5ECONOMIC significance 48 Brisbane Airport Corporation Pty Ltd
5 economic significance Brisbane Airport is a critical transport and business centre and a gateway for SEQ that facilitates tourism, trade and economic activity across the region. Given that SEQ is one of Australia s fastest growing regions, the ability of the airport to contribute to economic activity is, and will continue to be, important to sustain this growth. Supporting regional economic growth and employment is one of the primary objectives of Brisbane Airport. Long- term trends in travel demand, as set out in Chapter 4, indicate continued growth. Consequently BAC is investing significantly in expanded aviation capacity and airport precinct development to encourage new and expanded industries and employment growth. Brisbane Airport s current and future economic significance and contribution to the region was analysed by Access Economics for this Master Plan. Specifically, Access Economics analysed the economic significance of Brisbane Airport generated from the planned airport expansion and evaluated the airport s contribution to the wider economy and the airport s 24/7 operational status. This Chapter provides the key findings of this study. 5.1 Economic Significance of Brisbane Airport Highlights A summary of the key findings of the Economic Study is outlined below. Brisbane Airport s Current Contribution to the Wider Economy: In 2008, Brisbane Airport will directly contribute an estimated: - $3.2 billion in output to the SEQ economy; - $1.4 billion in spending in the wider community; - $840 million in total wages for people working on airport; and - 16,000 Full Time Equivalent (FTE) jobs. By 2029, employment at Brisbane Airport is projected to increase to more than 50,000 jobs. Brisbane Airport s Future Contribution to the Wider Economy BAC is investing approximately $4.2 billion over the next 20 years for significant planned expansion. As a result of the planned airport expansion, by 2029, the cumulative economic impact (i.e. added contribution over 20 years) for the SEQ region is projected to: - increase Gross Regional Product by $1.2 billion; - increase real household consumption by $1.7 billion; and - increase jobs in the region for approximately 11,000 workers in addition to the projected increase in jobs at Brisbane Airport. Today s Future Value of Brisbane Airport Over the next 20 years, the estimated net present value (i.e. discounted to 2008 $ value) of the planned airport expansion increases real household consumption by $5 billion, with economic benefits concentrated in the SEQ region. The estimated increase in Gross Regional Product (in 2008 $ value) is $2.6 billion in the SEQ region. Value of 24/7 Operation at Brisbane Airport By 2029, the cumulative value of an absence of a night time curfew at Brisbane Airport for the SEQ region is estimated to contribute: - $542 million in Gross Regional Product; - $1.3 billion in real household consumption; and - jobs for 5,455 persons in the SEQ region. Further details about these key findings are set out in the remainder of this Chapter. 5.2 Economic Growth SEQ is one of the nation s fastest growing regions. Figure 5.1 provides the boundary of the SEQ region, which shows the majority of population and employment in this region. Over the next 20 years, the SEQ population is forecast to grow from 2.9 million to over 4 million. A rapidly growing labour force and robust regional investment are expected, with Gross Regional Product set to expand by around 3.9% annually over the next 20 years well above the projection for both the State and national level over this timeframe. 2009 Master Plan 49
5 economic significance cont. SEQ regional land use categories FIGURE 5.1 SOUTH EAST QUEENSLAND LAND USE CATEGORIES South East Queensland The Department of Infrastructure and Planning,does not guarantee or make any representations as to the accuracy or completeness of the information shown on this map, nor does it accept any responsibility for any loss or damage arising from its use. Sources include: The Souther Region Division as part of the Department of Infrastructure and Planning; The Australian Bureau of Statistics, Census of Population and Housing, 2006. Version: March 2008 Noosa Heads Sunshine Coast Maroochydore Caloundra Somerset Esk Moreton Bay Caboolture Redcliffe Strathpine Toowoomba Toowoomba Lockyer Valley Gatton Laidley Brisbane Airport Ipswich Ipswich Brisbane CBD Brisbane Cleveland Redland Logan Key Boonah Scenic Rim Beaudesert Gold Coast Southport Railway Major roads Coolangatta Waterbody/waterway Local government area boundaries, March 2008 Regional land use categories (October 2006) Urban Footprint Rural Living Area Investigation Area Regional Landscape and Rural Production Area 0 5 10 20 30 40 50 Kilometres Department of Infrastructure and Planning Produced by the Southern Region Division, Department of Infrastructure and Planning (C) Queensland Government, 2008 50 Brisbane Airport Corporation Pty Ltd
