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Canberra Airport gets closer to meeting the world

Low cost airlines could be the first wide-body international carriers to use the new terminal facilities at Canberra airport, where opportunities to create a Sydney by-pass hub look stronger than ever

AirAsia X A350-900. Will it launch world flights to a David Warren Airport at Canberra?

As Canberra’s new terminal nears completion what are the outlooks for international services and more domestic competition?

There is a view in the industry that the operation-most-likely for longer haul international services will be a low cost franchise based in Asia.

Which as of today would make the suspects AirAsia X, Scoot and Jetstar, sometime before the end of the decade, or 2019. The first and last named could fly to Kuala Lumpur or Singapore in A330s, or as they renew their fleets, A350-900s and Boeing 787-8s respectively, while Scoot would fly 777-200ERs in the shorter term, or the 787-9s owner Singapore Airlines no longer wants in the longer term.

The reasoning behind this is that these are airlines that could see Canberra as useful for air access to Sydney because Murrays Coaches or similar will on recent reports wholesale coach fares pre dawn or middle of the night between bulk discounted tour hotels and the airport for around $10 a passenger, and, they will be flying tour groups that can be induced to shop in both Sydney and Canberra, and the southern highlands and Illawarra in between.

This could be even truer for the China-Australia market as flown by PRC flag carriers, or possibly from Korea, Taiwan and Japan, which could see operations in 747-400s as well as A380s in higher capacity formats.

There are however structural barriers in tourism that need to be overcome, such as major investments in large scale affordable leisure accommodation in Canberra, as well as in the less costly places where such hotels can be built in Sydney, which won’t be in the CBD under such a caveat.

Fixing Canberra accommodation would probably take a minimum of three years, if all the steps and the investors were in perfect alignment tomorrow morning.

They aren’t. This means that when twin aisle jets start flying between Canberra and Singapore or Kuala Lumpur, and perhaps Jakarta in the following decade, the market will be driven more by small groups, curious individuals, students and the small but prosperous Canberra population.

Competing for line honours in starting a lasting international air service to Canberra will be flights to New Zealand, almost certainly in a single aisle jet, whether for a full service or low cost brand, or the hybrid example now being set by Air New Zealand in A320s where you pay for as little as a seat, or go for ‘the works’.

Such a service would not be predicated on a huge boom in hotel construction in the ACT.

But it would also be in the race with initially low frequency non-stop flights between Canberra and Denpasar or Jakarta, routes that can be done with current single aisle jets and will be more comfortably within the maximum range/payload combinations for passengers and the odd freight consignment once the A320 NEOs and 737 MAX series are available.

Freight is important to the future of  Canberra Airport because it doesn’t depend on the concurrent rise of tourism infrastructure investment or the fickle choices of passengers when it comes to times of travel.

It may be a much longer time before business travellers or fussy discretionary spenders get long haul full service international services to Canberra, although many of those with whom this has been discussed are optimistic that it will come to pass.

However before this happens Canberra is likely to see much more by way of corporate biz jets, both for senior government officials and major private enterprise executive transportation, and those flights will suck the cream off the top of the equation for some time.

There are of course many variables. The writer was chided by several of those spoken to for assuming it would be state of the art 787s and A350s that do the Canberra international flying.  Those experts said that the real costs of early operations will involve fleet choices determined by the acquisition costs of new versus used jets, and how close the older choices are to D checks, when one basically has to have an airliner dismantled, inspected and rebuilt, often with new parts, wiring and so forth.

With the right timing and quality of care, older A340s, A330s, 777s, 767-300ERs  and 757s can make a brand new jet look wasteful over the first 3-5 years of operation, after which all sorts of shiny new goodies or lightly used more recent Airbuses and Boeings can be expected to be available.

Those early A380s and 777s in the Emirates fleets have to find a home somewhere, perhaps flying tourists to Canberra.  The economics of judiciously used older aircraft are apparent in the initial use by Scoot of 777-200ERs that have done long service with Singapore Airlines.  Good used jets can make big dollars. If you don’t have to rebuild them.

If Sydney does actually build an airport at Badgerys Creek by around 2020, and it could do it in four years if everyone tried harder, the on-the-margin midnight and pre-dawn coaches between jets in Canberra and hotels in the middle western suburbs would not happen, or persist.

Yet the tourism potential of Canberra would continue to grow, both domestically and internationally, as should government and non-government related business travel.

Which raises the issue of domestic competition. Tiger did briefly fly to Canberra during its initial mismanagement ending in the 2011 grounding, and it had a return firmly in sights prior to Virgin Australia moving to take a 60% stake.

The on-the-record ambition of Tiger under Virgin domination is to at least more than treble the current fleet of A320s to 35 jets by around 2017-18. This would seem to make Canberra services highly probable, and Jetstar would probably seek to enter the market or pre-empt its national low cost competitor.

