THE FOUR PILLARS OF SUSTAINABILITY : ECONOMIC Continuing globalisation of the world economy and trade, the growth of low cost airlines and buoyancy of tourism in recent years, have been key drivers of air traffic growth. This section outlines the air travel forecasts for Brisbane Airport for the next 20 years and the economic benefits that the airport is set to provide to both the regional and national economies. Airports provide air transport services for a wide range of economic activities. In the case of Brisbane Airport, it serves as the major international airport link for not only Brisbane and SEQ, but for Queensland and northern New South Wales. With some potential capacity constraints at other major Australian airports, passenger and freight movement through Brisbane Airport, which operates 24/7, will increasingly influence the wider Australian economy, trade and tourism. BAC s commitments to the growth of Brisbane Airport, including over $3.3 billion investment in new and expanded infrastructure over the next 10 years, is consistent with BAC s Economic Development Objectives which are to: contribute to regional economic wealth and employment generation; ensure selective, profitable and timely commercial development; and achieve sound corporate governance, planning and management. THE ECONOMIC PILLAR CHAPTERS 4-6 4. Aviation Growth Forecasts Aviation business including the attraction of airlines, passengers and freight is central to the airport s growth and prosperity. For this reason, trends and issues that impact on air travel and airline expansion are regularly monitored to understand and forecast the pattern and impacts of growth. Chapter 4 profiles the current and projected growth of commercial airline movements to Brisbane, annual passenger numbers, trends in general aviation and domestic and international air freight. 40 Brisbane Airport Corporation Pty Ltd
Airports worldwide, including Brisbane Airport, are developing extensive business and commercial land precincts that offer tenants either a direct nexus with aviation, for example, ready access to air freight and domestic and international air transport links. Brisbane Airport is fortunate to have the largest available, undeveloped land mass of any major Australian airport for further aviation and commercial development. The forecasts indicate that Brisbane Airport will have over 50,000 employees by 2029, and the airport will contribute some $2.6 billion to the regional and State economies. These outcomes can only be realised through a continued, strong investment in the region s aviation infrastructure and the timely and sustainable development of airport land. As an integral member of Australia TradeCoast Limited, BAC s land use and development intentions presented in this section demonstrate its commitments to growing Brisbane Airport as a significant economic and employment driver for the region. 5. Economic Significance 6. Land Use & Precinct Development Brisbane Airport is a major economic driver for South-East Queensland. The contributions of the airport to regional revenues and spending, employment, tourism and other industries underline the need for continued expansion including the future development of the New Parallel Runway. Chapter 5 outlines the airport s current and future economic contribution with 24/7 operation and it compares its national and regional economic impacts with and without further airport expansion. A substantial future increase in the value of Brisbane Airport to the region is expected from ongoing terminal, precinct and runway developments. Brisbane Airport s economic goals are supported by a responsible, long term strategy for land use. Integrated precincts that feature the terminals, retail shopping, airside activities like freight forwarding, aviation maintenance, manufacture and education, light and general industries, offices, leisure facilities, amenity and open space will progressively shape Brisbane s airport city. Chapter 6 describes BAC s land use strategy across the airport precincts, its design principles and ways in which airport development interfaces with surrounding land uses. The allocation of land use zonings and intended uses within each precinct are also shown in this chapter. 2009 Master Plan 41
4AVIATION GROWTH FORECASTS 42 Brisbane Airport Corporation Pty Ltd
