Too little, too late for Perth Airport’s lacklustre redevelopment?

This article is a supplement to last month’s Perth Airport, best in airport design? Unlikely.

Perth Airport’s $750 million redevelopment is resonating well with a public that laments current facilities, but will the terminal redevelopment actually provide ample space to handle growth?

Westralia Airports Corporation (WAC) Perth Airport’s is known for underestimating traffic forecasts. Master planning is based on a prediction of 3.5 per cent compound annual growth, with total passenger traffic of 18.9 million per annum by 2028-29. Unsurprisingly redevelopment plans provide no terminal passenger capacity forecast, stating only that the consolidated development will ensure the already under-capacity terminal is capable of handling passenger growth to 2020.

Australian Government BITRE statistics show between FY1991 and FY2011 Perth Airport recorded:

  • 20-year compound growth rate of 7.6 per cent p.a.; and
  • an increase in aircraft movements of 260 per cent.
  • Passenger growth between FY2006 and FY2011 was 9.2 per cent p.a.

In FY2012 passenger traffic will pass the 12 million mark for the first time. If growth continues at current rates passenger traffic will reach 24.8 million to 40.7 million passengers p.a. by 2028/29.

My math tells me it’s unlikely.

Perth Airport’s current international terminal. Royal Brunei no longer serves Perth. Image: Stuart Sevastos

Is airline resistance to blame?

When WAC reduced its commitment from a ‘world-class’ facility, its main reason for not investing more was “any attempt to design to a higher standard would be met with resistance by airlines, reflected in a refusal to support resulting investment plans”. Perth’s smallest international operator Qatar Airways is ‘the world’s best airline’, and the majority of Perth’s largest international operators are based at airports designed to IATA Level of Service (LOS) A standard, and others such as China Southern, Virgin Australia and Garuda are moving upmarket. Wouldn’t these carriers want facilities at a standard higher than simply average?

Further proselytizing its decision, WAC ‘recognised’ “that lower airport operating costs relative to other airports enhances the viability of air services to Perth and therefore increases the prospect of attracting new services”. True for all airports, particularly those in high competition areas, but Perth Airport’s nearest major competitors are Adelaide, South Australia; Darwin, Northern Territory; and Denpasar, Bali, all over 2,000km away.

What about new operators and LCC traffic?

  • Air China will likely be the next Chinese airline serving Beijing and/or Shanghai, China Eastern focused on growing North American services;
  • Vietnam Airlines to Ho Chi Minh City is a possibility given Perth’s growing Vietnamese population and outbound Australian tourism;
  • Etihad and Virgin Australia to Abu Dhabi;
  • Kenya Airways has confirmed Boeing 787 services to Nairobi from 2016; and
  • Long-term potentials: Korean Air (KE) to Seoul, and Hawaiian Airlines (HA) to Honolulu. HA has made significant strides in developing HNL into a Pacific hub. KE is aggressively targeting in-transit traffic and serves many small-low traffic cities with less than weekly frequency using convenient connections to high-frequency heavy traffic destinations to attract custom.

Air Asia’s largest Australian operation is to Perth with 31 return services a week from KUL and DPS.

In 2007, Low-Cost Carriers (LCCs) accounted for just four per cent of Perth’s international seats. By 2010 they accounted for 27 per cent. While LCCs have increased the ratio of outbound trips per person, frustratingly WAC believes this is over as “there is a limit to the number of outbound trips from residents that can occur”. Pardon? Correct me if I’m wrong, but LCCs:

  • do actually carry inbound passenger traffic;
  • have a substantial stimulation effect on markets; and
  • operators serving Perth will increase. Batavia Air and Lion Air may serve Perth from Indonesia. Jetstar may introduce new Asian destinations, including perhaps resuming QF Group services to Tokyo. Not to mention IndiGo in India, and more services by Air Asia.

WAC highlighted the differentiated basic service needs of LCCs noting only “some LCCs are unlikely to support the redevelopment…because it will increase airport charges”. If it was only ‘some’ LCCs that opposed a ‘world-class’ terminal, why didn’t WAC plan a fully independent LCC terminal allowing the airport to offer diversified services through distinct airline products? Dedicated terminals only enhance an airports value proposition for both LCCs and full service carriers.

Is this development too little, too late? Perth Airport doesn’t think so, but it’s not going to take the public long to realise they weren’t given the best in airport design.

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