The question remains, how would such an entry work given the importance Qantas and Virgin Australia managements put on the very rich vein of full service patronage that pumps through Canberra Airport?

This writer remembers that his younger siblings, who were in high school in the 60s, went by the whole class load to Canberra for a day in Vickers Viscounts and Fokker Friendships just to see what is now Old Parliament House and the War Memorial on the other side of what wasn’t yet Lake Burley Griffin, but pasture, because cars, coaches and the gloriously incongruous diesel motor coaches of the Canberra-Monaro express all took an eternity to make the trip, and often, at the wrong times.

Low cost flights are the natural ally of school tours, tertiary student travel, and the self organized tourists who want to see the red centre, and the Great Barrier Reef, and the Snowy Mountains, and go beyond the billowing blue and brown hills of the Brindabellas, making many domestic flights to Canberra more possible than they may seem to those who see only the tidal surge of politicians and lobbyists through the airport.

For Canberrans, there is as much scope for a classy Virgin Australia E-190 to the Gold Coast as there is for more than a few daily Tiger or Jetstar A320s to the same strip.

There is scope to grow discretionary tourism between Canberra and the Alice, and if it is finally developed as a Sydney by-pass, a matrix of turbo-props, E-jets and larger mainline airliners can link cities like Tamworth and Newcastle and Port Macquarie to Hobart and Launceston as well as directly serving the national capital.

Hopefully when they come they will enter the David Warren Airport, recognizing the Australian inventor of the single most important contribution to air safety ever made, as well as discover the many treasures within and near Canberra.

You can sign Eve Cogan’s petition to so name this most pleasant of capital city airports here.

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  • 1
    Aidan Stanger
    Posted December 22, 2012 at 7:57 pm | Permalink

    Jakarta’s quite a long way from Canberra. A318s can manage it, but can any other current single aisle jets?

  • 2
    Geoff
    Posted December 22, 2012 at 8:52 pm | Permalink

    Ben – I sense your exitement about Canberra however I have to ask a few questions.
    1. Why do you think a new terminal will suddenly generate overseas flights? Build it and they will come is fine but surely there would already be evidence of the demand before the terminal was built. That is some existing international flights.
    2. As you say ANZ is a prime contender but what is stopping them servicing Canberra now? They fly into both the Gold and Sunshine Coast airports. Canberra only recently got direct services to Perth so clearly priorities are different in Canberra. Gold Coast (a bigger city than Canberra) does not have and probably will never have a Perth service
    3. What will induce Canberrans to travel LCC when 90% work for the Federal government and will have bountiful FF points and lounge memberships to go with them.
    4. How will Canberra attract visitors other than people wanting stuff from the Feds and Fokker Friendships full of kids when it resembles a ghost town after 8:00pm?
    5. As I understand the freight market, there are only about ten dedicated freighter flights per week in and out of Australia. How will Canberra attract them when it hardly rates an overnight domestic freight service?

    No sorry I don’t see Canberra bleeding any services from Sydney, it will have to settle for developing as a diversified destination in it’s own right. The incredible number of SYD-CBR flights tell the real tale in terms of what CBR is all about. Even Adelaide does not attract the kind of services you are writing about, with about ten times the population.

    Obviously if the movement rate cannot be raised and/or the curfew abolished then SYD will eventually run out of capacity. I honestly don’t believe this will happen in the long run, however BNE and MEL are already building sufficient capacity to be able to cope as Sydney by-passes.

    As a passenger, a one hour domestic aircraft leg into SYD compared to six hours in a bus is a no brainer.

  • 3
    Ben Sandilands
    Posted December 22, 2012 at 9:30 pm | Permalink

    I’m not reporting support for the idea that Canberra will become a true alternative across a broad range of customers for Sydney. But there is a large and mobile student population in Canberra, and there is far more to attract visitors than there was when I was a kid, fortunately. The view I’m hearing agrees with your assessment that growth will come to Canberra from within, and from international visitors, except that the view is that this will happen while you may not agree that it will actually emerge.

    Consider this too. A full service fare Q400 to anywhere from Canberra is as uncomfortable and on published fares far more costly than a low cost configured A320, and if Qantas persists with turbo-props taking over two hours to Adelaide it will get burned off by both Virgin Australia and any low cost formatted jet.

    There was another, somewhat wilder conjecture I didn’t mention here but which I have reported earlier in relation to Sydney’s impending capacity crisis. And that is that if the ACT decided to institute a more business friendly taxation regime, such as no payroll tax, and other incentives to set up corporate operations in competition with the costs of doing business in Sydney, the demographics of Canberra will be transformed, and like the opportunities presented to Brisbane and Melbourne, it will take growth opportunities off Sydney. Businesses located in Sydney that generate business travel to other capital cities may well enjoy better connection to the rest of Australia out of Canberra than they would out of Sydney, which would become a side trip.