4 aviation GROWTH FORECASTS 4.1 Introduction Brisbane Airport has seen continued strong growth in both domestic and international air travel since the approval of its 2003 Master Plan. In the financial year 2002/03, Brisbane Airport handled a total of 12.3 million passengers and some 138,000 aircraft movements. In 2007/08, this has grown to 18.5 million passengers and 177,000 annual aircraft movements, an increase of 50% and 25% respectively. This growth over the last five years continues the growth that Brisbane Airport has achieved over many years and reflects the strong population and economic growth of Brisbane and SEQ. Figure 4.1 shows the historical growth in passenger travel through Brisbane Airport since 1992. Over these 16 years, there have been a number of significant events that have caused short term impacts on air travel, including: the Asian economic crisis of 1997; the attacks on the World Trade Centre Buildings in September 2001; the collapse of Ansett in September 2001; and the SARS virus concerns in 2003. The recent significant volatility in fuel prices, coupled with the worldwide economic concerns have resulted in debate about continued growth in air travel. However, as can be seen from past events, while the rise in fuel costs and economic uncertainty may result in some short term reduction in growth rates, continued long-term growth in air travel is likely. BAC is making a significant investment in airport infrastructure to address this growth. FIGURE 4.1 Historical passenger movements Passenger Numbers ( 000) 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year 4.1.1 Brisbane Airport Highlights 2003 2008 Airline Services airlines have consolidated and grown their operations through Brisbane Airport, including: Emirates commenced daily services between Dubai and Brisbane, including a daily connecting service to Auckland, in October 2003. Emirates will extend this to a double daily service to Dubai from February 2009; Singapore Airlines has increased its frequency out of Brisbane to up to three services per day; Qantas commenced a direct Brisbane to Los Angeles service in April 2005, steadily increasing the number of weekly services and in early 2008, this became a daily service; Pacific Blue, an international airline within the Virgin Blue Group, commenced a number of international services to Pacific and New Zealand destinations. Growth in both flight frequencies and destinations is continuing with new services recently commenced to Samoa, Bali, Port Moresby and Honiara; Air New Zealand has grown its services to Brisbane Airport considerably; Etihad, another Middle East carrier, began three services per week from Brisbane to Abu Dhabi in September 2007; Jetstar began international flights from Brisbane to New Zealand and Japan. While it has recently withdrawn from the Brisbane to Japan route, Jetstar has announced new international destinations from Brisbane including its new service to Bali; and V Australia has announced its intentions to begin direct Pacific services to Los Angeles commencing in March 2009. As SEQ and, in particular Brisbane, continues its rapid growth as a major commercial and tourism centre, international airlines are expected to continue to grow their operations through Brisbane Airport. In addition to the growth in international airline activity, domestic air travel through Brisbane Airport has seen significant growth, from 9.5 million annual passengers in 2002/03 to some 14.4 million in 2007/08. This five-year period saw the launch of Jetstar in Australia, with Brisbane providing a significant domestic route network. Qantas, Qantas Link, Virgin Blue and other regional domestic carriers also have experienced growth in their services and passengers through Brisbane Airport. 2009 Master Plan 43
4 GROWTH FORECASTS CONT. 4.1.2 Developments in Aviation Technology It should be noted that in the period since BAC s last Master Plan two additional significant aviation initiatives have occurred, which are expected to have a positive influence on continuing air travel growth worldwide, including traffic at Brisbane Airport: (i) The commitment by the world s two largest aircraft manufacturers, Boeing and Airbus to develop new advanced technology aircraft. Boeing has developed the world s first composite frame aircraft, the B787 Dreamliner which is set to begin service in 2010. The Qantas Group has the largest order for this new aircraft. Airbus has launched the world s largest passenger aircraft, the A380, which began service with Singapore Airlines in October 2007. A number of airlines that service Australia and Brisbane, including Singapore Airlines, Qantas, Emirates, Etihad, Thai and Malaysian have ordered this aircraft. Airbus has also begun the development of a new wide body aircraft, the A350XWB, which is scheduled to commence airline operations in 2013. All of these aircraft represent significant technological advancements in aircraft design, including major fuel efficiencies and quieter aircraft, as well as passenger amenity. (ii) Unprecedented orders from world airlines for new aircraft many of which will be delivered from 2009 onwards. With airlines updating their fleet with newer and more fuel efficient aircraft, these aircraft will enable airlines to manage fuel cost and economic volatility while growing their routes and services. 