Sydney Airport says it is in talks with airlines on plans to expand Terminal 1 and introduce international flights at the Terminal 2/3 precinct.
The company floated the proposed expansion at its annual general meeting (AGM) in May, which in addition to new gates, baggage system expansions and apron capacity at Terminal 1 also raised the prospect of a new Terminal 4 offering new international gates adjoining T2/T3.
There were also plans for new aeronautical facilities in the south-south-east sector, south of General Holmes Drive.
Sydney Airport said the capital expenditure for these projects would be about $500 million, depending on the scope of the work, with a decision to be made based on “stakeholder consultation and the satisfaction of internal business cases”.
“We continue to deliver on our strategy of investing in a significant improvement in customer experience and capacity to support our airline partners’ growth,” Sydney Airport chief executive Kerrie Mather said in a statement on Tuesday when the company published its calendar 2017 first half results.
“We’ve commenced consultation with our airline partners and stakeholders on the next phase of international capacity expansion, including additional aerobridge gates, more baggage system capacity and aircraft aprons.”
The airport has maintained its capital expenditure guidance of $1.3 billion between 2017-2021, including $450 million in calendar 2017. It said the $500 million for expansion projects was excluded from this guidance.
The slides, which were first published at the Sydney Airport AGM in May, showed the proposed Terminal 4 would be located where Qantas’s maintenance facilities are currently.
Qantas chief executive Alan Joyce has said previously the airline was in good dialogue with Sydney Airport regarding any move of its jet base.
However, Joyce said any move would be over a long period of time.
“We are working through exactly where the maintenance facility is and what happens to the cargo facilities as well, so there is significant redevelopment of Sydney,” Joyce told reporters on the sidelines of the International Air Transport Association (IATA) annual general meeting in Cancun, Mexico in early June.
“We’re talking about over the next couple of decades.”
In terms of the financial results, Sydney Airport reported a first half net profit of $167 million, up 4.4 per cent from $160 million in the prior corresponding period.
Total revenue rose 7.9 per cent to $714.2 million.
Aeronautical charges, which made up a little over half of the airport’s total revenue and comprised payments from airport users for terminal and airfield infrastructure use, rose eight per cent to $364.2 million.
Revenue per passenger increased 4.2 per cent to $34.10, compared with $32.7 per passenger in the prior corresponding period.
Retail had the largest revenue growth, rising 14.3 per cent to $162.6 million. Rents from duty free shops, food outlets and other advertising made the second largest contribution to revenue at 23 per cent.
Sydney Airport declared an interim distribution of 16.5 cents per stapled security. It also lifted full year distribution guidance for calendar 2017 to 34.5 cents per stapled security, from 33.5 cents previously, thanks to “strong capital management outcomes and excellent operational performance”.
Reflecting the importance of international flights to revenue, Sydney Airport said overseas flying accounted for 15 per cent of landing and takeoff slots but accounted for 70 per cent of passenger driven revenues.
To that end, Sydney Airport said the already announced new services and increased frequencies or upgauging to larger aircraft on existing routes from the likes of Beijing Capital Airlines to Qingdao, China Airlines to Taipei and Qantas to Osaka so far in 2017 contributed to the positive growth outlook for the second half of 2017.
Total passenger numbers rose 3.6 per cent to 21 million during the first half of calendar 2017, with international travellers up 7.7 per cent to 7.7 million and domestic travellers up 1.3 per cent to 13.2 million.
In May, Sydney Airport said it would not take up its right of first refusal (ROFL) to build and operate the proposed airport at Badgerys Creek. The Commonwealth said it would build the airport and has established WSA Co, a government-owned corporation tasked with building and operating Sydney’s long-awaited second airport, with a major works contract expected to be awarded in 2019.
