Govt to build Sydney’s longpromised second airport

SYDNEY: The Australian government said yesterday it will build a A$ 5 billion ( US$ 3.76 billion) second international airport in Sydney, ending decades of indecision on the project which private investors deemed too risky and expensive.

The government stepped in after Sydney Airport Holdings declined its right to develop and run the new hub, even though its withdrawal promises to end its airport monopoly in Australia’s biggest city and tourist drawcard.

But the site at Badgery’s Creek is 40 km from central Sydney compared with 8 km for the existing airport, and critics question its viability without a rail link to the city.

Airlines also warn that fees will need to be low to encourage them to switch.

“It’s a burden that the government has the capacity to bear – the burden being not simply the costs, but the risks,” independent economist Saul Eslake told Reuters.

“Nobody really knows what the demand for services at this facility is likely to be.” Prime Minister Malcolm Turnbull said the project would inject more than A$ 1.9 billion into the economy during the construction phase alone.

It is expected to open in late 2026 and boost inbound air passenger numbers to Sydney by about a quarter, or 10 million people per year in the early years.

Sydney Airport, which had first right of refusal to build the airport, earlier on Tuesday said it would not proceed with the project which it had previously called ‘deeply uneconomic’.

“The risks associated with the development and operation of the airport are considerable, and that will continue for many decades without commensurate returns for our investors,” Sydney Airport chief executive Kerrie Mather said at the Macquarie Australia Conference, an economic forum.

Sydney Airport will lose its monopoly as a result, but it could benefit from lower-margin domestic traffic migrating to the second airport, allowing it to accept more lucrative international traffic, analysts say. — Reuters