Privatisation to hit Regional Airports
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Privatisation to hit Regional Airports
Well it's worked so well for the city airports why not privatise all the regional ones as well.
And as soon as they buy the airport it turns out the growth figures weren't as expected so it will be no more runway, no new terminals and jack up the landing fees, terminals, car parking, and rezone part of the airport industrial.
This is a failed policy why are we looking at doing it to smaller towns? For many of them it is possible to self fund the airport for expansion projects. A small passenger tax for a infrastructure build is the way to do business not sell the whole thing off then get sub third world infrastructure at inflated prices.
Councils eye privatisation of regional airports to boost the bottom line
And as soon as they buy the airport it turns out the growth figures weren't as expected so it will be no more runway, no new terminals and jack up the landing fees, terminals, car parking, and rezone part of the airport industrial.
This is a failed policy why are we looking at doing it to smaller towns? For many of them it is possible to self fund the airport for expansion projects. A small passenger tax for a infrastructure build is the way to do business not sell the whole thing off then get sub third world infrastructure at inflated prices.
Councils eye privatisation of regional airports to boost the bottom line
Australia is poised for the first major wave of airport privatisations in more than a decade, as cash-strapped councils look to sell or lease regional airports to investors, including superannuation and infrastructure funds.
Queensland's Sunshine Coast Council has hired RBC Capital Markets to advise it on funding for a new $350 million runway that could allow for direct flights to Asia with aircraft such as Boeing 787s and Airbus A330s by 2020.
A report is due this month. Potential outcomes could include selling or leasing some or all of the airport.
Sunshine Coast Airport served 900,000 passengers in the year ended June 30, with growth of 11.4 per cent, outpacing all of the nation's top 20 airports except Alice Springs.
"We have been in both the national and international markets talking with prospective investors – initially generating awareness, and increasingly, competitive tension," Sunshine Coast mayor Mark Jamieson said.
"We see this as a really worthwhile asset and one there will be significant appetite for."
The vast majority of Australian airports that have been privatised are owned by the Commonwealth, which granted long-term leases to private entities between 1997 and 2003.
Included in this group are those in Sydney, Brisbane, Melbourne, Adelaide, Perth and Darwin, but also regional airports such as Tennant Creek, Mount Isa and Launceston. The Queensland government sold the Cairns and Mackay airports in 2008.
Australian Airports Association chief executive Caroline Wilkie said it was logical for regional councils to also consider divesting airport stakes.
"For bigger regional ones, it makes sense as they have the passenger volume. There are some smaller regional airports that could consider lease arrangements or partnership arrangements with larger airports," she said.
Newcastle Airport last year finalised a change in its corporate structure to facilitate the future introduction of new shareholders.
The structure allows for the two owners, Newcastle City and Port Stephens councils, to sell up to a combined 49 per cent in one of the nation's larger regional airports, although no deal has been done yet. The airport served 1.2 million passengers last year.
Ballina Shire Council, near Byron Bay in northern NSW, is looking at offering a 40-year lease of up to 49 per cent of the fast-growing airport to potential buyers.
Ballina mayor David Wright said the airport, which is serviced by Virgin Australia, Jetstar and Regional Express, was worth about $50 million. It serves about 400,000 passengers a year.
"Because it has a regular business and a good income, it makes it very *viable for a super fund to come in," he said. "It is most likely safer than anything else they could invest with."
Cr Wright said a deal could be done by the first half of next year.
Lismore City Council, which controls a much smaller airport near Ballina, is considering a full sale or lease after receiving an unsolicited offer. It has issued a formal call for expressions of interest, with submissions due by September 30. The offers will be assessed in October before a report to the council on November 11.
The mayor of Lismore, Jenny Dowell, cautioned a deal was not guaranteed to occur. "It is very much a toe in the water at the moment," she said.
But Cr Dowell said any proceeds would be useful in filling gaps in the general council budget for services such as road maintenance.
Industry sources said sizeable council-owned airports in the West Australian mining towns of Kalgoorlie, Port Hedland and Karratha were also candidates for outside investment.
Airport operator Queensland Airports is among those on the hunt for acquisitions. QAL holds the leases over the Gold Coast, Townsville and Mount Isa airports which were privatised by the Commonwealth. But in 2012 it also *purchased a 99-year lease over the tiny Longreach airport in western Queensland for $2.5 million.
QAL managing director Dennis Chant said his company would not rule out further deals, including east coast locations outside Queensland. He said the group's model was to have a centralised corporate team that had sophisticated forecasting and research capability which supported location-specific airport management.
