and considerations that may warrant special consideration”.

The role of the issues paper is described as a tool to initiate debate and discussion among stakeholders on the key issues faced by the state aviation industry now and into the future, and which will inform the development of the state aviation strategy.

To encourage responses to the issues paper, a series of discussion questions are included through the document. Following comments from key stakeholders, a draft strategy will be developed and released for public comment.

Feedback will provide the basis for the final strategy document, which the Department of Transport hopes to submit for ministerial approval in late 2012.

The vision is that the state will have a world-class aviation network and infrastructure that supports and promotes the State’s economic and social development. The objectives of the state aviation strategy are:

To support the economic and social development through the provision of safe, affordable, efficient and effective aviation services and infrastructure.

To provide a sound framework for policy setting, and future planning and investment in WA’s international and domestic air services and airport infrastructure. In particular, the strategy aims to foster:

– Quality air services on safety, security, choice and cost.

– Air services that support industry and economic growth, including synergies for utilisation of airport land and the training and development of such industry.

– Inbound tourism, interstate and international, on capacity and destinations.

– Regional development.

– Essential services, including medical, defence, and fire fighting).

– Corporate sector
The scope of the review is all-encompassing and a steering committee from all levels of government, industry and peak bodies will assist to develop the strategy.

The Issues Paper focuses on Perth Airport, which has developed into a bottleneck because resource industry workers demand to fly to remote and not so remote work locations on Tuesday, Wednesday and Thursday as their partners may have Mondays or Fridays off.

The companies they work for also want the shift changes to be first thing in the morning so there is a logjam of aircraft leaving Perth between 5.30am and 8am mid-week.

The airport is striving to work with airlines and Airservices Australia to lift the number of flights per hour and hopes a 30 per cent lift to 48 per cent can be achieved. This will be introduced in September and means some flights will be rescheduled by up to 20 minutes in the worst cases to better match plane types and destinations into the air traffic control system.

However, Airservice staff tell Australian Aviation there is little chance of that number —“Maybe high 30s” is the response from controllers at the coal face.

What is needed is a second parallel runway but the land set aside has been leased with a four-year break clause, so it will be 2016 before this could begin.

The issues paper says the efficiency and effectiveness of Perth Airport is vital to the economy, to the ability of WA to connect with the rest of Australia and the world and to be able to interconnect the state’s vastly spread cities and towns.”

It adds: “Passenger growth figures are an essential input into airport planning. Sound assumptions are required if forecasting models are to produce results that provide a reliable assessment of likely levels of demand in the medium to long-term.”

Perth Airport has long said the solution to runway congestion is a move to larger aircraft. But critically, only one of the 88 FIFO only airports in WA is capable of taking a 180-seat 737 or A320-sized aircraft — thus the industry’s heavy reliance on the 100-seat Fokker 100 and BAe146.

At the higher end of the scale an airline such as Cathay Pacific is not interested in larger aircraft for its Perth-Hong Kong route, which will move from 10 to 14 a week later this year.
Logic would suggest the two daily A330s should be replaced with a single 747 but the airline wants frequency because that’s what its passengers want.

The issues paper, noting the resource industry demands, says: “Airport infrastructure capacity must be able to reach targeted levels of efficiency and customer service at peak demand periods. A critical element of airport planning is therefore the combination of activity forecasts with future airline schedule assumptions to forecast peak hour demand for airfield, terminal and surface transport infrastructure.”

And it is not only the FIFO business that is driving demand, according to the paper: “A combination of the increased presence of low-cost carriers in WA, declining airfares and increased destination choices within Australia [and internationally] from Perth Airport, contribute to the longer term growth in passenger numbers.

“Public confidence in the strong record of aviation safety within Australia also underpins the growth in passenger demand.”
The paper also takes aim at Perth Airport over its forecasts, which have consistently been far too low: “In 2009, the Perth Airport published its forecast passenger movement in the Perth Airport master plan. This forecast estimates that RPT passenger movements will increase from 9.2 million passengers in 2007-08, to 18.9 million passengers a year by 2028-29 and assumes annual compound growth over the 21 -year period of 3.5 per cent per annum.

“In the event, the Perth Airport 2009 forecast has so far considerably underestimated actual growth of RPT passenger movements over the past two years, continuing to grow strongly at: 0.1 per cent forecast vs. 6.8 per cent actual in 2009-10; and 3.5 per cent forecast vs. 9.0 per cent actual in 2010-11.

“Underestimation of growth in passenger movements at Perth Airport is not new. The 2009 Perth Airport master plan noted that actual passenger movements in the years following the 2004 master plan were much higher than forecast.”

The paper notes also that the BITRE numbers published in 2009 forecast 24.8 million passengers through Perth Airport by 2029-30, 26 per cent greater than Perth Airport’s forecast.

The WA State Aviation Strategy is the most critical transportation review ever undertaken by the government. It will be fascinating to watch is evolution and recommendations.