Airlines body rejects levy plan to fund Western Sydney airport

International airlines have rejected suggestions for an industry levy to help fund the second Sydney airport.

International airlines have rejected suggestions an industry levy be introduced to help fund construction of Western Sydney Airport, saying any financial assistance should exclusively come from government coffers.

In a major position statement to be released today by the Board of Airline Representatives of Australia — which represents airlines including Air Canada, ­Cathay ­Pacific and United Airlines — the industry body has rejected calls for such a levy, saying it will scare away international airlines from using the new airport. BARA’s concerns about funding for the planned $2.7 billion airport at Badgerys Creek in western Sydney stem from analyst projections that the infrastructure project would require $1bn of government subsidies or extra levies on airlines in the first decade of its existence to make it a financially viable proposition.

“If initial financial assistance is necessary, it should be funded ­directly from the Australian government’s consolidated revenue,” the industry group says in its paper. “BARA does not support any form of levy on airfares, either during Western Sydney Airport’s construction phase or subsequent operations, which would effectively impose an additional tax on existing passengers.” BARA said it would also not support cross-­subsiding the costs of the proposed airport through additional airline charges at Sydney Airport.

“International airlines have underpinned the growth of passenger services into Australia through real airfare reductions of some 30 per cent over the last decade,” BARA said. “Placing an extra levy on otherwise commercially viable air routes, now or in the future, will only serve to reduce airfare affordability, which would damage inbound tourism and decrease the opportunities for Australians to holiday and visit family and friends overseas.”

Instead, the BARA paper says that success of Sydney’s second airport would be underpinned by efficient infrastructure that allows smooth passage of freight and passenger traffic to and from the terminal.

“Efficient infrastructure ser­vices will maximise the airport’s total value and therefore are critical to minimise any financial assistance that may be required by the airport operator,” says BARA executive director Barry Abrams.

BARA’s members also want to see more competitively priced jet fuel at the new airport.

“Unfortunately, globally recognised importers of jet fuel have, to date, seen their efforts to bring competition and lower-priced fuel to airlines in Australia frustrated.

“The success of the new airport will be at risk if the situation at Sydney Airport were replicated at ­Western Sydney Airport,” it says. “A competitive jet fuel market at Western Sydney Airport is dependent on firstly establishing a more competitive supply at Sydney ­Airport.

“This requires arrangements providing open access for any jet fuel importer to the fuel storage and distribution facilities at Sydney Airport.”

The release of the paper comes as question marks hang over the development of the second airport. Sydney Airport is still waiting on the federal government to hand over its proposed development plan for the Badgerys Creek creek airport, despite assurances it would be delivered after the ­federal election.

Sydney Airport has been waiting since December to receive the so-called notice of intention, but the process has been twice delayed. The first delay occurred after the government was inundated with more than 4500 submissions to the airport’s environ­mental impact statement, and the second delay came with the election. The plans are expected to be delivered by the end of this year.

The formal “notice of intention” will give Sydney Airport the first right of refusal over the development. Analysts expect Sydney Airport to commit about $1bn to the terminal, with another $3bn-$4bn coming from the federal government or debt financing, with tens of thousands of jobs now depending on the speed and scale of the investment.