4.2 Methodology / Trends A large number of factors influence the growth of air travel. These include: the incomes of travellers both the level of income, and confidence that these levels will be maintained and will grow; the competitiveness (quality, product attributes) of a destination compared to alternative destinations; the supply of airline services frequency, reliability, quality of service; tourism promotion by Governments, airlines and industry bodies; consumer tastes and available time for travel; the process of air travel and the ground component of travel; and threats such as wars, SARS, terrorism. While all of these types of factors have an influence on demand, only some can be measured and factored into the type of modelling used in airport forecasting. Of the factors listed above, income (generally measured through an aggregate variable such as Gross Product (GDP)) has the largest influence on growth rates for international travel. In addition to the influence of GDP, developments in domestic and international aviation will also influence air travel. Airline alliances, code sharing, privatisation and the advent of new aircraft types can have a material impact on market outcomes. For these reasons, a number of approaches have been used in constructing the forecasts that underpin this Master Plan. Because forecasting deals with many uncertainties, BAC also considers lower and higher growth scenarios to assess the sensitivity of its forecasts. The forecasting approach is to: review markets and establish trend growth rates for Brisbane Airport traffic; use quantitative analysis and review other studies to establish relationships between traffic drivers, such as GDP and traffic demand. These are undertaken at a high macro level and compared with market based, or micro reviews; and 44 Brisbane Airport Corporation Pty Ltd
establish the reasonableness of the forecasts by reviewing other long-term forecasts (economic, population and traffic), and by comparing Brisbane with other airports. The macro approach establishes relationships between aggregate passenger numbers for Brisbane Airport and economic factors such as Australian and/or Organisation for Economic Co-operation and Development (OECD) GDP, as well as identifying specific markets for major tourism generating countries and/or regions. The micro approach provides an additional perspective on growth and is more responsive to developments in specific regions (e.g. the Asian economic crisis). From previous research and comparable studies within Australia and overseas, estimates of various elasticities have been established, mainly for income and fares. This data was used in forecasting passenger traffic by travel type and route. While these elasticity estimates are not derived from Brisbane Airport data, experience indicates that they can be valuable in preparing medium to longer term forecasts of air traffic markets, particularly when used in conjunction with trend analysis for the specific market. In the case of domestic travel, the Bureau of Transport and Regional Economics (BTRE) publishes route level data monthly for top Australian domestic routes only. This route level data was used by BAC to establish trends that inform this Master Plan. In addition, the anticipated capacity expansion by Australia s domestic airlines has an important influence on growth forecasts in the short to medium term. 4.3 Growth Forecasts 2008/09 to 2028/29 4.3.1 Passenger Growth Forecasts In the near term (out to 2012/13), it is considered that international passenger movements through Brisbane Airport will sustain an average 5% annualised growth. This is similar to the national forecasts for all Australian airports for the same period. For the same period, Australia s Tourism Forecasting Committee has forecast (in its release of November 2007) that the number of international visitor arrivals to Australia will grow by 4.8% per annum. The number of Australians travelling overseas is set to grow by 5.9% achieving a combined annual growth of 5.3%. Based on these projections, BAC forecasts indicate that by 2028/29, some 11.8 million passengers will annually pass through the international terminal at Brisbane Airport. The number of domestic passengers is expected to grow by 5.2% per year up to 2012/13. Growth rates in the longer term will remain relatively high at around 4% annually for Brisbane Airport due to continuing population and economic growth in Brisbane and the surrounding SEQ region. Consequently, forecasts suggest that by 2028/29, around 33.3 million passengers will annually pass through the Terminal at Brisbane Airport. Figure 4.2 shows the international and domestic passenger growth forecast. figure 4.2 PASSENGER GROWTH FORECASTS 50,000 45,000 40,000 Passenger Numbers ( 000) 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Year 2009 Master Plan 45
