Sydney Economic Impact Report

7/28/2019 Sydney Economic Impact Report

1/131

F I N A L R E P O R T

The Economic Impact of Growthat Sydney Airport

Prepared for

Sydney Airport Corporation Limited

1 Link RoadMascot

09th

January 200843187196

C:\DOCUME~1\txritch0\LOCALS~1\Temp\notesE1EF34\FinalEconomic ImpactReportJanuary 2008.docTheEconomic Impactof GrowthatSydney Airport


2/131

T H E E C O N O M I C I M P A C T O F G R O W T H A T S Y D N E Y A I R P O R T

Prepared for Sydney Airport Corporation Limited

Project Manager:Todd Ritchie

Principal

Project Director:Don MilesPrincipal

URS Australia Pty Ltd

Level 3, 116 Miller StreetNorth SydneyNSW 2060AustraliaTel: 61 2 8925 5500Fax: 61 2 8925 5555

Date:Reference:Status:

09th January 200843187196Final


3/131


Contents

Prepared for Sydney Airport Corporation Limited, 09th January 2008C:\DOCUME~1\txritch0\LOCALS~1\Temp\notesE1EF34\Final Economic Impact Report January 2008.doc

i

Contents

Executive Summary ............................................................................................ES-1Section 1 Introduction .............................................................................................. ES-1Section 2 About Sydney Airport and SACL ............................................................. ES-1Section 3 Sydney as a World City ........................................................................... ES-1Section 4 Sydney Airport Direct Economic Impacts ................................................ ES-1Section 5 Indirect and Total Impacts of Sydney Airport........................................... ES-1Section 6 Growth at Sydney Airport......................................................................... ES-1Section 7 Planning Analysis..................................................................................... ES-1

1 Introduct ion ................................................................................................... 1-11.1 Introduct ion .................................................................................................................. 1-11.2 Methodology and Approach ....................................................................................... 1-11.3 Brief Workstream Descr ipt ions .................................................................................. 1-11.4 What is an Economic Impact Study? ......................................................................... 1-11.5 Why do Airports Conduct Economic Impact Studies .............................................. 1-1

1.5.1 Types of Airport Economic Impacts............................................................... 1-11.5.2 Economic Impacts Identified in the Study ..................................................... 1-1

2 About Sydney Airport & SACL..................................................................... 2-12.1 About Sydney Airport & SACL ................................................................................... 2-12.2 Scale of Facili ty ............................................................................................................ 2-1

2.2.1 Physical Scale ............................................................................................... 2-12.2.2 Throughput Scale .......................................................................................... 2-1

2.3 Scope of Activit ies ....................................................................................................... 2-12.3.1 About Sydney Airport Corporation Limited (SACL) ....................................... 2-12.3.2 Aviation (Aeronautical services).................................................................... 2-12.3.3 Retail.............................................................................................................. 2-12.3.4 Commercial Trading ...................................................................................... 2-12.3.5 Property & Development ............................................................................... 2-12.3.6 Other Organisations ...................................................................................... 2-1

2.4 Complexi ty of Operations ........................................................................................... 2-12.4.1 Passenger Operations................................................................................... 2-12.4.2 Freight Operations......................................................................................... 2-1

3 Sydney As A World City ............................................................................... 3-1


4/131


Contents


ii

3.1 Introduct ion .................................................................................................................. 3-13.2 What is a World City .................................................................................................... 3-13.3

The Role of an A irpor t in a Wor ld City ....................................................................... 3-1

3.4 Benchmarking World Cities ........................................................................................ 3-1

3.4.1 Comparable World Cities............................................................................... 3-13.4.2 More Qualitative Correlation between Airport and Economy ........................ 3-1

3.5 The Role of Sydney Airport ......................................................................................... 3-13.5.1 Passenger Movements.................................................................................. 3-13.5.2 Freight Movements........................................................................................ 3-13.5.3 Aircraft Movements........................................................................................ 3-13.5.4 Air Routes...................................................................................................... 3-1

3.6 Aviat ion and the Economy.......................................................................................... 3-13.7 Aviat ion & Airport as a Sub-Set of Transport & Storage ......................................... 3-13.8 Sydney Ai rport & International Trade ........................................................................ 3-13.9 International Visitors, Sydney Airport & the Economy ............................................ 3-13.10 Sydney Airport A Catalyst for Economic Development........................................ 3-1

4 Sydney Airpor t Direct Economic Impacts................................................... 4-14.1

Introduct ion .................................................................................................................. 4-1

4.1.1 Survey Methodology and Data ...................................................................... 4-14.1.2 Incremental Approach & Key Drivers ............................................................ 4-14.1.3 Additional Industry Data ................................................................................ 4-1

4.2 Summary Direct Economic Impacts .......................................................................... 4-15 Indirect & Total Economic Impacts of Sydney Airport .............................. 5-1

5.1 Introduct ion .................................................................................................................. 5-15.2 Input Output Approach............................................................................................. 5-15.3 Ai rport Indust ry and the Input Output Model ......................................................... 5-15.4 Appl ication of the Input Output Model ................................................................... 5-1

5.4.1 Economic Impact Measures.......................................................................... 5-15.5 Sydney Airport Summary Economic Impact Results ............................................ 5-1

5.5.1 NSW Economic Impacts................................................................................ 5-15.5.2 Output, Value Added, Household Income & Employment Impacts............... 5-15.5.3 The Industry Distribution of Flow-on Impacts................................................ 5-15.5.4

Capital Investment Economic Impacts .......................................................... 5-1


5/131


Contents


iii

5.5.5 Sydney Economy Economic Impacts............................................................ 5-15.6 Sydney Airport Labour Force ..................................................................................... 5-15.7

Average Wages ............................................................................................................ 5-1

6 Growth At Sydney Airport ............................................................................ 6-1

6.1 Introduct ion .................................................................................................................. 6-16.2 Growth Predict ions for Sydney Airpor t ..................................................................... 6-1

6.2.1 Passengers.................................................................................................... 6-16.2.2 Freight............................................................................................................ 6-16.2.3 Capital Expenditure ....................................................................................... 6-1

6.3 Drivers of Grow th ......................................................................................................... 6-16.3.1 Population...................................................................................................... 6-16.3.2 Economy, Income and Employment.............................................................. 6-16.3.3 Business Investment ..................................................................................... 6-16.3.4 Tourism Local and International ................................................................. 6-1

6.4 Ai rport Growth What does it mean for the Sydney and New SouthWales Economy ........................................................................................................... 6-16.4.1 GSP Impacts of Airport Growth..................................................................... 6-16.4.2 Employment Impacts of Airport Growth......................................................... 6-16.4.3 Capital Expenditure Growth........................................................................... 6-16.4.4 Summary of Passenger and Capital Growth................................................. 6-1

6.5 Sydney Airport in the context of Sydney and New South Wales Growth .............. 6-17 Planning Analysis ......................................................................................... 7-1

7.1.1 Federal Government...................................................................................... 7-17.1.2 New South Wales Government..................................................................... 7-17.1.3 Local Government ......................................................................................... 7-1

7.2 Ai rport Precincts .......................................................................................................... 7-17.2.1 What Role do Airports Play in the Economic Life of a City ........................... 7-17.2.2 Other Global Examples ................................................................................. 7-17.2.3 Sydney Airport Precinct................................................................................. 7-17.2.4 Implications for Economy of Precinct Restriction.......................................... 7-1

7.3 Transpor tation and Infrastructure.............................................................................. 7-17.3.1 Airport Users.................................................................................................. 7-17.3.2 Existing Traffic & Infrastructure Base Airport and Airport Precinct ............ 7-1