Mr Chant said operating airports was a core business for QAL, unlike for a local council struggling to run an airport along with the local roads, garbage collection and water treatment plants. "Our structure is very well geared to, if you like, just plugging in additional regional airports," he said.
"If the right opportunity came along and it made sense to us, I'm sure our shareholders would be interested in having a look at it."*
Richard Hoskins, executive director of Hastings Funds Management, which is a large shareholder in QAL, said the regional airport investments had proven very successful to date. "They have been some of the best investments we have been involved with as a firm," he said.
Mr Hoskins said the preference would be to have a majority stake in an airport, based on experience overseas, although he would not rule out a minority stake.
"We have certainly had experiences where investing alongside a local government has been challenging," Mr Hoskins said. "It doesn't have to be a constraint but there certainly has been experience in certain jurisdictions where it has been.
"When we are looking at investments, we tend to like to be able to control the execution of the business plan."*
Read more: Councils eye privatisation of regional airports to boost the bottom line
Queensland's Sunshine Coast Council has hired RBC Capital Markets to advise it on funding for a new $350 million runway that could allow for direct flights to Asia with aircraft such as Boeing 787s and Airbus A330s by 2020.
A report is due this month. Potential outcomes could include selling or leasing some or all of the airport.
Sunshine Coast Airport served 900,000 passengers in the year ended June 30, with growth of 11.4 per cent, outpacing all of the nation's top 20 airports except Alice Springs.
"We have been in both the national and international markets talking with prospective investors – initially generating awareness, and increasingly, competitive tension," Sunshine Coast mayor Mark Jamieson said.
"We see this as a really worthwhile asset and one there will be significant appetite for."
The vast majority of Australian airports that have been privatised are owned by the Commonwealth, which granted long-term leases to private entities between 1997 and 2003.
Included in this group are those in Sydney, Brisbane, Melbourne, Adelaide, Perth and Darwin, but also regional airports such as Tennant Creek, Mount Isa and Launceston. The Queensland government sold the Cairns and Mackay airports in 2008.
Australian Airports Association chief executive Caroline Wilkie said it was logical for regional councils to also consider divesting airport stakes.
"For bigger regional ones, it makes sense as they have the passenger volume. There are some smaller regional airports that could consider lease arrangements or partnership arrangements with larger airports," she said.
Newcastle Airport last year finalised a change in its corporate structure to facilitate the future introduction of new shareholders.
The structure allows for the two owners, Newcastle City and Port Stephens councils, to sell up to a combined 49 per cent in one of the nation's larger regional airports, although no deal has been done yet. The airport served 1.2 million passengers last year.
Ballina Shire Council, near Byron Bay in northern NSW, is looking at offering a 40-year lease of up to 49 per cent of the fast-growing airport to potential buyers.
Ballina mayor David Wright said the airport, which is serviced by Virgin Australia, Jetstar and Regional Express, was worth about $50 million. It serves about 400,000 passengers a year.
"Because it has a regular business and a good income, it makes it very *viable for a super fund to come in," he said. "It is most likely safer than anything else they could invest with."
Cr Wright said a deal could be done by the first half of next year.
Lismore City Council, which controls a much smaller airport near Ballina, is considering a full sale or lease after receiving an unsolicited offer. It has issued a formal call for expressions of interest, with submissions due by September 30. The offers will be assessed in October before a report to the council on November 11.
The mayor of Lismore, Jenny Dowell, cautioned a deal was not guaranteed to occur. "It is very much a toe in the water at the moment," she said.
But Cr Dowell said any proceeds would be useful in filling gaps in the general council budget for services such as road maintenance.
Industry sources said sizeable council-owned airports in the West Australian mining towns of Kalgoorlie, Port Hedland and Karratha were also candidates for outside investment.
Airport operator Queensland Airports is among those on the hunt for acquisitions. QAL holds the leases over the Gold Coast, Townsville and Mount Isa airports which were privatised by the Commonwealth. But in 2012 it also *purchased a 99-year lease over the tiny Longreach airport in western Queensland for $2.5 million.
QAL managing director Dennis Chant said his company would not rule out further deals, including east coast locations outside Queensland. He said the group's model was to have a centralised corporate team that had sophisticated forecasting and research capability which supported location-specific airport management.
Mr Chant said operating airports was a core business for QAL, unlike for a local council struggling to run an airport along with the local roads, garbage collection and water treatment plants. "Our structure is very well geared to, if you like, just plugging in additional regional airports," he said.
