Infrastructure investment inbound for Melbourne Airport

By intouch * posted 22-06-2018 10:22


A booming international flight market, a rapidly growing local population and seventeen years of uninterrupted traffic growth have placed greater urgency on infrastructure investment in and around Melbourne Airport.

Screen_Shot_2018-06-22_at_10_06_44_AM.pngintouch toured the airport and surrounding estate courtesy of investment manager AMP Capital, which owns and manages 27.3% of Australia Pacific Airports Corporation (APAC), the owner of Melbourne and Launceston Airports. AMP Capital have two directors on the nine member APAC Board.

In 2009, Melbourne Airport held a 20.6% share of international traffic; by 28 February this year that share had jumped to 26.2%, chipping away at Sydney’s dominant position (which was 44% in 2009, dropping down to 40.5% in February).

The airport ended 2017 with a record breaking December that saw traffic of 1.02 million international passengers.

David Kenny of AMP Capital, a director of APAC, expects that by the mid 2020s Melbourne will secure a third of Australia’s international passenger market, with improving aircraft technology allowing for more long haul flights being the major driver behind the growth.

A third runway “key”

Of course, this phenomenal growth needs infrastructure to support it. Mr Kenny said the construction of a third runway is a “key area of focus” – understandable, given that without it, average delays across the day at the airport could reach 14 minutes by the early 2020s, which in turn would translate to a holding time of 40 minutes in peak hours.  

But first, the airport will need endorsement from airlines to go ahead with the development of a third runway – something that is proving less than straightforward.

“There’s a general recognition on the need for a third runway, but the question is around the timing,” Mr Kenny told intouch.  

“Different airlines have different objectives – those that are the current users of the majority of all of the slots naturally have a different view to those that are trying to enter the market, particularly in peak times.

Virgin-Australia-passenger-airliner-at-Melbourne-Airport-484399327_1256x838.jpeg“I think the role of the airport is to navigate that and look at what we can do to enable the airport’s continued growth, which is obviously not only beneficial from the airport’s perspective, but it’s a key facilitator of broader economic growth as well”

The estimated cost could be as high as $1.2 billion and take between three to four years to complete, the third runway being an east-west configuration and crossing at the southern end of the existing north-south runway. Initial works would also include extension of the existing east-west runway.

“We’ve got two runways – the longest is the north-south runway and the shorter is the east-west runway. The east-west can support wide body operations which are short to medium haul, and any domestic service on any aircraft can also take off from the east-west runway,” Mr Kenny says.

“The north-south runway is used in most instances by wide body aircraft that are flying long distance – for example, the A380s to the middle east and America would use the north-south runway, just because of the weight of the aircraft and the amount of fuel they need.”

During construction of the third runway, the north-south runway may be unavailable for a period while works are undertaken on the new east-west runway.

“This would see the airport operating on one runway for a period of time, and  if the east-west runway had not been extended, it wouldn’t be long enough for some of the long-haul aircraft to take off with the fuel required to reach their destinations,” Mr Kenny says.

Engineering the new runway could throw up some challenges – Mr Kenny says there is some uneven land on the site that would need to be levelled.

One stop closer to airport rail

Screen_Shot_2018-06-22_at_10_08_29_AM.pngIn 2017, access to the airport was restricted when a small plane taking off from Essendon Airport crashed into the adjacent DFO, cutting off Tullamarine Freeway.

“Tullamarine Freeway is one of the main access points for people travelling by car to the airport. When there are traffic delays or lane closures, it can make it very difficult for customers travelling to the airport,” Mr Kenny said.

The Federal Government’s $5 billion budget pledge to help build a long-awaited rail link between Melbourne Airport and the CBD is a significant step toward mitigating this risk.

“With a growing population and increasing numbers of international visitors, it’s vital that our city’s transport infrastructure continues to support the rapid growth in the north and west,” Melbourne Airport Chief Executive Lyell Strambi said in a statement.

“As a contemporary airport connection service SkyBus does a fantastic job right now, but it’s important to remember that those buses use the same roads as all other road users. 

“A rail link can help us to realise the full potential of Melbourne Airport, injecting enormous value into the Victorian and national economies, creating and supporting jobs for the local community and putting the world within reach for millions of Victorian travellers.”

Disagreement is looming, however, over the rail link’s route, with at least four possible options on the table.

“The major advantage of a rail link from the airport’s perspective is that it enables a diversification in terms of the options for surface access to our infrastructure,” Mr Kenny said.

“Whether the train runs direct and takes 12 minutes or takes a less direct route, there are advantages and disadvantages with both. If it’s a less direct route, potentially some of the options being talked about are a hub station that links with other regional centres – that’s obviously advantageous because it increases the catchment that the rail has.

“We’re just really pleased that the project now has priority and a commitment around funding, and there’s no point us investing money in building a whole lot of infrastructure out here if no one can access it.”