6/131


Contents


iv

7.3.3 Impact of the Airport and Airport Precinct Growth on Traffic andInfrastructure ................................................................................................. 7-1

7.3.4 Comparisons between Airport and Airport Precinct Traffic andInfrastructure Impacts.................................................................................... 7-1

7.3.5 Requirements for Infrastructure..................................................................... 7-18 Conclusions................................................................................................... 8-19 References ..................................................................................................... 9-110 Limitat ions ................................................................................................... 10-1


7/131


Tables, Figures & Appendices


v

Tables, Figures, Plates, DrawingsAppendices

Tables

Table 1-1 Airport Business Activities................................................................................................... 1-1Table 2-1 Comparisons of Land Mass ................................................................................................ 2-1Table 2-2 Comparison of Scale of Sydney Airport Facilities............................................................... 2-1Table 2-3 Comparisons of Daily Activity Flows................................................................................... 2-1Table 3-1 World Cities Airport Statistics.............................................................................................. 3-1Table 3-2 World Cities Populations ('000s)......................................................................................... 3-1Table 3-3 Gross Metropolitan Product ................................................................................................ 3-1Table 3-4 Gross Metropolitan Product per Capita .............................................................................. 3-1Table 3-5

Household Income.............................................................................................................. 3-1

Table 3-6 International Merchandise Trade ........................................................................................ 3-1Table 3-7 International Visitors (millions)............................................................................................ 3-1Table 3-8 Direct International Air Routes 2006................................................................................... 3-1Table 3-9 Direct Australia Domestic Air Routes 2005/06.................................................................... 3-1Table 3-10 Description of Aviation & Airport Related Industry Sub-Categories.................................... 3-1Table 3-11 Aviation & Airport Industries Gross Product & Employment 2005/06................................. 3-1Table 3-12 Air Freight Exports 2005/06................................................................................................ 3-1Table 3-13 International Visitors to Australia ........................................................................................ 3-1Table 3-14 Direct International Airlinks 2005/06 ...................................................................................3-1Table 4-1 Survey Responses By Industry Group................................................................................ 4-1Table 4-2 Key Drivers by Industry Group............................................................................................ 4-1Table 4-3 Additional Data Sources ..................................................................................................... 4-1Table 4-4 Direct Impacts Summary by Category ................................................................................4-1Table 5-1 Industry Classification of Defined Activities ........................................................................ 5-1Table 5-2 Sydney Airport Economic Impacts on NSW ....................................................................... 5-1Table 5-3 Sydney Airport Impacts on Employment in NSW ............................................................... 5-1Table 5-4 Total Economic Impact: Sydney Airport Industry & SACL Capital Investments................. 5-1Table 5-5 Sydney Airport Economic Impacts on Sydney.................................................................... 5-1Table 5-6 Sydney Employment Impacts of Sydney Airport................................................................. 5-1Table 5-7 Sydney Airport Labour Force.............................................................................................. 5-1Table 5-8 Average Weekly Earnings for Sydney Airport..................................................................... 5-1Table 5-9 Average Weekly Earnings for Persons in Selected Industries - 2006 ................................ 5-1Table 6-1 Population Forecasts - Greater Sydney, NSW & Australia (2006/07 to 2015/16).............. 6-1


8/131




vi

Table 6-2 New South Wales Forecast GSP Growth (2006/07 to 2015/16) ........................................ 6-1Table 6-3 Employment Growth Forecasts - Sydney & NSW (2006/07 to 2015/16)............................ 6-1Table 6-4

Household Disposable Income Forecasts (2006/07 to 2015/16)........................................ 6-1

Table 6-5 Forecast Visitor Numbers in NSW ...................................................................................... 6-1Table 6-6 Growth in Economic Impact at Sydney Airport ................................................................... 6-1Table 7-1 Modal Split of Container Handled at Port Botany ............................................................... 7-1Table 7-2 Current Population Accessing Sydney Airport.................................................................... 7-1Table 7-3 Forecast Airport Population Accessing Sydney Airport ...................................................... 7-1Table 7-4 Estimated Ground Transport Split 2023/24 ........................................................................ 7-1

FiguresFigure 1-1 Project Workstreams........................................................................................................... 1-1Figure 2-1 SACL Revenue By Source 2006/07 ................................................................................... 2-1Figure 2-2 SACL Revenue Growth....................................................................................................... 2-1Figure 3-1 Study Process Workstream 1 - World City Economic Benchmarking ................................ 3-1Figure 3-2 Passengers by Population .................................................................................................. 3-1Figure 3-3 Sydney Airport Share of the Total Passenger Market 2006/07 .......................................... 3-1Figure 3-4 Sydney Airport Share of International Passenger Market 2006/07 .................................... 3-1Figure 3-5 Sydney Airport Share of Domestic Passenger Market 2006/07 ......................................... 3-1Figure 3-6 Sydney Airport Share of Regional Passenger Market 2006/07.......................................... 3-1Figure 3-7 Sydney Airport Passenger Numbers 1995/96 to 2005/06 .................................................. 3-1Figure 3-8 Sydney Airport Freight Volumes 1995/96 - 2005/06........................................................... 3-1Figure 3-9 International Australian Airfreight Market Share 2005/06................................................... 3-1Figure 3-10 International Australian Airmail Market Share 2005/06 ...................................................... 3-1Figure 3-11 International, Domestic & Regional Australia Aircraft Movements 2006/07....................... 3-1Figure 3-12 Aircraft Movement Trends 1995/96- 2005/06 ..................................................................... 3-1Figure 3-13 Industry Structure of the Australian Economy 2005/06 ...................................................... 3-1Figure 3-14 Top 10 Commodities Air Imports into Sydney 2005/06 ...................................................... 3-1Figure 3-15 Commodities Air Exports from Sydney 2005/06................................................................. 3-1Figure 3-16 Market Share of International Tourism 1996/97 2005/06 ................................................ 3-1Figure 4-1 Study Process Workstream 2 - Airport Direct Economic Impacts ...................................... 4-1Figure 5-1 Study Process - Workstream 3 - Indirect Economic Impact Analysis................................. 5-1Figure 5-2 The Structure of Sydney Airport Activities .......................................................................... 5-1Figure 5-3 NSW Production Induced Value Added & Employment Effects by Industry Groups.......... 5-1


9/131




vii

Figure 5-4 NSW Consumption Induced Value Added & Employment Effects by Industry Group ....... 5-1Figure 6-1 Study Process Workstream 4 - Airport Growth Strategy and Forecasting ......................... 6-1Figure 6-2

Sydney Airport Passenger Forecasts ................................................................................. 6-1

Figure 6-3 Aircraft Movements Forecast.............................................................................................. 6-1Figure 6-4 Forecast Freight Volumes................................................................................................... 6-1Figure 6-5 Real Output Growth Forecasts - NSW and Australia (2006/07 to 2016/17)....................... 6-1Figure 6-6 Employment Growth Forecasts - NSW & Australia (2006/07 to 2016/17).......................... 6-1Figure 6-7 Business Investment Forecasts - NSW (2006/07 to 2016/17)............................................ 6-1Figure 6-8 Forecast GSP Outcomes of Growth ................................................................................... 6-1Figure 6-9 Forecast Employment Outcomes of Growth....................................................................... 6-1Figure 7-1 Study Process Workstream 5 - Planning Analysis.............................................................. 7-1Figure 7-2 Airport Precinct Concept..................................................................................................... 7-1Figure 7-3 Types of Businesses Attracted to Airport Precincts............................................................ 7-1Figure 7-4 Current Modes of Access.................................................................................................... 7-1Figure 7-5 Access by Market Segment - Weekdays ............................................................................ 7-1Figure 7-6 Access by Market Segment - Weekend.............................................................................. 7-1Figure 8-1 Forecast GSP Outcomes of Growth ................................................................................... 8-1Figure 8-2 Forecast Employment Outcomes of Growth....................................................................... 8-1Error! No tableof figures entries found.