Over the same period, Gross Regional Product and exports out of SEQ are also set to increase. Growth in exports is measured by the increase of goods and services, including freight movement, generated from the economic development across all employment sectors, such as tourism and business sectors. In June 2008 dollars out of region exports are expected to increase by 2029 to $160 billion and Gross Regional Product is forecast to increase to $281 billion (Figure 5.2), which represents a compound (that is, year on year) increase in: exports of 3.8%; and Gross Regional Product of 4.0%. Figure 5.2 SEQ gross regional product and exports, 2006-2029, $ billion June 2009 Cultural and recreational services, a sector with particularly high exposure to the tourism industry, is forecast to experience the highest growth rates, expanding at around 4% annually over the next 20 years. Figure 5.3 Growth in employment by industries in SEQ, 2006-2016 and 2016-2029 Total Personal Services Cultural & Recreational Health & Community Education Government 300 Out of Region Exports 281 Property & Business 250 Gross Regional Product Finance Communication 200 Transport 160 Hospitality 150 Retail 100 133 84 50 2009 2013 2017 2021 2025 2029 Source: National Institute of Economic and industry Research Economic Activity and Employment Forecasts: 2006-2026, Access Economics estimates Wholesale Construction Utilities Manufacturing Mining Agriculture 5.2.1 Employment Reflecting the rapidly growing population and robust economic growth, SEQ is expected to see a significant increase in employment over the next 20 years. Brisbane is forecast to remain the main population and workforce centre of the State. However, hinterland and coastal regions are expected to capture a larger share of the population and workforce. A working age population of 1.7 million is projected by 2029 an increase of around 34% on today s level. Growth in employment in SEQ is forecast to be relatively strong across various industry sectors. Areas of particular strength are projected to be personal services, cultural, health, education and Government with slightly lower growth rates in finance and property. Employment growth is expected to be relatively weaker in sectors such as agriculture, mining, manufacturing and utilities (Figure 5.3). 0.50% 0.50% 1.50% 2.50% 3.50% 4.50% 2006-2016 2016-2029 Source: National Institute of Economic and industry Research Economic Activity and Employment Forecasts: 2006-2026, Access Economics estimates 5.2.2 Regional Tourism Tourism activity accounts for a large component of the Queensland economy, contributing $8.4 billion to Queensland Gross State Product in the 2005 financial year, on the back of $14.83 billion in tourist spending (Table 5.1). Tourism expenditure in Queensland is concentrated in the SEQ areas of Brisbane, the Gold Coast and Sunshine Coast accounting for $8.96 billion or 60.4% of tourism expenditure in the State. The tourism sector is a key economic driver in these regions. 2009 Master Plan 51
5 economic significance cont. Queensland Government estimates suggest the contribution of tourism to Gross State Product (GSP) could be as high as $11.6 billion in 2016 on the back of spending of $20.24 billion. Of this, $12.2 billion will be spent in the SEQ region, maintaining a constant share around 60.4%. Employment in the tourism industry is expected to grow from 136,000 in 2005 to 166,000 by 2016. Tourism visitor nights confirm the central role the region plays in attracting visitors to the State (Table 5.2). In total, just under 60% of visitor nights in Queensland are spent in the SEQ region. Of the 145 million visitor nights recorded in the State for the year ended December 2007, about 86 million were generated in Brisbane, the Gold Coast or the Sunshine Coast. Among the categories of travel, overnight domestic was the largest with 42.9 million nights in the region followed by international visitor nights of 23 million. In addition, there were a total of 20.2 million domestic day trips to the region. Of the sub-regions, Brisbane attracted the largest number of visitor nights with 25.8% or 37.4 million total nights followed by the Gold Coast with 21.1% or 30.5 million total nights. Brisbane also attracted the largest number of international visitor nights with about 13 million visitor nights or about 36% of the Queensland total. Table 5.1 Tourism impact on the Queensland and SEQ economy, 2005-2016 Tourism contribution to GSP ($b) 8.40 11.60 Visitor expenditure ($b) Queensland 14.83 20.24 2005 2016 % of Queensland South East Queensland 8.96 12.22 60.4 Gold Coast 3.83 5.22 25.8 Brisbane 3.23 4.41 21.8 Sunshine Coast 1.90 2.59 12.8 Employment (persons) 136,000 166,000 Source: Queensland Tourism Strategy Queensland Government November 2006 Table 5.2 Tourism activity in Queensland and SEQ year ending December 2007 Nights ( 000) Days ( 000) Total nights* ( 000) International Overnight domestic Domestic