"If the right opportunity came along and it made sense to us, I'm sure our shareholders would be interested in having a look at it."*
Richard Hoskins, executive director of Hastings Funds Management, which is a large shareholder in QAL, said the regional airport investments had proven very successful to date. "They have been some of the best investments we have been involved with as a firm," he said.
Mr Hoskins said the preference would be to have a majority stake in an airport, based on experience overseas, although he would not rule out a minority stake.
"We have certainly had experiences where investing alongside a local government has been challenging," Mr Hoskins said. "It doesn't have to be a constraint but there certainly has been experience in certain jurisdictions where it has been.
"When we are looking at investments, we tend to like to be able to control the execution of the business plan."*
Read more: Councils eye privatisation of regional airports to boost the bottom line
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Is there a better of two evils?
It's a catch-22 situation. Councils, which are part of government, generally couldn't manage to fund or undertake a pothole repair let alone anything larger like an airport. When you combine a Councils lack of aeronautical technical skills with their skill in blowing taxpayer money you can see why airports turn to custard under their management. The Council Mayor Farmer Bob who only knows how to introduce stop/go road signs hasn't an inkling about running an airport and usually does a poor job. The other side of the coin is that privately managed airports are better operated and money is spent on them, plus they end up turning a profit, however the public are gouged with car park fees and 'land use plans' are stacked in the favour of airport developers who like to build anything and everything up to the airport boundary and beyond. The villains in this are the super funds like the JP Morgans etc.
Where do we find an even balance, where our airports remain airports, yet the aviation community doesn't get disadvantaged by greedy private investors or incompetent Councils?
Where do we find an even balance, where our airports remain airports, yet the aviation community doesn't get disadvantaged by greedy private investors or incompetent Councils?
Where do we find an even balance, where our airports remain airports, yet the aviation community doesn't get disadvantaged by greedy private investors or incompetent Councils?
The airport owning council entrees into an agreement witha private operator where the operator gets the right to run the airport for a fixed period. The operator gets to collect the landing fees, sell the fuel,lease the hangars and run the cafe.
Depending on the individual circumstances the money mightflow either direction. For a busy regional airport the operator would pay a fee to the council for the right to operate the airport. If the airport was not particularly busy the owner might have to pay the operator but it is likely less than they would have to pay to operate it themselves. In this case the council would have to decide that having an airport was an important thing for the community and fund it or close it but this is the same situation they face now.
The agreements can be tendered to get competition between private operators.
The concessions run for a fixed period after which it is tendered again. The period needs to be long enough to allow the operator to recover the costs of any upgrades. 10 years might be an appropriate number. The incumbent usually has an advantage but the retendering keeps them honest and stops them becoming complacent.
The agreements can also have upgrade provisions. For instance the private operator might be required to add lighting or seal a runway during the first 2 years of the 10 year concession period.
The agreement might have incentives in it. For instance the airport operator might get a bonus if there are more than 10 RPT flights a week to the state capital. That encourages the operator to work proactively with the airlines so they continue to operate into that airport. This acts as a subsidy to the RPT flights but means that the community benefit of the access is retained.
The agreement might set the landing, car parking and hangar lease fees. This way the operator has an incentive to have a busy active airport with hangars full of aircraft rather that a dormant lot of land to turn into housing… It also avoids the massive increase in fees for small aircraft like has recently happened following the privatisation of Cairns airport.
What do you think?
Last edited by no_one; 15th Sep 2014 at 23:58. Reason: text formatting
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Part of the problem is the unrealistic expectations of the local community. In my regional area I've had 2 recent conversations with senior "stakeholders" in our local airport.
One is suggestiong closing up the secondary runway and had no idea of crosswind limitations or what its loss would mean to the airport and its current operators surviving."We cant afford two runways" I was told "so we'll have to get rid of one".
The other would like to see the airport on sold to a private operator but was horrified to learn that this would probably mean night freight operations.
When I pointed out that to survive and not cause to much noise stress to local residents, that the airport would have to remain pretty well as it is, both assett wise and ownership, both told me that the current situation is not commercually viable for the current local council. Both were horrified when I told them that the site was a conditional lease from the Commonwealth and could not be sold for real estate.
The reality of regional airports that dont have at least some RPT ops is that they cant survive without Government assistance and it seems that Government is not interested in assisting any of them as there are no real votes in it. As discussed elsewhere on this site, yet another example of the total failure from the Minister and what purports to be Aviation Policy in Australia.
Wunwing
One is suggestiong closing up the secondary runway and had no idea of crosswind limitations or what its loss would mean to the airport and its current operators surviving."We cant afford two runways" I was told "so we'll have to get rid of one".
The other would like to see the airport on sold to a private operator but was horrified to learn that this would probably mean night freight operations.