Appendices

A. Sydney Economic Impact Study Invitation Letter & SurveyB. Sector Classification


10/131


Executive Summary

Prepared for Sydney Airport Corporation Limited, 09th January 2008

ES-1

ExecutiveSummary

ES 1 Headline Findings/Results

About Sydney Airport:The economic impact of the activities at

Sydney Airport includes the generation of:

the largest piece of contiguously ownedcommercial real estate in Sydney

206,133 full and part-time jobs about 6% of theSydney labour force

handles 46% of Australias internationaltraffic

120,162 full-time equivalent jobs

31 million passengers in 2006/07, with forecast

growth of 4.2% per annum till 2023/24

good quality jobs average wages for airport

workers is about 18% higher than the NSW average

serves 43 airlines and connects to 50international, 23 domestic and 28 regionaldestinations

around $30.4 billion in gross output/turnover

around 650 separate businesses operating onor in connection with the airport

around $16.5 billion in contribution to NSW GSP

is forecast to invest over $1.2 billion in capital

expenditure over the next 5 years

around $7.4 billion in contribution to household

incomes

The economic impact of Sydney Airport is equivalent to:

approximately 2% of the Australian economy

6% of the New South Wales economy


11/131


Executive Summary


ES-2

Section 1 Introduction

Economic impact studies measure the contribution of a major commercial or government activity on aregional, state or national economy. Economic impact is usually measured in terms of four key indicators

- output, value added, household incomes and employment and a combination of direct and indirecteffects.

Airports often conduct economic impact studies because there is no simple way to measure the quantumof economic activity at an airport. This is because the airport operator itself is only a small component ofthe economic activity at an airport. Servicing the flow of passengers and freight at an airport usuallyrequires the combined effort of hundreds of organisations of varying descriptions (around 650 at SydneyAirport).

As a result, measuring the economic impact of an airport requires the gathering of turnover andemployment data from these organisations and then modelling that data to determine indirect effects.

Section 2 About Sydney Airport and SACL

Section 2 provides an overview of the scale, scope and complexity of Sydney Airport. To analyse scale,benchmarks are identified for Sydney Airports land mass, its terminal and other building floor space, thenumber of car parks and the volume of people passing through the facility.

Sydney Airport is Australias busiest airport servicing 31 million passengers and 634,000 tonnes of freightin 2006-07. The airport was opened in the 1920s operating continuously since this time. Sydney AirportCorporation Limited (SACL) was established in 1998 as the corporatised entity to run Sydney Airport. In2002, the airport was privatised for $5.6 billion to a consortium of investors.

In terms of scope, the diversity of SACLs business is examined through an analysis of each SACLbusiness units contribution to total revenue, while the size of SACLs overall business is measuredrelative to other businesses.

In terms of complexity, SACL is only one of around 650 operations that undertake business activities inand around the airport. Other organisations include airlines, ground transport operators, airport groundhandlers, freight companies and various Government agencies all servicing the flow of passengers andfreight through Sydney Airport.

In terms of diversity of operations, SACL is an amalgam of aeronautical, retail, property and commercialtrading businesses with turnover of $725 million in 2006/07.

On any trip through the airport, a passenger or item of freight requires interaction with as many as 30 or40 individual organisations, even if the trip would appear, on the surface, to be relatively seamless.

Section 3 Sydney as a World City

Part of the scope of this economic impact study was to characterise Sydney as a World City andcompare and contrast Sydney with other World Cities.

The World City concept and line of thinking comes from the Globalisation and World Cities (GaWC) StudyGroup and Network. The World City concept refers to various attributes characterising the city as adistinct region playing a pivotal economic, financial, social and cultural role. However, the primarycriterion for inclusion in the list of World Cities was the provision of "advanced producer services" such asaccountancy, advertising, finance and law by international corporations.

Sydney is benchmarked against other cities in the World City network thereby contextualising Sydney inrelation to other major cities around the world. By outlining the role of the airport we will show that aviationtraffic is as much a function of a World City as it is a driver of a city becoming a World City.

URS selected six other cities from the GaWC Inventory of World Cities for benchmarking:


12/131


Executive Summary


ES-3

London;

New York;

Hong Kong;

Singapore;

San Francisco;

Melbourne;

An airport is a critical part of any city but the day to day business that defines a World City requires amodern and efficient airport. In fact, one of the characteristics defining a World City is the existence of amajor airport that serves as an established hub for several international airlines. It is a chicken and eggquestion of whether a city develops as a World City because of it having a first class airport or whether afirst class airport develops because the city is a World City.

There is clearly an interaction between the economy of a city and the development of its airport. Anessential requirement of a World City is to have efficient transport and communications to link it to othercities in the World City network. A city without a first class airport cannot hope to develop as a World City.

Section 4 Sydney Airport Direct Economic Impacts

This section of the report outlines the methodology used in the study to estimate the direct economicimpact of Sydney Airport and provides estimates of these direct economic impacts. The data collectionprocess involved a combination of an incremental approach to past studies, survey and companyinterviews, estimation techniques and the use of industry sources. Measuring direct impacts requiresgathering financial and employment data for a variety of businesses whose activities are linked to theairport including airlines, freight companies, retailers, government agencies and other tenants.

The operating environment of an airport involves a large number of businesses operating in a variety ofdifferent areas in and around the airport, facilitating the movement of passengers and cargo. Given thiscomplex structure, required information such as sales, expenditure, value added, jobs and householdincome is difficult to obtain through official published sources. Such data is typically sourced through acomprehensive stock-take involving surveys and interview consultations with all airport-relatedbusinesses, as well as desk-based research and analysis.

Data was collected and estimated by industry groupings to assist in the calculation of impacts and theeconomic modelling process. The industry groupings include:

Scheduled passenger airlines;

General aviation operators;

Air cargo carriers;

Freight handlers;

Air services management operators;

Government operators;

Retailers;

Car rentals;

Car parking operators;

Other commercial providers;

Hotels;


13/131


Executive Summary


ES-4

Ground passenger transport operators; and

Airport service providers.

Data gathering and estimation for each of the above categories involved the following:

a survey of major businesses; and

the identification of key benchmarks and drivers to update the 2001 base data used in the 2002study

Economic impacts (both direct and indirect) can be measured using a range of variables. The usualmeasures calculated in economic impact studies are:

Gross output or turnover this is a guide to business operation impacts that business operatorscan readily relate to. However, it involves double counting of intermediate inputs at each stage ofthe supply chain and so is not the preferred economic measure.

Value added this is a measure that nets out the use of intermediate inputs in the supply chain andapproximates the measurement of gross national product (GNP), or as in the case of a State basedanalysis Gross State Product (GSP), used by the ABS to measure the value of output.

Employment this is a socio-economic measure used as an indicator of performance. Employmentmay be measured in terms of the number of jobs or in terms of jobs adjusted to full-time equivalents.Both measures are used in this analysis.

Household income this is a measure of the contribution that these activities make to the income(before tax) of households.

Typically an emphasis is placed on the outcomes of the value added and employment outcomes as beingthe most useful.