day trips Australia 155,020 288,603 147,737 591,360 Queensland 36,115 77,069 31,614 144,798 SEQ 22,935 42,866 20,166 85,967 Brisbane 12,976 15,412 8,985 37,373 Gold Coast 7,459 16,476 6,560 30,495 Sunshine Coast 2,500 10,978 4,621 18,099 % of Queensland SEQ 63.5 55.6 63.8 59.4 Brisbane 35.9 20.0 28.4 25.8 Gold Coast 20.7 21.4 20.8 21.1 Sunshine Coast 6.9 14.2 14.6 12.5 Source: International Visitors in Australia December 2007, Travel by Australians December 2007 and Regional Expenditure Tables, Tourism Research Australia 2006 and Access Economics estimates. * For total nights domestic day trips are counted as one night 5.2.3 Aviation Growth In 2007-08, Brisbane Airport processed over 18.5 million passenger movements, consisting of 14.3 million domestic and approximately four million international passengers. Brisbane Airport is Australia s third busiest airport, behind Sydney and Melbourne (Figure 5.4). Brisbane Airport is also Australia s second busiest entry point for international visitors. 52 Brisbane Airport Corporation Pty Ltd
1 0, 0 0 0 Revenue passengers (thousand) 5, 0 0 0 0 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Y e a r Figure 5.4 Passenger movements at Australia s major airports 1986-87 to 2006-07 Passengers ( 000s) 30,000 Sydney Brisbane Adelaide 25,000 Gold Coast Hobart 20,000 Townsville 15,000 10,000 Melbourne Perth Cairns Canberra Darwin 5,000 0 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Year Source: Access Economics based on BITRE Traffic forecasts by Tourism Futures International (TFI) show passenger numbers at Brisbane Airport continuing to accelerate over the next twenty years (Figure 5.5). Total passenger movements are projected to grow at an average rate of 4.5% annually over this period, with international passenger movements growing at around 5.2% and domestic passenger movements growing at 4.2%. Overall, growth of this magnitude will see passenger movements increase to over 45 million by 2029. More detailed passenger forecasts are discussed in Chapter 4 of this Master Plan. Brisbane Airport also serves as an important freight hub for both domestic and international freight. In 2006-07, Brisbane Airport handled 88,575 tonnes of international freight 45,274 tonnes of inbound freight, or imports, and 43,301 tonnes of outbound freight, or exports (Table 5.3). Brisbane accounts for 12% of international freight movements (by tonnes), making it Australia s third busiest international air freight port, behind Sydney (49%) and Melbourne (27%). Table 5.3 international Freight movements at Australia s major airports, tonnes, 2006-07 Sydney Melbourne Brisbane Perth Adelaide Other Total Imports 243,277 111,876 45,274 32,198 9,346 3,175 445,146 Exports 126,679 91,629 43,301 32,588 9,322 5,280 308,799 Total 369,956 203,505 88,575 64,786 18,668 8,455 753,945 % of total 49% 27% 12% 9% 2% 1% Source: Access Economics based on BITRE data 5.3 Brisbane Airport s Significance to Economy Brisbane Airport contributes significantly to the economic well being of the SEQ region. The current level of employment across Brisbane Airport is estimated to be 16,000 FTE and with ongoing expansion of the airport, this is projected to expand employment to more than 50,000 full time equivalent (FTE) workers by 2029. Current Economic Contribution The estimated 16,000 FTE workers currently employed at Brisbane Airport are engaged in a wide range of occupations and a number of different industries. Approximately 80% of those employed in the airport s labour force are employed in the property and business services industry, with 6% employed in manufacturing and 4% in retail (Table 5.4). 2009 Master Plan 53
5 economic significance cont. Table 5.4 CURRENT Economic contribution of Brisbane airport Manufacturing Retail Construction Property and business services Other services Employment (FTE) 954 636 498 13,340 572 16,000 Labour income ($m) 52 22 16 748 31 869 Value added ($m) 93 31 35 1,165 35 1,360 Output ($m) 343 71 116 2,633 79 3,241 % B-M GRP 1.7% Source: Access Economics Future Economic Contribution BAC continues to adopt a proactive approach to developing the airport, with significant capital expansion planned, including runway capacity, terminal facilities, airport access and business and industry related development. BAC s development plan for Brisbane Airport involves more than $4.2 billion in infrastructure investment over the next 20 years. Investment in airport capacity underpins the growth prospects of the airport, and will have flow-on effects to the wider economy. Specific major infrastructure projects include: New Parallel Runway (NPR): BAC has received approval from the Australian Government to build the $1 billion plus NPR located two km west of the current main runway. Site preparation works are expected to commence around 2011, with the runway to be operational by not before 2018. International Terminal Expansion: BAC will complete a $340 million upgrade and expansion of the