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Senator Nick Sherry's speeches

ADDRESS TO THE AUSTRALIAN AIRPORTS ASSOCIATION CONVENTION 2011 

15 Nov 2011
 

Tourism and Mining - Drivers of Airport Growth

Brisbane, QLD

Good morning. It's my pleasure to be here in Brisbane to address your convention and technical workshop.

My compliments for the role you play in showcasing technologies, and exploring the trends and solutions that will shape one of Australia's most important industries.

A strong air-transport sector is, of course, vital for tourism - an important part of my portfolio responsibilities and an industry which contributes $34 billion to Australia's GDP.

But today I want to highlight one of the fastest-growing business opportunities for the air-transport sector: mining.

Before I do, there's an interesting link between mining and another of my portfolio hats, Small Business.

It's probably a little known fact that more than 90 per cent of businesses in mining are small businesses.

The opportunities, however, are anything but small.

Air transport and mining drive each other's growth.

This is a healthy mutual interest the Gillard Government is supporting.

Aviation, tourism, airports, regional economies and the resources sector all benefit from closer ties.

Strategic importance of aviation

Aviation's strategic importance to our island continent is obvious - 99 per cent of all people arriving here come by air.

Regional and remote communities, in particular, rely on a vibrant, resilient and efficient aviation industry.

The grounding of the Qantas fleet was a vivid demonstration of Australia's dependence on air transport.

The Australian Government acted immediately.

We applied to Fair Work Australia to end industrial action.

Swift action averted long-term impacts on passengers, the economy and all those who work in the tourism industry.

When the reputation of a whole industry is at stake, complacency is a luxury we cannot afford - especially with so much potential growth from Asia.

Visitor arrivals to Australia rose by three per cent in the year to June, driven mainly by Asian markets.

The number of business travellers into Australia went up at three-times that rate.

The average annual growth in arrivals from China is forecast to be seven per cent a year until 2020.

By then, there would be over 900,000 Chinese visitors a year from China, adding at least $6 billion to our economy - a doubling of the current numbers.

Mining's boost to aviation

The resources boom, meanwhile, generates strong economic growth for Australia and our aviation sector.

There are complex, inter-mingling factors at play:

  • Mining attracts many more business travellers to Australia, especially the parts that only the aviation sector can reach.
  • Mining helps to fill the front end of planes, which we all know is vital to the economics of flying.

Last year, in fact, 12 per cent of all arrivals from China were here on business.

Strong demand for our commodities has taken our dollar to record levels. One benefit is that airlines pay less for fuel.

That demand has also, in part, shielded Australia from the sharp economic downturns we've seen elsewhere. That means Australians can still afford to book airfares.

At the same time, Australian resources help to raise living standards among our trading partners which, in turn, bring more holidaymakers to Australia.

All these interwoven trends strengthen the economic case for more air capacity.

The fly-in fly-out trade is a good illustration.

Fly-in fly-out

More Australian workers are commuting by air.

They use in many cases the same aircraft, hotels, cafes and restaurants that a typical tourist would.

Around three-quarters of fly-in fly-out nights last year were in regional Australia - galvanising many local economies.

The fly-in fly-out concept is essential to meet the resources sector's need for skilled, flexible labour.

Last year, the busiest airport in Australia's north-west was Karratha, with more than half a million trips to and from Perth.

We've also seen growth in seat capacity on the Brisbane-Mackay route - 14 per cent a year on average over the past decade.

There were nearly 800,000 passenger movements on that route last year alone.

Since 2007, airports near mining communities have seen a surge in traffic.

Passenger movements in Derby-Curtin rose by 82 per cent and by 56, 54 and 42 per cent in Port Hedland, Karratha and Emerald respectively.

Five out of the ten busiest domestic airports that link with PerthAirport are major mining centres, while one-in-four passengers who pass through Perth's domestic terminal are connected in some way to the resources industry.

Not surprisingly, load factors have remained high and it's great to see the air-transport sector responding to this growth.

Perth Airport is investing $120 million in a new terminal, mainly to service flights for the resources sector.

Within 18 months, the terminal is expected to be operating 16 check-in counters and 36 aircraft bays.

Both Qantas and Virgin Australia have upped their services to mining areas.

Qantas, for example, added more than 4,000 seats a week between Perth and Exmouth, with even more across Broome, Port Headland and Kalgoorlie.

Qantas owns the third-largest fly-in fly-out charter airline in Western Australia.

Virgin provides more than 33,000 seats a week between Sydney and Perth, while Strategic Airlines flies between Brisbane and Port Headland.