The total direct gross output impact is estimated at $14.8 billion, the GSP component (value added) is$8.0 billion, household income $3.3 billion and direct employment impact of 75,580 jobs.

Section 5 Indirect and Total Impacts of Sydney Airport

The next stage of the study involved the measurement of indirect impacts. Indirect economic impacts arethose that are not directly associated with operations on the airport, but are the result of flow on activities.Measurement of indirect impacts is typically done via the use of a model of the economy. For the SydneyAirport study an input output model was used to determine the flow on benefits.

The results of the study provide sound evidence that Sydney Airport is a major employment generatorand wealth creator in the NSW economy. The economic headline results of the study are summarisedbelow:

Employment (NSW)

Direct employment (full-time and part-time jobs) of 75,580, plus indirect employment of 130,553 for atotal of 206,133 jobs;

44,389 direct full time equivalent (FTE) jobs, plus 75,774 indirect FTE jobs for a total of 120,162; and

average wage levels that are 18% above the NSW average.

Activi ty Indicators (NSW)

Directly contributing $8.0 billion in NSW Gross State Product (GSP) and after taking into accountflow-on impacts contributing a total of $16.5 billion to NSW Gross State Product;


14/131


Executive Summary


ES-5

Directly generating $14.8 billion in output and after taking into account flow-on impacts generating$30.4 billion in output; and

Directly providing $3.3 billion in household income and after taking into account flow-on impacts

providing $7.4 billion of household income.

Section 6 Growth at Sydney Airport

In this section the economic impact of growth, and the drivers of this growth, are analysed. It assessesthe future economic impact of airport activities as well as estimating the role Sydney Airport will have onthe regional and state economies. This report has analysed these impacts over a 10 year period.

The Sydney and NSW economies, as indicated by GSP, are forecast to grow over the next 10 years at anannual average rate of 3.2 per cent. The airport has a role to play in facilitating this growth allowingbusiness and tourism levels to grow. In conjunction with this, Sydney Airport plays an important part inthis growth in GSP as shown by the forecast growth in the economic impact of the airport in the precedingsection.

The future impacts of passenger and capital expenditure growth has been calculated based on forecastpassenger growth and capital spending by SACL. The forecast economic impact of Sydney Airport showsa growth in value added or GSP impact from $18.4 billion to $22.3 billion between 2006/07 and 2010/11and a growth in employment from 230,253 to 279,414 over the same period. Because of limitations inforecast capital expenditure, the combined information can only be provided out to 2010/11.

Section 7 Planning Analysis

In Section 7, the concept of an airport precinct is introduced. Airports around the world have becomemore than just aviation service suppliers or infrastructure facilities. The trend is for airports to bemultimodal and multifunctional with commercial and residential developments on or close to the airport.

The development of airport precincts has increased around the world as airports and the businesseslocating around the airports grow. There are a number of reasons that airport precincts have begun todevelop in importance and why businesses are moving to these areas. These include

accessibility to transport networks, in particular air services which can lead to reduced transaction orfreight costs;

improvements in speed of movements;

the development of airport precincts has a flow back effect on airports which can receive greaterpassenger and freight throughput;

connectivity to other business and tourist centres; and

access to other businesses who are also located in the airport precinct.

An analysis was undertaken of the traffic and infrastructure requirements of Sydney Airport. Therelationship between development and generated traffic was explored and the consequent need fortransport infrastructure provision investigated.

Growth at Sydney Airport and the surrounding precinct will result in increased requirements forinfrastructure. Passenger levels are expected to grow from the 2006/07 level of 31 million to 68 million by2023/24 and at the same time there will be development within the airport precinct both associated withthe airport and not associated with the airport. Development of airport and nonairport facilities will resultin increases in employment, residential living and air travel passengers and associated with this will beincreases in trip traffic within the airport precinct. This will thereby generate increases in the requirementsfor new infrastructure.

Given the forecasts of economic growth associated with development of Sydney Airport and the airportprecinct, it will be necessary for infrastructure development in roads, public transportation and possibly in


15/131


Executive Summary


ES-6

the service networks such as electricity, water and sewerage. Without investment there is the possibilityor probability of congestion or reductions in service quality which will impact on the ability of the airportprecinct to function efficiently.

Without sufficient investment in this infrastructure the forecast level of growth for the Sydney Airportprecinct will not be achieved and growth in the NSW economy will suffer as a result.

In its Ground Transport Plan SACL has provided some suggested infrastructure improvements to thetransport network which may assist in meeting possible future capacity constraints. These include:

high occupancy vehicle lanes - provision of priority lanes for buses and vehicles with more than 3passengers on the main roads approaching the airport;

realign and augment existing bus services review existing bus services and change routes to meettravel profiles of employees and passenger segments;

reposition or reduce kerbside drop offs and pick ups kerbside drop offs and pick ups account for 25per cent of traffic around the airport. This option may encourage more public transport use and

hence reduce congestion around the airport; and

flexible ticketing arrangements on Airport Rail link provide cheaper, more flexible ticketing forairport employees to encourage rail use.

This section also assesses the government framework and strategy for the Sydney Airport, including thepolicy and administrative framework imposed by Councils, State and Federal Governments for thetransport industry.

The impact of the growth of Sydney Airport on all levels of government can not be considered in isolation.As we have discussed within this report, a growing Sydney Airport contributes significantly to economicand job growth and hence to the governments ability to provide positive economic outcomes for thebroader community.

Growth at the airport impacts governments in a number of ways:

roads;

public transport; and

security.

A review of the NSW Government Metropolitan Strategy and the implications for Sydney Airport isundertaken as well as review of the Federal Governments Auslink policy as a way of addressingtransport infrastructure capacity constraints.


16/131




1-1

1 Introduct ion

1.1 Introduction

The last report into the economic impact of Sydney Airport was completed in 2002 using base data from2001. This report updates the economic impact of the airport, but also adopts a forward looking view ofgrowth in conjunction with the growth of the Sydney and NSW economies. The aims of this report,therefore, are to provide SACL with:

a study measuring the impact that the operation of Sydney Airport has and will have on theeconomy, utilising measures such as output, value added, household income and employment.SACL requires that this study both provides a snapshot of existing impacts but also provides SACLwith a flexible model/tool to enable the calculation of impacts to be refreshed at annual intervals (oras required), in between major periodical updates of the study;

a study linking Sydney Airports growth with the Sydney region and NSW economic growth. Theobjective of this analysis will be to highlight that aviation traffic at Sydney Airport is as much afunction of Sydneys standing as a global city as it is a contributor to it;

a study putting the growth of aviation and non-aviation development at Sydney Airport into thecontext of growth and development in the surrounding community, including the development ofairport precincts; and

a study addressing the implications of the airports growth and economic role on Government policy.

1.2 Methodology and Approach

Due to the complex and inter-related nature of the elements of this study, it has been organised into anumber of workstreams. When put together, these will provide SACL with an ability to understand thealignment of growth at Sydney Airport with the economic growth of Sydney and NSW.

The workstreams have been organised around specific tasks and functional inputs, as set out in Figure 1below.

Figure 1-1 Project Workstreams


17/131




1-2

The project workstreams will guide the reporting of the Sydney Airport economic impact study. A briefdescription of each of the workstreams is provided in the next section, however, more detaileddescriptions of the methodology and approach used for each of the workstreams is provided within thereport.