International Terminal in December 2008. Further capital expansions over the next 20 years are planned that will see a further $680 million invested in the International Terminal. Domestic Terminal Expansion: BAC has allocated an estimated $640 million for expenditure over the next two decades on a range of projects at the Domestic Terminal. Construction works have begun to upgrade and expand the Common User Terminal as a significant component of the Domestic Terminal expansion. Northern Access Road Project (NARP): BAC has funded a five km, multi-lane road to provide airport users and tenants with a second major access route to the terminals and on-airport businesses, addressing the area s major road congestion issues. This project will be completed in late 2009. Aviation-related industry precincts: BAC is continuing to invest in its airport precincts, attracting specific types of businesses and industries. Access Economics undertook a quantitative analysis of the economic benefits that will be derived through this planned investment by BAC. Results are reported for the SEQ region; the rest of Queensland and the rest of Australia (Table 5.5). Table 5.5 FUTURE economic CONTRIBUTION OF BRISBANE AIRPORT % deviation from no expansion scenario Total SEQ Rest of Queensland Rest of Australia Real output 0.79 0.68 0.05 Real consumption 1.55 0.35 0.02 Real investment 0.06 0.73 0.06 Employment (persons) 0.38 0.28 0.05 $m deviation from no expansion scenario Real output 1,195 457 714 Real consumption 1,659 214 217 Real investment 37 197 188 Employment (persons) 11,208 2,638 5,068 54 Brisbane Airport Corporation Pty Ltd
As Table 5.5 shows, the greatest impact of the planned airport expansion will occur in SEQ, where by 2029, real output is projected to be 0.8% or $1,195 million higher than if the planned airport expansion plans were not implemented. While the benefits of the airport are concentrated most heavily in SEQ, benefits also flow over to other jurisdictions, with the rest of Queensland also projected to increase output by 0.68% or $457 million and the rest of Australia by 0.05% or $714 million. Real household consumption (a measure of economic welfare) is projected to increase by 1.55% in SEQ by 2029 because of the planned airport expansion. This equates to a $1,660 million increase in economic welfare. Welfare at the State and national levels also increases, with real consumption expanding by $214 million (0.35%) for the rest of Queensland, and $217 million (0.02%) for the rest of Australia. The planned airport expansion is estimated to result in additional employment of 11,200 persons in SEQ by 2029, an additional 2,600 jobs in the rest of Queensland and 5,000 additional jobs throughout Australia. In net present value terms, over the period 2009-2029, the planned airport expansion increases economic welfare (real household consumption) by $5 billion and real Gross Regional Product by $2.6 billion. Economic Impact of No Expansion In the absence of the planned airport expansion, Brisbane Airport is forecast to become capacity constrained by mid 2015 (Figure 5.5). Beyond 2015, a clear divergence in passenger growth with and without the planned airport expansion can be observed in the trend line below. By 2029, the difference in passenger numbers under the planned expansion, compared with no planned expansion, is projected to be around 9 million passengers annually, with the absence of expansion constraining overall passenger growth by around 25%. This constrained capacity would result in lower passenger and freight activity, leading to a lower economic value for Brisbane Airport and reduced contributions to the wider economy. Figure 5.5 Projected passenger numbers, with and without the planned airport expansion, 2008 to 2029 40,000 35,000 Domestic (with planned expansion) Domestic (without planned expansion) International (with planned expansion) Passenger Movements ( 000) 30,000 25,000 20,000 15,000 International (without planned expansion) FORECAST CAPACITY 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 Source: Access Economics based on TFI forecasts 2009 Master Plan 55
5 economic significance cont. 5.4 Value of 24/7 Operations at Brisbane Airport Access Economics has also analysed the value of curfew- free operation between 11pm to 6am at Brisbane Airport. 