Two decades on

Two decades on, Australia’s major airports that were formerly owned by the Federal Airports Corporation (FAC) are an international example of the successful privatisation of key infrastructure assets. As other countries such as Canada contemplate future approaches for their airports, the success of Australia’s privatised airports is worth further reflection.

The leasing of the 22 airports in our capital cities and regional centres has supported the growth of a growing and dynamic customer-focused airports sector that provides world-class infrastructure at no cost to the taxpayer and which is attractive for local and international investors.

The numbers alone speak for the success of our airports over the past two decades in driving the growth in aviation. More than 68 million passengers travelled through major airports in 1996/97, including almost 14 million international passengers. This had grown to more than 150 million passengers by 2015/16, with more than 36 million international passenger movements. On average, passenger numbers at Australian airports have grown by 4. 3 per cent a year during the past two decades.

The growth in passenger numbers has brought more international visitors to Australia for business, tourism or education, as well as provided Australians with more opportunities for international travel and trade. This growth has been privately-funded through investments made by airport operators, airlines and other industry participants.

At a time when Australian governments need to prioritise their infrastructure spending programs because of budgetary constraints, our privatised airports are able to attract the capital required to support major investments in expensive aeronautical infrastructure.

Supported by increasingly sophisticated commercial agreements with airlines, our airport operators are planning and delivering vital infrastructure at the right time to provide the additional capacity needed to support growth. Major investments are underway or are being planned at three of our largest airports at Brisbane, Melbourne and Perth. The cost of these projects will be recouped by their users. Meanwhile, the Australian economy benefits greatly through the increased capacity and productivity delivered by these projects.

Passengers have also benefited from the privatised airport model. Airports are more focused on customer service and providing a better passenger experience, including a wider range of retail, food and beverage and other travel-related services.

Compare Canberra’s outstanding new domestic and international terminal facilities today with the single level and often crowded terminal facility of the pre-privatisation era. Such a facility could never have been imagined, developed or delivered by a government department.

Our privatised airports also compete with each other for business. Airlines (and passengers) make choices about the destinations they fly to and from, and our airports are proactive in the global aviation market attracting new services to their destinations through innovative marketing and service propositions. This competitive tension helps to drive innovation and higher levels of service for airlines and their passengers so that airports can attract and retain their business.

The success of the Australian privatised airports has been assisted by a sensible regulatory approach, including through the Commonwealth Airports Act 1996. The current legislation generally gets the right mix of public oversight and accountability while providing airport operators with the scope to develop and grow commercially viable businesses.

Australians benefit from safe, efficient and customer-focused airport and aviation infrastructure. Airlines can negotiate commercial agreements with airport operators over service levels. The growing visitor economy is supported through increased aviation services to key international markets. Our exporters have more opportunities to get their goods to overseas markets.

Another and less heralded benefit of our privatised airport model is the contribution our airports are making to the retirement incomes of millions of Australians. As assets which deliver reliable returns over a longer period, Australian airports have been attractive for investors who manage superannuation and pension funds.

Two decades since privatisation, Australia’s airports are meeting the needs of more than 150 million passengers each year and driving national economic growth while also providing for the financial security and well-being of millions of Australians in retirement in the years to come.

This competitive tension helps to drive innovation.