1.3 Brief Workstream Descriptions

The report takes a workstream approach to the study. A brief description of each of the workstreams isset out below:

World City Economic Benchmarking - the purpose of the world cities section of the report is tocharacterise Sydney as a World City and to outline the role of the Airport and related drivers ofgrowth;

Ai rport Direct Economic Impacts this workstream takes a snapshot measurement of the directeconomic impact of the airport and the on-airport business community (aviation and non-aviationrelated);

Indirect Economic Impact Analysis this workstream involves using the direct impacts measuredin the direct impacts workstream to determine the indirect or consequential impacts, utilisingeconomic modelling;

Ai rport Growth Strategy and Forecasting this workstream will utilise the direct and indirectimpacts measured in the direct and indirect workstreams to generate forecasts of future increases ineconomic impacts arising from the implementation of the Sydney Airport Master Plan;

Planning Analysis - in the planning workstream, the process of comparing the airport to the precinctin which it is located is undertaken. How does growth at Sydney Airport (historical and future)compare to growth in the surrounding regions? What is driving the growth and what will the futuregrowth be within the precinct zone? The analysis also quantifies the impact of development (current

and future) at Sydney Airport and in surrounding precincts in terms of population (resident andworking) and transport (ie private and public transport).

1.4 What is an Economic Impact Study?

An economic impact study measures the contribution of a major commercial or government activity to aregional, state or national economy. Economic impact is usually measured in terms of contribution to fourkey economic indicators:

output;

employment;

value added (i.e. GDP); and

household incomes.

There are typically two components to an economic impact study a direct component and an indirect orflow-on component.

While the direct employment and economic activity impacts of an industry are usually obvious, the flow-onimpacts are not so obvious, referring to the multiplier effect of the direct activity. By way of explanation,the jobs of employees in an industry or working on a project is an example of a direct impact, while thejobs created in other industries by those employees spending their wages on various items ofconsumption is an example of a flow-on impact.

Some examples of the types of activity usually subject to an economic impact study include:


18/131




1-3

entire industries for example, the economic impact of the mining industry or the horse racingindustry;

major sporting and cul tural events for example, the economic impact of the Olympic Games, the

Formula 1 Grand Prix or a major conference/convention;

major projects for example, the construction of a new shopping centre, an industrial or residentialdevelopment or a new road/seaport/railway line; and

major facilities or pieces of infrastructure for example, the economic impact of Sydney Airportor a major sporting stadium.

1.5 Why do Airports Conduct Economic Impact Studies?

Aviation and airports have become deeply embedded into our economic and social fabric. Air travel, forboth business and leisure, is growing at an historical average of 1.5 to 2 times the rate of GDP and anincreasing proportion of global trade is being undertaken via air transport. As a result, the beneficial

impact that airports have on our economy and society has also grown.Although there is little debate about the ability of an airport to generate economic activity and growth,measuring that contribution can be difficult. This is because an airports contribution to economic activityis actually the amalgam of the contribution of hundreds of diverse organisations.

At Sydney Airport, for example, around 650 organisations actually carry on commercial or governmentactivity in and around the airport. SACL, the owner of the facility, is but one of those organisations and inrelative terms is not the largest in revenue or employment terms.

In this sense, an airport is akin to a business park. It is a facility that a wide range of people can and douse to generate economic activity.

The difficulty in measuring the economic impact of an airport is in identifying the myriad of organisations

that carry on activities at an airport and then calculating, in a standardised way, the activity of those firms.In addition, the nature of the activity occurring at airports and the scale of many modern airports meansthat they have many external impacts and stakeholders, including commercial organisations,governments, neighbouring communities and the travelling public.

It is common practice internationally for airports to conduct an economic impact study to providequantitative and qualitative evidence on the importance of the airport to the economy.

Some examples of situations where airport economic impact studies have been undertaken to aiddecision making include:

promoting an understanding of the economic role and impact of the airport among key decisionmakers and stakeholders;

allowing an informed view to be taken of the balance between the benefits and costs associated withairport development;

making the economic case for investment in off site infrastructure, such as new access roads,railways and rapid transit systems; and

influencing planning policy, such as in relation to proposals for housing and commercial developmentin the area around the airport.

The objective of this study is to measure the economic impact that Sydney Airport and airport associatedbusinesses, often labelled the Sydney Airport Community, has on the economy.


19/131




1-4

1.5.1 Types of Airport Economic Impacts

Although economic impact analysis practices differ around the world, for the purposes of this study, theeconomic impact of Sydney Airport is defined as that activity associated with servicing the flow of

passengers and freight.

The study is not intended to measure the economic impact or the value of the flow itself. That is, noattempt has been made to include the economic impact of the expenditure of tourists and visitors toSydney passing through the airport or the value of goods transported by air.

In addition, in measuring the economic impact of Sydney Airport, no attempt has been made to limit theanalysis to those activities that take place within the airport boundary. Over the years in which SydneyAirport has been operating, some economic activity has moved over the fence into neighbouring areas.The economic activity generated by the Qantas Flight Catering Centre, for example, although not strictlylocated on Sydney Airport (it is on the other side of Qantas Drive), has been counted as part of the overallimpact of the airport.

In broad terms, economic impacts for airports can fall into three categories:

Direct impact activity, employment and income that is wholly or largely related to airportoperations or usage of the services provided by the airport, either on site or in the surrounding area;

Indirect or flow-on impact activity, employment and income generated in the economy of thestudy area by the spending of incomes generated by the direct impacts; and

Catalytic impact - employment and income generated in the economy of the study area by thewider role of the airport in attracting economic activities, such as inward investment and inboundtourism.

Direct Impacts

The direct economic impact of the airport relates to the jobs and incomes which are generated wholly orlargely by the operation of an airport and generated either on site or in the surrounding area.

Examples of direct activities generally associated with an airport include the following activities:

Table 1-1 Airport Business Activ ities

Airlines Government Agencies

Airport Operations Customs, Immigration &Quarantine

Aircraft Maintenance Freight Forwarders

Air Traffic Control Fuel Services

Car Parking Ground Handling

Car Rentals Hotels

Cargo Terminal Operators In-Flight Catering

Cleaning Passenger Handling

Couriers Security

Airport Service Providers Retail Outlets

Ground Transport rail, taxi &buses

Some direct activities, such as aircraft maintenance, air traffic control and ground handling are required tobe located on site at the airport. Other direct activities, however, such as car parking, hotels, in flightcatering and other airport industry service providers, can be located off-airport, usually in the surrounding

area, but are still considered to be directly associated with the airport.


20/131




1-5

Indirect or Flow-on Impacts

Expenditure and economic activity occurring at Sydney Airport result in beneficial flow-on impacts due topurchases made by businesses situated in and around the airport. Ideally, for airport related studies, this

is measured through the use of an input output model.

An input output model provides the interrelationships of industry sectors of an economy in order toestimate the total impact an operation or industry, such as Sydney Airport has on the economy in terms ofoutput, employment, value added and household incomes. The model allows the calculation of multipliereffects, enabling the calculation of the total economic impact that Sydney Airport has on the economy.

Catalytic Impacts

Airports and other large infrastructure facilities can act as major generators of economic growth and ascatalysts for a wide range of economic activities. For example, an airport will

influence company location decisions and competitiveness;

attract new investment to the economy;

retain existing companies and secure their expansion projects;

promote exports through airfreight;

enhance competitiveness of an economy through the provision of efficient passenger and freightservices; and

attract businesses, leisure activities and tourism generating income and employment.

1.5.2 Economic Impacts Identif ied in the Study

This economic impact study identifies and calculates the direct and indirect / flow-on impacts of the

activities in and around Sydney Airport and does this in a current and forward looking manner.