24-hour operation enables greater flexibility in scheduling fights to integrate with international networks and respond to conditions at overseas and other Australian airports. Curfew-free operation also reduces the cost of operating, as carriers do not lose valuable time on the ground waiting for a curfew to lift. On average, in June 2008, there were approximately 13,300 available international seats per week during 11pm and 6am. This figure was expected to increase during the Northern Winter 2008/09 to around 18,800 international seats. Assuming a typical load factor of 71%, BITRE estimates this equates to, on average, 13,300 passenger movements per week. On the typical weekday, the available domestic seats during the 11pm and 6am period are estimated to be 1,400 arrivals and 1,700 departures. Given an average domestic load factor of 77.3% (BITRE estimate), this equates to 2,400 passenger movements per day, or 16,800 per week. These passenger movements increase tourism both to and from Brisbane and SEQ. Curfew-free operation at Brisbane Airport has positive economic implications for the SEQ region (Table 5.6). By 2029, the absence of a night time curfew at Brisbane Airport for the wider SEQ region is estimated to contribute: $542 million in Gross Regional Product (or 0.35%); $1.3 billion (or 1.11%) in the economic welfare for consumers; and The curfew free status of Brisbane Airport is particularly relevant during the summer months when Queensland is not on daylight saving time. This means that key domestic airline services to southern states must operate in the 5am to 6am period. Table 5.6 ECONOMIC value (CURFEW SCENARIO minus no CURFEW SCENARIO, cumulative effect) 2029 % deviation from no curfew scenario SEQ Real output 0.35 Real consumption 1.11 Real investment 2.56 Employment (persons) 0.25 $ million deviation from no curfew scenario Real output 542 Real consumption 1,300 Real investment 1,507 Employment (persons) 5,455 Night time aircraft movements at Brisbane Airport have a lower impact than elsewhere, as the airport has the largest buffer zone from surrounding communities of any major airport in Australia. The nearest community from the end of the main runway centreline is at a distance of some 6.7 km, around ten times the equivalent for Sydney, Cairns and Coolangatta airports. BAC also works closely together with its aviation partners on a number of measures to minimise the impacts of night time aircraft noise, such as operating night flights wherever possible over Moreton Bay (Chapter 11: Aircraft Noise). jobs for 5,455 (or 0.25%) persons region wide. 56 Brisbane Airport Corporation Pty Ltd
Brisbane s curfew-free status is one of its key assets. A curfew at Brisbane Airport would result in lower aviation activity and less than optimal regional economic growth. Advice received by BAC from the Australian scheduling authority, Airport Coordination Australia, is that the current international services to and from Brisbane Airport between 11pm and 6am (i.e. around 18,800 international seats per week) would be lost to SEQ and would not be rescheduled if a curfew was imposed. 5.5 Economic Outlook Brisbane Airport growth forecasts and future economic contribution depends on a range of factors, some airportspecific, others related to the prospects of the aviation industry more broadly. Some local and international challenges to Brisbane Airport s growth and economic contribution are outlined in this section. Global Challenges The aviation industry faces a period of marked uncertainty. Volatile fuel costs, financial market unrest, the current global economic slowdown and the costs of climate change mitigation policies, pose real and significant challenges to the aviation industry. With the price of crude oil increasing in recent years, significant upward pressure is being placed on jet fuel prices. As the ability of airlines to absorb such cost increases diminishes, rising fuel prices are increasingly being passed on to passengers through higher ticket prices. Rising ticket prices could reduce demand for air travel, with the greatest impact felt by more price-sensitive leisure travellers. Any downturn in travel demand will have ramifications for airports and the wider economy. The Australian Government is scheduled to introduce an Emissions Trading Scheme (ETS) in 2010. This ETS will place a price on carbon dioxide (CO 2 ), resulting in an increase in the price of a range of goods and services, commensurate with the CO 2 content. This might result in increases in the price of fuel. Similar to rising oil prices, the cost increase could be passed through to air travellers, resulting in possible reduced demand for air travel. Local Challenges BAC also faces some local challenges. Brisbane Airport lacks a strong international home-carrier presence. The airport operations are subject more directly to foreign carrier flight schedules which are driven by international networking imperatives and constraints at other airports. To optimise Brisbane Airport s growth, adequate local and regional infrastructure is required. Infrastructure weaknesses, such as limited transport links to and from the airport may, over the longer term, constrain growth at the airport, both in aviation, and business and industry activity. BAC recognises this challenge and has developed new surface transport initiatives presented in this Master Plan. More broadly, while SEQ is well positioned for a period of sustained growth, economic and social infrastructure will need to continue to emerge in a timely way in order to ensure the region is sufficiently serviced. 2009 Master Plan 57