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Dec 22, 2012

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

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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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