When I pointed out that to survive and not cause to much noise stress to local residents, that the airport would have to remain pretty well as it is, both assett wise and ownership, both told me that the current situation is not commercually viable for the current local council. Both were horrified when I told them that the site was a conditional lease from the Commonwealth and could not be sold for real estate.
The reality of regional airports that dont have at least some RPT ops is that they cant survive without Government assistance and it seems that Government is not interested in assisting any of them as there are no real votes in it. As discussed elsewhere on this site, yet another example of the total failure from the Minister and what purports to be Aviation Policy in Australia.
Wunwing
NO NO NO NO NO,
Young and old, we should all be screaming bloody blue murder......
Once its gone, its GONE!
Keep our public infrastructure out of private hands for ever.
This is what we pay f!!cking tax for - supposedly to have these b+astards run the place properly.
Selling our public property off is like letting the fox run the chook shed.
Young and old, we should all be screaming bloody blue murder......
Once its gone, its GONE!
Keep our public infrastructure out of private hands for ever.
This is what we pay f!!cking tax for - supposedly to have these b+astards run the place properly.
Selling our public property off is like letting the fox run the chook shed.
Last edited by ramble on; 18th Sep 2014 at 22:26.
NO NO NO NO NO,
Young and old, we should all be screaming bloody blue
murder......
Once its gone, its GONE!
Keep our public
infrastructure out of private hands for ever.
This is what we pay
f!!cking tax for - supposedly to have these b+astards run the place properly.
Selling our public property off is like letting the fox run the chook
shed.
Most councils and shires have hundreds of miles of roads etc to maintain. The local airport only adds about a mile or so . Problem is that this mile of road can be cost quarantined by the bean counters the rest like the parks and pools etc are considered in one batch of costs.
Local airports serve the whole community not just those that fly in and out . Close down and no RFDS or courier flights taking bank Nd blood work out.! Business people might represent one or two movements a week but can have a huge effect on the local economy. It's the most important mile in the town!
Local airports serve the whole community not just those that fly in and out . Close down and no RFDS or courier flights taking bank Nd blood work out.! Business people might represent one or two movements a week but can have a huge effect on the local economy. It's the most important mile in the town!
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TBM you and I know that, but an Alderman/Councillor has to try telling that to the noisy group who still dont have a decent road or curb and guttering and who vote.Those who support local airports tend to be spread a bit thin accross many voting areas often not even within the area where the airport is located
Expense wise, that kilometer of runway is way more expensive to lay and maintain than the equivalent kilometer of backwood road and thats before all the other expenses of running an airport to comply with the DOT rules.
The other problem is that in many cases the costs are covered by one local Govt body while the benefits are often shared by many. That is certainly the case of my local airport and understandably some of the ratepayers are saying that this is not right so lets get rid of it.
So as I said before the policy of privatisation of airports without considering these problems was flawed then and is still flawed now. But now times are tightening things have to give and airports may well be the ones to suffer. Some input from the body which ultimately has responsibility under the Australian Constitution, the Federal Govt and the Department of Transport is needed but I for one dont expect any until (maybe), there are few regional and GA airports left.
Wunwing
Expense wise, that kilometer of runway is way more expensive to lay and maintain than the equivalent kilometer of backwood road and thats before all the other expenses of running an airport to comply with the DOT rules.
The other problem is that in many cases the costs are covered by one local Govt body while the benefits are often shared by many. That is certainly the case of my local airport and understandably some of the ratepayers are saying that this is not right so lets get rid of it.
So as I said before the policy of privatisation of airports without considering these problems was flawed then and is still flawed now. But now times are tightening things have to give and airports may well be the ones to suffer. Some input from the body which ultimately has responsibility under the Australian Constitution, the Federal Govt and the Department of Transport is needed but I for one dont expect any until (maybe), there are few regional and GA airports left.
Wunwing
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YSCB is an absolute perfect example of why there should be no privatisation of an airport - YSWG is a perfect example of a local council who is willing to own the airfield and inject funds into it to make it more viable.
[ REX location has not much to do with that decision ]
Once an airfield is sold to private owners, most of the time it goes to ****
And once it starts going south - GA suffers, it is all seems so hard but if the solutions are worked on and a little common sense are applied GA can be profitable again
GO GA !!!!! GO !!!!
[ REX location has not much to do with that decision ]
Once an airfield is sold to private owners, most of the time it goes to ****
And once it starts going south - GA suffers, it is all seems so hard but if the solutions are worked on and a little common sense are applied GA can be profitable again
GO GA !!!!! GO !!!!