Direct economic impacts were calculated through the use of survey methodology, estimation techniquesbased on survey data, SACL databases, various publicly available sources of company information andcompany interviews. Indirect / flow-on impacts were calculated through the use of an input output model.Estimates of catalytic economic impacts are provided in qualitative terms, due to the lack of robust data.

In addition to measuring the economic impact of airport related activities, the study also sought to captureother data relevant to understanding the scale, scope and complexity of operations related to SydneyAirport. In particular, data was gathered on:

the value of assets employed in servicing Sydney Airport related activity;

the level of capital expenditure expended in recent years by SACL and other airport users; and

the skill level and occupation of employees.

Although these measures are not strictly part of an economic impact analysis, they reinforce theimportance of Sydney Airport as a generator of economic activity and a positive influencer of growth inthe Sydney and NSW economies.


21/131


Section 2 About Sydney Airport & SACL


2-1

2 About Sydney Airport & SACL

2.1 About Sydney Airport & SACL

Sydney Airport is Australias busiest Airport and serviced 31 million passengers and 634,000 tonnes offreight in 2006-07. The airport was opened in the 1920s operating continuously since that time. SACLwas established in 1998 as the corporatised entity to run Sydney Airport. In 2002, the Airport wasprivatised for $5.6 billion to a consortium of investors.

Section 2 provides an overview of the scale, scope and complexity of Sydney Airport. To analyse scale,benchmarks are identified for Sydney Airports land mass, its terminal and other building floor space, thenumber of car parks and the volume of people passing through the facility.

In terms of scope, the diversity of SACLs business is examined through an analysis of each SACLbusiness units contribution to total revenue, while the size of SACLs overall business is measuredrelative to other businesses.

In terms of complexity, SACL is only one of around 650 operations that undertake business activities in

and around the airport. Other organisations include airlines, ground transport operators, airport groundhandlers, freight companies and various Government agencies all servicing the flow of passengers andfreight through Sydney Airport.

2.2 Scale of Facil ity

There are two primary aspects to understand the scale of Sydney Airport: a physical aspect and athroughput aspect.

2.2.1 Physical Scale

While Sydney Airport is small by comparison with many other airports, in terms of its land footprint, by anyother measure of infrastructure asset size, it is an extraordinarily large facility.

Sydney Airport is one of the largest contiguously owned pieces of real estate in the Sydney area. At 907hectares, the site is much larger than other major facilities in the Sydney region (as set out in Table 2.1below). Sydney Airport is larger than Sydney Olympic Park and larger than the SCG, Moore Park andCentennial Park combined. It is also larger than a number of Sydneys industrial estates and businessparks.

In addition to sheer land size, Sydney Airport also has a substantial amount of other facilities. Table 2.2below sets out the amount of tarmac, terminal building floor space and car parking contained withinSydney Airport, as well as comparisons with some of Sydneys largest CBD office towers, Sydneymotorways and major Sydney regional shopping centres.

Sydney Airport has an estimated 1,687,986 square metres (sqm) of runways, roadway and aprons1

and75 aircraft parking gates.

2Sydney Airport has more tarmac than the M2, M5 and Eastern Distributor

motorways combined.

1 This figure does not include the taxiways area.

2 34 international gates, 31 domestic gates, 5 domestic express gates and 5 airfreight specific gates (3 international and 2 domestic).


22/131




2-2

Table 2-1 Comparisons of Land Mass

FacilityLand Size

(hectares)

Sydney Airport 907

Sydney Olympic Park 641

Wetherill Park IndustrialEstate

600

Huntingwood Industrial Estate 600

Norwest Business Park 377

Centennial Park 210

SCG & Moore Park 175

Source: SACL, Sydney Olympic Park Authority, Bankstown City Council,

and the Moore Park Trust.

In terms of terminal buildings, Sydney Airport has 361,941 square metres (sqm), comprising the 3 levelinternational terminal (T1), the two level T2 domestic common user terminal and T3, the Qantas domesticterminal. In comparison with Sydney CBD office towers, Sydney Airport passenger terminals are 3.6times the size of the MLC Centre office tower, and in terms of floorspace larger than the combined officetowers of Chifley Tower, Governor Phillip Tower and Grosvenor Place in terms of sqms of space.

A number of large car parking facilities provide passenger access to the Sydney Airport terminalbuildings. Sydney Airport car parking spaces number 11,000, significantly outnumbering the car parking

facilities of Sydneys largest regional shopping centres.

In addition, SACL is landlord to an extensive portfolio of commercial and industrial property comprisingapproximately 945,000 sqm of space, which is available to be let, with the potential to make availableanother 700,000 sqm for non operational uses. To put this in perspective, this is double the size of four ofSydneys largest office buildings, the MLC Centre, Governor Phillip Tower, Chifley Tower and GrosvenorPlace.

The property portfolio includes long term lease sites for the domestic terminals, airline offices, loungesand check in counters within the International Terminal. Additional major property leases include theQantas Jet Base, airfreight, maintenance facilities and long term leases for rail underground stations.

Table 2-2 Comparison of Scale of Sydney Airport Facilit ies


23/131




2-3

Facility Scale Comparison Scale

Paved Surfaces

Runways 441,986 sqm M2 motorway 554,000 sqmRoadways 561,000 sqm M4 motorway 1,122,000 sqm

Aprons 685,000 sqm M5 motorway 450,000 sqm

Eastern Distributor 145,000 sqm

Terminal Buildings

International (T1) 246,630 sqm MLC Centre 100,000 sqm

Domestic (T2 & T3) 115,311 sqm Chifley Tower 90,000 sqm

Grosvenor Place 90,000 sqm

Governor Philip Tower 55,000 sqm

Car Parking 11,000+ spaces Westfield Parramatta 4,280 spaces

Westfield Chatswood 2,850 spaces

Westfield Miranda 4,500 spaces

Westfield Hornsby 3,700 spaces

Westfield Bondi 3,300 spaces

Source: SACL, Sydney Olympic Park, Macquarie Infrastructure Group, Westfields and skyscapers.com

2.2.2 Throughput Scale

Sydney Airport is Australias busiest airport in terms of both domestic and international passengerthroughput. Sydney Airport accounts for nearly half of all Australias international passengers and aquarter of the domestic passengers. It is also one of the busiest facilities, of any type, in Australia.

The substantial throughput scale of Sydney Airport is evident in its key operating statistics for 2006/07, asset out below:3

31 million passengers;

260,344 aircraft movements; and

634,000 tonnes of freight.

In terms of other Australian transport facilities, Sydney Airport is one of the largest. It has, for example, 40per cent more passengers, 53 per cent more aircraft movements, 38 per cent more freight and 36 percent more mail freight than the next busiest airport, Melbourne Airport.

It is also worthwhile comparing the throughput scale of Sydney Airport with the throughput scale of othertransport facilities within Sydney. This allows a broader appreciation of Sydney Airports throughput scale.Comparisons with other transport facilities are set out on Table 2.3 below. These comparisons highlightthe fact that by any measure, Sydney Airport is an extremely busy facility. In terms of average dailypassenger throughput, Sydney Airport is twice as busy as the busiest ferry terminal and more passengerspass through than Town Hall Railway Station, the busiest train station in Australia.

