WESTRALIA CASH FLOW TO FUND TERMINALS
02 May 2008 Steve Creedy
WESTRALIA Airports believes it can fund its ambitious $1 billion plan to consolidate its terminals largely through cash flow, but says it does not expect to slug users with big per passenger price increases.
Perth Airport officials announced yesterday that they were embarking on phased redevelopment of the airport, taking up to seven years, which will see domestic and international operations consolidated at the site of the existing international terminal.
And they expect the long-awaited redevelopment to be funded by the strong traffic growth that has led to the problems plaguing the existing airport.
"We're generating significant cash flows and they will go a large way to funding it," Perth Airport chief executive Brad Geatches said yesterday.
"We've got a very strong balance sheet, we're not carrying a large lot of debt, so we've got plenty of capacity to do some debt funding as well.
"We need to broadly agree our capital plan with the airlines and negotiate a price path and almost without exception in Australia those agreements get reached.
"So we'll get the commerce done with the airlines and, given the volumes of passengers we're talking about, we don't think the airport charge increase will be substantial."
The company announced yesterday it would kick off the expansion with a $112.5 million first phase, which will include building a $55 million terminal dedicated to services in regional Western Australia.
The single level terminal will have undercover facilities that allow passengers to walk out to smaller planes servicing the resources industry.
Regional traffic now makes up more than 40 per cent of the airport's movements after volume shot up by 42 per cent in 2004-05 and a further 48 per cent last financial year.
The first phase will include a $40 million apron that will accommodate about 30 aircraft overnight.
It will also see the construction of a $17.5 million road within the airport precinct to connect the existing separate terminals. This is expected to significantly reduce travel time between the two.
The new Terminal WA will be delivered within two years and is expected to take pressure off the airport's overstretched domestic terminal.
Perth has been hit by unprecedented growth in traffic, which has seen passenger movements rise by 85 per cent in the past five years to already exceed 2016 forecasts. It expects this growth to continue and predicts international traffic, also causing problems during peak periods, to exceed 12 per cent in 2007-08.
The strong growth and a lack of investment in new infrastructure has left Perth with what many West Australians see as the worst airport in Australia.
While airport authorities have yet to unveil detailed plans for the more ambitious second and third stages of the project, Mr Geatches said a concept would be released by the end of this year with plans to be confirmed in 2009.
But he said a map of the apron and terminal layout released yesterday presented "a pretty solid image" of layout.
"The next step is now to say, what do the terminals look like, and we think that by the end of this calendar year we'll have a good handle on that," he said.
The second and third phases will see the existing international terminal incorporated into a much bigger combined facility with as many as 40 bridged gates, up from 11 now. The plans include a multi-storey car park and a hotel, with discussions under way with the WA Government about a possible rail link and improved road connections.
The project is also likely to see the current international terminal switched to domestic operations in favour of building a completely new facility.
"The reason for that is the current international terminal's got some shortcomings internally, in terms of the processing of passengers through border control," Mr Geatches said.
Mr Geatches said the five-to-seven-year timeline for the development remained a "best estimate" that reflected the fact that the airport would need to move two thirds of its activity from the domestic terminal.
"I think one of the challenges is we've got to avoid the temptation to underbuild," he said. "We don't want to be cutting the ribbon on a substantial redevelopment and then at the same time announcing the next stage."
The airport chief said that removing smaller aircraft to Terminal WA, which would be bigger than the existing facility, would create "wriggle room" for the bigger carriers. He noted that some bigger carriers, such as Tiger Airways and Jetstar, were also keen to consolidate their domestic and international operations as quickly as possible.
Building the regional terminal would also allow airport officials of properly plan and deliver the subsequent stages.
"What we do know is the domestic precinct can't continue to support all the airlines that are in there," he said.
"And, quite frankly, the negotiations we're going through now with all the airline is just working out the batting order of who moves first."
Mr Geatches said work would continue to improve the existing domestic terminal to relieve the congestion that had resulted from the unprecedented growth.
He said Qantas, which was investing $50 million on its terminal over the next 18 months, last week took the hoardings down on an additional baggage reclaim belt. A wall between the two terminals had also been removed to allow people to walk between them.
Copyright 2008 News Ltd. All Rights Reserved
The Australian
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