There is a range of domestic and international economic trends and challenges that influence the private sector in investing in a particular regional airport.
In recent years, economic growth in Western Australia, Queensland and the Northern Territory has been driven by the mining boom, leading to a rapid increase in passenger movements to airports servicing that industry. Regional airports such as Gladstone, Mackay, Roma, Karratha, Port Hedland and Tennant Creek enjoyed burgeoning FIFO patronage. However, as the resource sector investment levelled out with the construction phase of major projects coming to an end, coupled with the dramatic fall in commodity prices, the decline in the FIFO market has presented challenges for the local authority owned and operated regional airports in recent times.
However, the continuing rise of the middle class throughout Asia brings with it new potential for regional airports situated in our tourist destinations.
At present there is a high level of interest by superannuation funds and financial institutions in investing in the right type of airport infrastructure. The Bankstown and Camden airports in Sydney this month are the subject of an off-market bid of over $200 million. Both the Bankstown and Camden airports were privatised in 2003, but the bid price for these assets evidences the desirability of airport infrastructure.
The reality is that while the private sector has a real appetite to acquire airport infrastructure at present, there are only a few regional airports around the country that are “privatisation ready”. Further, the private sector needs to be aware of the political sensitivities local authorities must manage when looking at the privatisation of their assets. While regional councils will be focussed on obtaining the maximum purchase price, they will also be looking for investors who are ready to work with the local authority to develop and grow the airport for the benefit of the local community.