On the up

Currently, AAL is undertaking work to provide a new parking area for four aircraft off the southwestern end of the terminal,covering 20,000m2, and catering largely for overseas aircraft layovers, while preparing to build a new fuel pipeline system across the face of the passenger terminal to increase refuelling efficiency, and to replace sections of tarmac apron with concrete to reduce maintenance costs in a combined $24 million development program which should be completed within 12 months.

After spending $100 million on its multi-storey carpark and plazaproject, AAL has added another $100 million to potential capital expenditure programs, which would maintain long-term investment proposals at $400 million.

Of those investments, about $270 million relate to aviation infrastructure. The balance includes a 200-room hotel adjacent to the terminal.

Managing director Mark Young describes the hotel – which has been on the airport wish-list for many years – as “an active proposal”. “We are actively promoting it to the investment community and we’ve had quite a lot of interest from developers right now,” he told Australian Aviation.

However, he admits, turning interest into investment will take time.

Meanwhile, AAL is working hard to sustain its strong aviation growth.

In the year to June 30 2013, domestic passenger traffic topped six million for the first time, recording a 2. 9 per cent rise, and is picking up the pace as Jetstar launches additional services (and in April established an Adelaide base) and Tigerair resumes operations, adding Sydney and Brisbane to its initial Melbourne services.

By the end of the March quarter, domestic traffic growth had risen3. 5 per cent, with a total of 4. 69 million passengers, for the first nine months of 2013-14.

But international traffic has been the real growth story, up 15. 5 per cent to 763,000 passengers in 2012-13.

This financial year, Young forecasts that international passenger traffic will reach 850,000 and he expects to achieve one million passengers in 2014-15.

His projections are underscored by the latest passenger figures, showing 21 per cent growth in the March quarter, bringing year-to-date international passenger numbers to 671,000 – up 23 per cent on the same period in the previous year.

Increases in capacity by existing overseas airlines, the arrival

International traffic has been the real growth story, up 15. 5 per cent.

of Emirates with daily direct services to Dubai from November 2012 and the start of services to Kuala Lumpur by AirAsia X, as well as Virgin and Jetstar flights to Denpasar and Jetstar adding Adelaide-Auckland to its routes have helped to boost international seat capacity by about 80 per cent in the past two years.

These new direct overseas routes have been coupled with some schedule changes. Cathay Pacific’s early morning service which required dispensation to fly into Adelaide four days a week from Hong Kong at 5. 10am in the ‘shoulder period’ before the official curfew ends at 6am, and return direct instead of flying via Melbourne’s Tullamarine, has enable fast connections for passengers and cargo through Hong Kong to 17 destinations in China.

Such developments have helped to meet strategic objectives of gaining a major Middle East carrier, a low-cost Asian airline and an improved link to China, and tempered AAL’s pursuit of overseas airlines for the moment.

Young says the initiatives have more than doubled the destinations available on same-airline services from Adelaide, particularly opening up new ports in Europe and South-East Asia and providing better access to China – and to South Australia for European and Chinese travellers.

So, while the airport still covets a direct link to the US west coast, “we see expansion coming from organic growth through existing services,” Young says.

“I don’t think we will see any new tails in Adelaide for a while and we are focusing on working with airlines that are here already, tosupport their growth plans. ” The work includes joining in the promotion of South Australia as a destination for overseas tourists.

While Young emphasises that his operation is “first and foremost an airport which must provide the best possible infrastructure and services” for users, its other activities have become fundamentally important to the business.

In the past financial year, in which revenues from continuing operations grew from $169 million to $178 million, aeronautical activities generated income of $79. 9 million, but were almost matched by revenues from other operations, which reached $77. 5 million. Property income topped $40 million and commercial trading revenue was $36. 7 million.

The diverse business portfolio, Young says, provides a sound financial balance for AAL and gives it a strong base for growth plans.

The present five-year plans include demolition of older buildings behind the passenger terminal (including the original single-storey international terminal now partly used by regional airlines) to provide new and more convenient regional passenger facilities, and space for newinternational airline lounges and other aviation industry areas.

The apron being used by regional airlines will be extended behind the new buildings to a proposed double loading pier with space for up to 10 aircraft, while the northeastern end of the terminal will be revamped to accommodate three new gates with fixed aerobridges to accommodate Boeing 737 and Airbus A320 aircraft, with lower-level departure lounges.

That work program – for which public consultation will begin in July – will also result in additional space for outbound and inbound international passengers.

Further ahead – in what Mark Young describes as “the 30-year vision” – are concepts to extend the passenger terminal to the southwest with double-loading piers, and attracting the development of premium office accommodation on vacant space beyond the proposed hotel site.

Such concepts fit into AAL’s ambition to become “a top tier airport business centre” for the Asia Pacific region.

Meanwhile, the commercial projects continue to expand. National retail group Woolworths is building its first Masters hardware complex for Adelaide on a site next to the Ikea store, and has chosen AAL’s general aviation airport at Parafield for the site of its second Masters store, under a proposed $500 million, 11-store move into SA.

AAL continues to assess prospects for other commercial developments within vacant airport land, as it seeks to continue its profitable progress, following its $14. 1 million pre-tax result for 2012-13, up from $5. 63 million in the previous year.