4 GROWTH FORECASTS CONT. 4.3.2 Aircraft Movement Forecasts Commercial Airline Activity Aircraft movement growth is normally lower than passenger growth due to airlines upgrading their aircraft fleets to larger capacity aircraft. For example, in the case of the Brisbane Sydney route, which is the busiest sector flown from Brisbane, future capacity constraints at Sydney Airport could lead to a growing proportion of larger passenger capacity aircraft being utilised by the domestic airlines. movements are forecast to grow at an average of 3.9% annually over the next 20 years, with domestic movements growing at 4% annually over the same period. By 2029, Brisbane Airport is forecast to be handling approximately 358,000 annual aircraft movements. Figure 4.3 shows this forecast growth in aircraft movements. Figure 4.3 Aircraft movements forecasts Movements Numbers 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 GA 2007/08 2012/13 2017/18 2022/23 2028/29 Year General Aviation General Aviation refers to that part of the aviation industry not engaged in scheduled commercial flights, such as charter and private operators, or services such as the Royal Flying Doctor Service. General aviation movements at Brisbane Airport represent currently only a small percentage of total aircraft movements (approximately 8% of total movements). General aviation movements are forecast to grow only marginally over the next 20 years from 13,400 annual movements in 2008 to 14,900 annual movements in 2029. This means their percentage share of total movements will drop to 4%. Other regional airports such as Redcliffe, Caboolture and Archerfield would be expected to remain the main General Aviation airports for the greater Brisbane area. 4.3.3 Air Freight Air freight is an important source of revenue for passenger airlines. The Air Transport Association (IATA) reports that air freight can contribute up to 25% of total airline route revenue on some international services. Figure 4.4 shows forecast growth in air freight. Brisbane Airport handles approximately 12% of Australia s international air freight and ranks third after Sydney and Melbourne. Brisbane is an important international export gateway airport for Queensland and Australian goods, especially perishable produce. There is also a growing trend for imports and exports to be transhipped via Brisbane. The majority of international air freight is carried in the belly holds of wide body passenger aircraft. 46 Brisbane Airport Corporation Pty Ltd
figure 4.4 Aircraft Freight forecasts 350,000 300,000 250,000 Tonnes 200,000 150,000 100,000 50,000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Year Future growth in this air freight sector is dependent on increases in the number of services to Brisbane by international network carriers, which is one of BAC s strategic aviation business development objectives. Special consignments such as bulky industrial plant, livestock and airframe deliveries are transported by dedicated charter air freighter aircraft. Current trends suggest that this pattern will continue. air freight is mainly overnight parcel express business carried by dedicated scheduled air freighter aircraft operating within Australia-wide networks. The efficiency of these essential services is highly dependent on Brisbane Airport being fully operational 24 hours a day. Brisbane Airport handles approximately 15% of Australia s domestic air freight by tonnage. 4.4 Growth Comparisons with 2003 Master Plan Table 4.1 below compares passenger growth as forecast in the 2003 Master Plan with growth predicted in this 2009 Master Plan: TAble 4.1 growth comparisons with 2003 master plan Year 2003 Master Plan 2009 Master Plan (1) Total Total 2007/08 3.8 M 13.1 M 16.9 M 4.1 M 14.4 M 18.5 M 2012/13 5.2 M 16.6 M 21.8 M 5.3 M 18.4 M 23.7 M 2017/18 6.9 M 20.7 M 27.6 M 6.9 M 22.1 M 29.0 M 2022/23 9.1 M 25.9 M 35.0 M 8.8 M 26.6 M 35.4 M 2028/29 N/A N/A N/A 11.8 M 33.3 M 45.1M (1) Excludes international transit passengers. 1983 Master Plan predicted the airport having a 40 million passenger ultimate capacity. While there are differences in the forecasts in the near term, the longer term forecasts in the 2009 Master Plan (post 2020) remain similar to those contained in Brisbane Airport s 2003 Master Plan. 2009 Master Plan 47