Push for new Sydney airport to take more passengers

The Turnbull government will build pressure to ramp up passenger numbers at the Badgerys Creek project.

Urban Infrastructure Minister Paul Fletcher preparing for construction of Badgerys Creek Airport. Picture: Hollie Adams

The Turnbull government will build pressure on Sydney Airport Corporation to ramp up passenger numbers at the Badgerys Creek project faster than expected.

The federal government is ­expected to seek a commitment from Sydney Airport Corporation, which has the rights to ­develop Badgerys Creek, to carry as many as 10 million passengers a year by 2030.

The confidential talks, over the $5 billion deal, are expected to lead to a formal proposal by the end of this year and a final contract as early as April.

Analysts expect Sydney Airport to commit about $1bn to the terminal with another $3bn to $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.

Urban Infrastructure Minister Paul Fletcher told The Australian he wanted to see “three to five million” passengers passing through the airport in its first year, providing a strong start to the economic gains across western Sydney.

But others are mapping out more conservative forecasts, with UBS investment bank analyst Simon Mitchell estimating the western Sydney airport would start with three million passengers and reach 5.5 million passengers by 2030 — far less than Mr Fletcher’s 10 million target.

The forecasts are central to the looming decisions at Sydney Airport Corporation, assuming it runs both airports, over how quickly it wants to expand Badgerys Creek when it might be more profitable to keep capacity high at its existing terminals at Mascot.

Badgerys Creek would rival the size of Adelaide Airport with a capacity of 10 million, highlighting the potential for local jobs from a project that would add more than $12bn to regional economic output according to an analysis by the NSW Business Chamber.

Sydney Airport, which is listed on the Australian Securities Exchange, has the first right of ­refusal to run Badgerys Creek under the terms of the 2002 deal when the federal government ­privatised the company.

Mr Fletcher said the government aimed to put a “notice of ­intention” to Sydney Airport by the end of this year to set out the terms for the new airport, giving the likely bidder four months to agree to the deal.

Mr Fletcher would not discuss the details of the negotiations, which have to be kept confidential to smooth the way for a deal. “There’s still a few months to go yet but the expectation would be before the end of this year,’’ he said.

The talks on the airport contract are separate from the $3.6bn Western Sydney Infrastructure Plan, jointly funded by the federal and NSW governments to build roads that connect to the new airport. Billions of dollars will also be needed for a high-speed rail link to the airport, with the route yet to be finalised.

With massive investments underway, the federal and state governments want rapid action to expand the airport and deliver its economic benefits.

A key constraint will be the ­approval of an environmental-impact statement that will set out flight paths. Mr Fletcher has ruled out the idea of a single “merge point” over Blaxland that would concentrate aircraft noise.

“The notice of intention will set out what we expect the initial capacity to be. In year one we probably think it’s maybe three to five million passengers. We think it probably gets to about 10 million by 2030 or 2035,” he said.

The UBS analysis assumes the airport will carry 80 per cent domestic and 20 per cent international travellers. Revenue at the new airport would start at $86 million in its first year and rise to $164m five years later under the UBS scenario. That compares with $1.4bn in revenue expected this year at Sydney Airport, which handles more than 40 million passengers a year.