3

Sydney Airport Annual Report 200

7


24/131




2-4

Table 2-3 Comparisons of Daily Activity Flows

Facility Daily Passenger Flow Daily Vehicle Flow

Sydney Airport 79,000 775 aircraft

Town Hall Railway Station 70,050 2,000 trains

Circular Quay Ferry Terminal 38,356 301 ferries

Source: RailCorp, Sydney Ferries

2.3 Scope of Activities

Although Sydney Airport is owned and operated by a company Sydney Airports Corporation Limited there are around 650 individual organisations with substantial activities related to the movement ofpassengers and freight at the airport.

2.3.1 About Sydney Airport Corporation Limited (SACL)SACL is a large and diverse organisation with revenue derived from aeronautical, retail, property andcommercial trading business units totalling $725 million

4in 2006/07.

The revenue contribution of each of SACLs trading business units in 2006/07 is set out in Figure 2.1below, highlighting the scale and diversity of the activities carried out by SACL followed by a shortdescription of each of these key trading activities.

4 Sydney Airports Corporation Limited Annual Report 2007.


25/131




2-5

Figure 2-1 SACL Revenue By Source 2006/07

Aeronautical

and

Aeronautical

Security

recovery

49%Retail

23%

Commercial

Trading

13%

Property and

Development

13%

Other

2%

Source: Sydney Airport Corporation Limited Annual Report 2007.

Since privatisation of SACL, operating revenues have continued to grow as the commercial potential ofthe airport is realised. The revenues achieved by SACL over the last five years are presented in the figurebelow.


26/131




2-6

Figure 2-2 SACL Revenue Growth

Since privatisation in the 2002 financial year, SACL revenue has grown from $454 million to $725 millionin 2006-07, a CAGR of 10.0%.

2.3.2 Aviation (Aeronautical services)

SACLs aeronautical assets and services facilitate the movement of aircraft, passengers and freight.These assets include the runways, airfield lighting, taxiways and some of the terminals at Sydney Airport.

The primary source of income is the fees paid by airlines, individual aircraft owners and ancillarycustomers to use the aviation assets. These charges represent a significant source of revenue for SydneyAirport and are primarily levied on per aircraft tonnage or per passenger basis. Additional revenue is

sourced from aeronautical security recovery fees. This involves fees collected from activities such aspassenger screening, baggage screening and other security services and covers the actual costs ofproviding these mandated security services.

Sydney Airport is subjected to various legislated restrictions that affect aviation movements. For example,aircraft movements are limited to a maximum of 80 per hour, and a jet curfew operates between 11:00pmand 6:00 am. In addition, certain protections are provided for regional airlines access to the airport.

454498

548

619

659

0

100

200

300

400

500

600

700

2002 2003 2004 2005 2006

$'m

Revenue CAGR: 10%

(Financial Years)

Privatisation

725

2007

800


27/131




2-7

This aeronautical revenue represents the highest source of revenue for the airport. In 2006/07aeronautical revenue (excluding the aeronautical security recovery) was $294 million, which represented41 per cent of SACLs total revenue.5

The airport is the home base of Qantas, Australias largest airline and a vital destination airport for otherinternational airlines such as Air New Zealand, British Airways, Singapore Airlines, United Airlines,Emirates and Cathay Pacific6 - all of which use Sydney Airports aeronautical assets and services.

2.3.3 Retail

SACL is a major retail landlord in its own right. Retail revenue is primarily earned from concessions totrade given to retail operators in the T1 and T2 terminals. In 2006/07, these concessions generated $169million in revenue for SACL, which represents approximately 23 per cent of total revenue and is SACLslargest non-aeronautical source of revenue.

SACLs retail tenants comprise a range of duty free, foreign exchange, food and beverage and otherspeciality retail operators.

There are currently around 136 retail outlets in Sydney Airports International Terminal. The product offernow available at T2 has more than doubled to 50 retail outlets with total area at T2 expanded by some2,200 sqms to almost 5,000 sqms.

URS Airport Retail Study acknowledged Sydney Airports retail success by ranking it the top performingairport in the Asia Pacific region and second only to London Heathrow on a global basis.7

There are also a small number of retail outlets around the airport, most of which are open to the generalpublic, for which SACL also receives concession income.

Sydney Airports retail operations also include advertising revenue within the T1 and T2 terminals andfrom a range of outdoor sites around the airport.

2.3.4 Commercial TradingSACLs car parking, car rental and commercial ground transportation services generated approximately$93 million in revenue, accounting for approximately 13 per cent of SACLs total revenue in 2006/07.

The car parks provide more than 11,000 spaces for public and staff use. Sydney Airports commercialparking facilities comprise a major multi-storey car park in the domestic terminal precinct, a large car parkin the international terminal precinct and a long term car park. In addition, SACL also owns a number ofstaff car parks around the airport.

Other major sources of commercial revenue for SACL include:

car rental facilities (rental of desks within terminals, rental of storage and maintenance facilities andrental of car parking facilities within the major commercial car parks); and

ground transport operations (service and access fees, bus and other commercial transportationaccessing Sydney Airport).

5Sydney Airports Corporation Limited Annual Report 2007.

6Sydney Airport website International Airline listings, 2006.

7

For further details, visit the website: www.URS.com.au/airportretailstudy


28/131




2-8

2.3.5 Property & Development

SACLs property portfolio has over 140 tenants occupying almost 500 sites across 82 hectares of lettableproperty, which in 2006-07, generated approximately $93 million in revenue, accounting for 13 per cent of

SACLs total revenue.

This lettable space includes:

long term lease sites for the domestic terminals;

space within the international terminal including airline offices, lounges and check in counters;

aircraft maintenance facilities including the Qantas Jet Base;

hangars, buildings and other operational sites leased to general aviation operators;

airfreight facilities; and

long term leases for the rail underground station boxes at the Domestic and International Terminals.

2.3.6 Other Organisations

Although SACL is a substantial organisation with diverse operations, it is only one of around 650 otherorganisations carrying out various forms of activity at Sydney Airport.

The types of activities carried out by these other organisations include:

airlines there are 44 passenger airlines operating out of Sydney Airport;

other aircraft operators there are 25 general aviation operators;

Freight there are at least 130 organisations involved in freight activities including transportcompanies, handlers and forwarders;

Ai rport service providers - there are 205 airport service providers such as fuel providers,maintenance companies, in-flight caterers and security organisations;

Retailers there are at least 157 retail operators on-airport (some of which operate multiple outlets);

Hotels there are 7 hotels around the airport;

Government there are 6 Federal and State Government departments;

Car rental and car parking there are as many as 14 such operators; and

Ground transport there are at least 54 ground transport providers.

Each of these organisations has a role to play in the movement of passengers and freight through SydneyAirport.

2.4 Complexity of Operations

SACL is essentially the provider and asset manager of infrastructure at Sydney Airport. Thatinfrastructure is then augmented and used by the approximately 650 other organisations carrying outactivities related to the movement of passengers and freight through the airport.

As a passenger or cargo customer, the service provided by Sydney Airport is seamless. Any trip throughthe airport by a passenger or an item of freight requires interaction with as many as 30 or 40 individualorganisations. For the most part, passengers and freight customers are oblivious to this complexity ofoperations.


29/131




2-9

2.4.1 Passenger Operations

Airline passengers require goods and services from a range of people and businesses. Airlinepassengers need to arrange travel through an airline or associated business and then require transport to

the airport. According to the NSW Taxi Association, there are around 90,000 taxi trips a week to SydneyAirport. Other than the use of taxis, passengers will arrive at the airport using buses, trains and privatetransport, some requiring parking (long and short term) and others returning rental cars before theirdeparture.

Passengers are required to check-in at airline counters and are allocated seating. Passengers are thenprovided with a wide range of retail outlets.