Aviation investment

There is always room for more investment, which is why Australia has one of the most open and liberal aviation markets in the world.

Three of Australia's domestic airlines - Tiger, Regional Express and SkyWest - are owned by foreign investors.

So too, at one stage, was Virgin Australia.

Opening up our domestic aviation market has delivered lower fares and greater choice for consumers.

As a result, more people are flying domestically in Australia than ever before.

To cater for higher demand, the number of available seats rose in the year to June by six per cent to over 70 million.

Investment on this scale - despite volcanic ash and all the other disruptions - is a tangible sign of the resilience of Australia's air-transport industry and the value of its links with our booming resources sector.

Government adding value

The Australian Government is adding value in a number of ways - not least of all through direct funding.

Direct funding

For example, the Government has pledged $480 million for the Gateway WA Project.

This scheme will improve roads and traffic flow around PerthAirport and recognises the value of Perth as a hub for airlines flying to and from mining regions.

Among other funding, governments will spend $600 million marketing Australia domestically and internationally.

Promoting fly-in fly-out

At the same time, we are promoting fly-in fly-out employment opportunities in regional areas.

The Government will appoint new coordinators in four priority regions.

They will establish training and employment pathways for skilled workers and unskilled job-seekers alike.

They'll also link mining companies with air services to make it easier for these long-distance commuters.

Increasing aviation capacity

We are also committed to negotiating more access and seat capacity with key tourist markets ahead of demand.

This year's air-services talks with China, for example, negotiated a 55 per cent increase in available capacity entitlements, phased over 12 months.

Seat capacity between China and Australia is estimated to quadruple to more than 2.4 million seats by the end of the decade.

Already, China Southern has begun direct flights between Guangzhou and Perth.

It will also double its daily direct flights into Melbourne and add an extra flight per week to Brisbane.

New arrangements have been negotiated to open up Tokyo's HanedaAirport to Australian flights and remove capacity restrictions between all Australian and most Japanese airports.

The agreement also allows, for the first time, Australian carriers to fly beyond Japan to destinations such as China and Europe.

This is a breakthrough agreement which will have significant economic benefits for Australia - more than a million people fly between Australia and Japan each year with more than $3 billion worth of cargo transported between the two countries.

The Australia-Japan market is Australia's eighth-largest.

The deal will significantly boost capacity between the two countries and is an opportunity to build on the $1.2 billon Japanese tourism market to Australia.

Elsewhere, Indonesian visitor growth has been about 32 per cent in the past two years and by 2020 we expect the market value to more than double to $1.1 billion.

This year's talks with Indonesia paved the way for 25,000 seats per week for airlines of both countries - a significant increase in available capacity.

The Gillard Government has also finalised a 40 per cent increase in available capacity entitlements with Viet Nam this year.

Growth in passenger numbers

These Government initiatives are contributing to the ongoing solid growth in passenger numbers.

Last week, my colleague, Transport Minister Anthony Albanese, released the 2010-11 financial year results showing international movements reached record numbers.

The number of international air passengers travelling to and from Australia in 2010-11 increased by 7.5 per cent to reach a record 27 million.

Here again Australia bucked the international trend - while many airlines overseas are forced to cut routes and shed jobs, Australia is doing the opposite.

While Australia's economy continues to grow and create jobs, other advanced economies such as the US, the UK and Europe continue to struggle.

It's no surprise then that the regional breakdowns of where this travelling traffic is occurring put the Asian region front and centre.

There were 36.92 million available seats operated to or from Australia in 2010-11. The regional breakdown was:

  • South East Asia - 40 per cent
  • New Zealand - 21.2 per cent
  • North East Asia - 17.4 per cent
  • North America - 7.9 per cent

Balanced policies

All this government action to support the air-transport industry is embedded in a framework of sound policy.

The Aviation White Paper and the National Long-Term Tourism Strategy encourage forward planning and investment.

While we want airports to grow their business, we don't want them abusing market power by excessive pricing.

That's why the Productivity Commission is looking at the economic regulation of Australian airports.

Transparency and accountability is a good thing in business, not least for airport infrastructure and services.

The Productivity Commission will deliver its report soon.

Conclusion

The Gillard Labor Government has a proven record in ensuring the aviation industry continues to perform well.

We recognise aviation provides huge benefits to the Australian economy.

And so does the resources industry.

The Australian Government will continue to work hard to ensure both industries grow and prosper and provide ongoing benefits for the whole community.

 

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