    The current bus scheduled time which I consider somewhat optimistic is three hours to Sydney Airport and 3.15 to Central. In general, the street legal drive time from say Red Hill to a car park near Martin Place is 3.5 hours, assuming nothing untoward happens, but which often does. Once you drive out of Northbourne Avenue toward Sydney there are no traffic lights until you exit the eastern distributor into Macquarie Street. Overturned trucks, snow on the road if dead unlucky like this year’s spring surprise for about 60 kilometres from Gundaroo turnoff to near Goulburn, breakdowns galore, and chronic congestion in the M5 tunnel, sure, but no traffic lights.

    I’ve always been nonplussed by Canberra Airport’s campaign to be Sydney’s 2nd airport when the bigger and more easily secured prize is to entice the large corporate generators of business travel to relocate to the ACT.

  • 4
    ltfisher
    Posted December 22, 2012 at 10:24 pm | Permalink

    Sorry Geoff but Canberra has had non stop services to Perth for years…every evening at present and every afternoon return from Perth…always well patronised…and ben that Canberra-Sydney bus service is reliable…and well patronised…as attested to by many friends who use it when going overseas.

  • 5
    TT
    Posted December 23, 2012 at 12:05 am | Permalink

    Geoff, just to correct your point 3 in your comments above: work travel by Australian public servants earn zero FF points (however they might still earn status points which may make the travellers for Silver, Gold or Platinum membership). Most APS don’t have lounge membership either (very rare nowadays to get taxpayers funded lounge membership). They might either pay for lounge membership themselves (for which they can apply for a discounted rate), or they get it free when they reach Gold or Platinum levels. I do know some Government departments do offer lounge membership as a package to their senior public service (SES) staff.

    As to international services, I just cannot see how one of the LCC would be first to use Canberra airport (except for Jetstar flights to New Zealand?) for international flights. I would assume most of the current CBR travel are Government related travel, and there is a list of carriers where APS are allowed to travel. The only LCC international airlines that is on the current list is Jetstar! So at the moment no matter how aggressive AirAsiaX, Scoot or Tiger market CBR, they won’t get any APS travel from CBR to overseas for work purposes! Unless AirAsiaX or Scoot can develop a blue ocean strategy for CBR market, I would say they would have an uphill battle…

    (The list of airlines APS can travel can be found here:
    http://www.finance.gov.au/procurement/travel-and-related-services/suppliers.html)

  • 6
    Glen McDonald
    Posted December 23, 2012 at 10:39 am | Permalink

    Thanks ITFisher – Canberra also has daily flights to/from Coolangatta – an almost 100% leisure market. I don’t know what capacity they are running at but suppose that their existence indicates that there is a sustainable leisure (discretionary spend) market at least out of Canberra.
    Generally, if I may make a note about populations; Canberra’s population – which, incredibly, is not 90% APS – is (as announced by ABS last week) just over 375,000 (+ Queanbeyan and surrounds = well over 400k) , the Gold Coast is around 592,000 (not even twice the population) and Adelaide at 1.2 million is just 3 times the size of Canberra – both of those cities have numerous daily international flights.
    Canberra might still be a big country town, but, well, how would you describe, say, Wellington NZ – also with numerous daily international flights?

  • 7
    Aidan Stanger
    Posted December 23, 2012 at 12:18 pm | Permalink

    TT, do you imagine it would be a problem for any LCC to get onto the list?

  • 8
    Andrew Weller
    Posted December 24, 2012 at 3:34 pm | Permalink

    Time to temper the excitement on Canberra airport.
    Until the ACT government issues taxi licenses to sufficient taxis to service the normal parliamentary sitting day passenger load of the domestic services the airport as nice as it is is incapable of providing for the basic needs of getting passengers into the city.
    Absurd for the nation’s capital really!

  • 9
    ltfisher
    Posted December 27, 2012 at 11:46 am | Permalink

    How about a bit of lateral thinking Andrew? Why not suggest that the airport owners put in place transport facilities to cope with the ‘parliamentary sitting day itinerants’? Why should this be a responsibility of the ACT government [taxpayers]?

  • 10
    TT
    Posted December 27, 2012 at 3:28 pm | Permalink

    Aidan Stanger: it’s not as trivial to add LCC into such list. The current list does not have Tiger Australia for domestic airline (but Jetstar is). The selection is more just the lowest bid, it also takes into accounts the airline’a safety record (believe it or not!)

  • 11
    Nathan
    Posted December 28, 2012 at 10:16 am | Permalink

    I believe Air NZ crunched the numbers a few years ago on CBR – NZ (AKL or WLG?) and determined that the amount of CBR destined or originated traffic (ie any numbers of pax from Sydney not included)justified a weekly A320 service assuming they all wanted to travel on the one day.

    I know nothing of how these calculations are made and others can argue over their validity – “build and they will come” factor pushing up numbers and so on, but it is the carriers money after all. The weekly FJ flight from Canberra (immigration processing in the disused Golden Wing lounge was novel)didn’t exactly set the world on fire.

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