For international passengers to cross to airside, they are required to pass through passport control,Australian Customs and various screening and security measures. The Government agencies involved inthis process are the Australian Customs Service (ACS) and the Department of Immigration andCitizenship (DIAC).

ACSs policy role at the airport is to facilitate trade and assist in the movement of people across theAustralian border while protecting the community and maintaining appropriate compliance with Australianlaws.

The main activities of the Department of Immigration and Citizenship relate to the processing of peoplemoving into and out of Australia through Sydney Airport.8

The Australian Quarantine and Inspection Service (AQIS) is an operating group within the Department ofAgriculture, Fisheries and Forestry charged with protecting Australia against exotic pests and diseaseswhile helping the international movement of people and providing export certification for agriculturalproduce and other commodities. The key activities of AQIS at Sydney Airport are the monitoring of thequarantine status of passengers and goods passing through the airport.

9

SACL also provides various security and screening services via SACL and specialised security staff.

Also located in and around Sydney Airport are the Australian Federal Police who provide policing servicesat the airport.

Customers who have purchased duty free from non-airside duty free stores have their dockets collectedby Australian Duty Free Association (ADFA) officials as they enter the departure points of the airport.Once passengers are cleared to enter airside, they are provided with a wide array of retail, duty free, foodand beverage, foreign exchange services and speciality shops for travellers convenience while awaitingdeparture.

In addition, there is a wide range of firms and people involved in the preparation of an aircraft fordeparture. In-flight catering needs to be prepared and loaded, along with baggage, mail and other cargo.Cleaning, fuelling and maintenance of an aircraft also needs to be undertaken along with the operation ofaerobridges enabling passengers to embark. All these services are provided by airline staff, SACL staffand / or specialist airport service providers such as ground handling agents.

Departure and arrival of aircraft is controlled by Sydney Airport Traffic Control, which is managed byAirservices Australia. Airservices Australia also manages air traffic within Australian air space. The keyservices offered by Airservices Australia in regard to air traffic management are airspace management,air traffic control and navigational services and aeronautical information.

10Landing and departure times or

slots also need to be allocated to aircraft due to the high demand for the use of Sydney Airport facilitiesand this is undertaken by Airport Co-ordination Australia (ACA).

8Department of Immigration and Multicultural Affairs Annual Report 2005/06

9Department of Agriculture, Fisheries and Forestry, AQIS agency, Internet site 2006

10Air Services Australia, Corporate Profile, Internet site 2006


30/131




2-10

2.4.2 Freight Operations

As well as the operations facilitating the movement of passengers through Sydney Airport there areoperations facilitating the movement of freight. There are a number of organisations involved in the

airfreight business, the key ones being airlines (passenger and cargo and cargo specific), cargo terminaloperators, freight forwarders and government agencies.

The owner of the goods can be a company or an individual wishing to transport perishable or generalfreight. The receiver of the goods can also be a company or individual.

Many passenger airlines also carry freight in the belly hold of the aircraft. There are also airfreight specificairlines. These airlines allocate and sell space to freight forwarders, who then sell on to exporters andimporters.

In general, airfreight operators and freight forwarders perform a variety of functions including:

arranging transportation to and from the airport, whether that be with their own transport division orother road transport operators to and from the cargo terminal operator;

securing airfreight capacity on aircraft;

preparing and executing export / import documents;

loading / unloading airfreight containers once collected from the airport cargo terminal operator andarranging destination customs and delivery services; and

providing cool room facilities for perishables.

When freight is delivered to the airport it is directed to a Cargo Terminal Operator (CTO). Sydney Airporthas five CTOs, three located on airport and two off airport. CTOs are primarily responsible forloading/unloading freight, physically allocating freight to cargo containers and aircraft and working withACS and AQIS to obtain their approval and clearance for goods to be transported.

Independent customs brokers or customs clearance divisions within international freight forwardingcompanies often provide import customs brokerage. Brokers are licensed by the ACS to classify andenter goods on behalf of importers and to assess the amount of duty payable. Companies that are regularimporters normally use customs brokers. The ACSs key responsibility is ensuring compliance with locallaws prior to export and import. The AQIS are also involved in the process of exporting and importinggoods at airports. AQIS provides inspection and documentation services for many types of perishablefreight to meet mandatory requirements.

Once freight is cleared by customs brokers, ACS and AQIS, it is loaded onto aircraft for departure. Thereare a range of firms and people involved in the preparation and departure of cargo aircraft. Fuelling andmaintenance of aircraft need to be undertaken along with services provided by air traffic control,Airservices Australia and the ACA.


31/131


Section 3 Sydney As A World City


3-1

3 Sydney As A Wor ld City

3.1 Introduction

Part of the scope of this economic impact study was to characterise Sydney as a World City andcompare and contrast Sydney with other World Cities. The purpose of this section of the report is tooutline the role of the Airport, highlighting that aviation traffic is as much a function of a World City as it isa driver of a city becoming a World City.

Figure 3-1 Study Process Workstream 1 - World City Economic Benchmarking

3.2 What is a World City

The World City concept comes from the Globalization and World Cities (GaWC) Study Group andNetwork11. It refers to various attributes characterising the city as a distinct region playing a pivotaleconomic, financial, social and cultural role. However, the primary criterion for inclusion in the list of WorldCities is the provision of "advanced producer services" such as accountancy, advertising, finance andlaw, by international corporations. World Cities make up a global network which transcends nationalboundaries and the historical ties in which business is conducted within the network with more emphasison existing financial institutions.

Part of this analysis will include benchmarking Sydney against other cities in the World City network. Theaim of this section is to contextualise Sydney Airport in relation to other major cities around the world. Byoutlining the role of the airport we will show that aviation traffic is as much a function of a World City as itis a driver of a city becoming a World City.

3.3 The Role of an Airport in a World City

An airport is a critical part of any city but the day to day business that defines a World City requires amodern and efficient airport. In fact, one of the characteristics defining a World City is the existence of amajor airport that serves as an established hub for several international airlines.

11

http://www.lboro.ac.uk/gawc/rb/rb6.html


32/131


Section 3 Sydney As A World City


3-2

The World City concept describes a network of cities with international firms who have offices in manydifferent cities all over the world. Fast efficient air transport is critical to these multi-national firms andwithout a well run airport, operation as a World City would not be possible. This report will show thatSydney Airport has a significant beneficial impact on the city, the state and the country. But apart from the

employment and revenue it adds to the economy, this report will show that Sydney Airport provides oneof the most critical services to Sydney in its role as a World City.

3.4 Benchmarking World Cities

The GaWC Study Group compiled an inventory of World Cities. To be a World City the city must have amajor international firm or two major domestic firms in at least one of four sectors, accountancy,advertising, banking/finance and law. The number and size of the firms are then assessed and a scorebetween zero and three is assigned, zero (not qualified), one (minor), two (major) and three (prime). Thescores from each sector are added up and a mark out of twelve is assigned to each city. A Greek letter isthen assigned to each group of cities, Alpha (Prime), Beta (Major) and Gamma (Minor).

URS selected seven cities from the GaWC Inventory of World Cities for benchmarking:

London (Alpha 12)

New York (Alpha 12)

Hong Kong (Alpha 10)

Singapore (Alpha 10)

San Francisco (Beta 9)

Melbourne (Gamma 6)

Sydney (Beta 9)

These cities were chosen for their geographical location and for their similarities and differences withSydney.

London

London is the capital of the United Kingdom and, with approximately 7.5 million people (2006) is also thebiggest city in the country. London is

Documents

Sydney Economic Impact Report