Flight caps hurting Sydney Airport, says Kerrie Mather

Sydney Airport CEO Kerrie Mather has called for an easing of tight flight restrictions in Sydney.

Sydney Airport chief executive Kerrie Mather. Picture: Hollie Adams

Sydney Airport chief executive Kerrie Mather has called for an easing of tight flight restrictions on aircraft movements in the country’s largest airport.

In a broad-ranging interview with The Australian, Ms Mather, who is stepping down next month after a 15-year association with Sydney Airport, said its flexibility of operation was being ­constrained by tight federal ­government limits of 20 aircraft movements per 15 minutes. Ms Mather also addressed her legacy as chief executive at the airport, challenges of the role, changing travel habits over her tenure, China’s rise and her outlook for the future.

Growing popularity of airline travel has helped boost total ­traffic flying into Sydney to more than 43 million this year — about double the 23 million a year ­coming into the airport when it was privatised in 2002.

But against that backdrop, Ms Mather said, flight restrictions were “artificially constraining the efficient operation of the airport”.

She said there were no safety reasons why the restriction had to be that tight, and no other major airport around the world was ­subject to such strict limits on movements as Sydney.

“Our movement numbers are counted every 15 minutes. International flights coming in are often late. But we have no flexibility to respond if there are delays to due weather or late flights ­coming in.”

It is a particular problem in the morning, Sydney Airport’s peak for domestic arrivals and departures. “People always want to head interstate in the mornings, but if we get any off-schedule movements or a bit of weather, we have no flexibility to respond. It limits our ability to catch up in the afternoons.”

London’s Heathrow, one of the world’s busiest airports, only has to comply with an annual maximum number of arrivals and departures. Ms Mather said ­moving to the situation at Heathrow would be “nirvana”.

Meanwhile, the rise in international passengers has been ­Sydney Airport’s biggest single growth factor in recent years, with international travel numbers growing by 7.5 per cent in the year to October, compared with the ­increase of only 1.5 per cent in ­domestic passenger travel.

While Australia last week celebrated a record $10-plus billion a year in earnings from a more than 1.3 million visitors from China, Ms Mather, a former investment banker with Macquarie, has been one of the driving forces behind the scenes making it happen, pitching for more Chinese airlines to fly to Sydney.

She has made more than 20 trips to China in her six years as chief executive.

“It has been a lot of work going up there and visiting each of the cities, and some of the municipal governments and the airlines to try and build an understanding of why they should fly here,” she said.

For many of the Chinese airlines, Ms Mather said, it was not which city in Australia they should fly to next, but which of the many global cities who are pitching for the Chinese tourist dollar they should choose from.

“You have to be selling them on why their next aircraft should be coming to Sydney rather than New York or Paris. What is the business case for them to come to Sydney as opposed to any other major global city in the world?

“It’s a strategy which is bearing fruit.”

Ms Mather has also worked to make the arrival process easier for Chinese tourists — the single largest group of foreigners using the airport, with Chinese language signage, Mandarin-speaking guides at the airport and a Chinese version of a Google maps guide to the airport on Baidu, China’s ­Google.

With a market capitalisation of $16.5bn, Sydney Airport is now a top 50 ASX listed company, turning over more than $1.4bn a year, generating more than $330 million in net profit.

It’s a far cry from the early 2000s, when Ms Mather led a bidding team from Macquarie Bank to buy Sydney Airport. The Macquarie led consortium paid $5.6bn to the federal government, a figure which stunned rival bidders.

Ms Mather was chief executive of the ASX-listed company set to run the airport, MAP, and then ­became the airport’s chief in 2011, moving from being an arms-length investor to a hands-on leader.

The company now estimates that it generates some $30bn a year in economic activity, the equivalent of 6.4 per cent of the NSW economy.

The airport handles freight worth $14.6bn a year.

And closing her long arc of time driving that activity, Ms ­Mather is stepping down from her role as chief executive for a career as a non-executive director in January.

“I have been working with the airport for more than 15 years,” she said. “I always knew I wanted to move into the non-executive ­director space. But I wanted to leave the business in great shape, with a very orderly handover to a new chief executive.”

Ms Mather will be replaced by Mr Geoff Culbert, the former chief executive of GE Australia.

Meanwhile, she is expected to be name as a trustee of the Sydney Cricket Ground by NSW Premier Gladys Berejiklian this week.

Reflecting on the airport’s trajectory, she said she always knew Sydney Airport “had the potential to be much more significant than what it was” when it was bought by the Macquarie-led consortium.

“At that stage Sydney had come out of the Olympics. A lot of investment had gone into preparing for the Olympics, but it was a very challenging time.

“There had been the collapse of Ansett,” she said. “Sydney and Australia also lost international market share after the Olympics.

“There was a lot of interest by other states and other countries in ramping up their tourism efforts. Governments around the world started to understand the importance of tourism and what they called ‘the visitor economy’ for jobs and economic growth.”

Ms Mather saw her role as working with governments to “reignite a greater focus on ­tourism” into NSW working with Tourism Australia, Destination NSW, the Sydney chambers of commerce and the NSW government.

She argues that countries around the world which have done well out of tourism have had a co-ordinated approach between government and industry. “New Zealand, for example, has a very focused and co-ordinated ­approach for every aspect of tourism,” she said.

“It’s one of the things Australia has become much better at and I have really enjoyed being as part of that.”

Tourism Australia managing director, John O’Sullivan describes Mather’s time overseeing Sydney Airport as “nothing short of transformational”.

“Increased international services, an unprecedented development pipeline plus an increased community presence have all been hallmarks of her time in charge,” he said.

On that front, Ms Mather said larger capacity aircraft has helped drive the dramatic increase in passenger numbers with a much lower increase in flight numbers.

The 85 per cent increase in passenger traffic coming into ­Sydney Airport since 2002 has come on the back of a rise of only 43.5 per cent increase in passenger flight numbers to around 318,000 a year.

“We have seen an aviation step change on so many levels,” Ms Mather said.

“Sydney Airport was the first airport in the world to receive an A380 with a Singapore Airlines flight at the end of 2007,” she said.

“It has been transformative. We now have 111 A380 services a week. We are one of the busiest A380 airports in the world.”

At the other end of the scale, Ms Mather has overseen the big ­increase in low-cost carriers.

“It means you have to keep your facilities flexible so you can accommodate the changes.

“It has involved having three aerobridges per gate and upgrading all our baggage systems so they can cope with the increased volume of bags.”

“We are now turning around an A380 more quickly than we were a 747, as we have made an ­investment in facilities and infrastructure.”

But Ms Mather said one of the challenges of the job of running an airport was that few issues were completely within the control of her company.

Her personal style is to be ­“collaborative and inclusive, which is quite important when you are dealing with such a ­complex array of stakeholders”.

“You are working in an ­environment where there are hundreds of businesses working together to provide a seamless customer experience.

“There is very little of the process that we control ourselves.”

Ms Mather considered for some years whether Sydney Airport should take up its option to build a second airport in the west of the city, but rejected it in May this year.

“We did look at it very closely over a long period,” she said. “We looked at how you could make it an investible proposition for our shareholders.

“It is a very significant build which makes it very challenging. It would be a very long time before you saw your first passenger.

“We worked very closely with government, trying to look at ­different ways we could make it work, but at the end of the day we felt government was best placed to take the very significant green fields risk.”

Despite the major growth under her leadership, Ms Mather says she still sees very significant development potential ahead for the airport despite its proximity to the densely populated Sydney area. She said the airport still had significant pockets of land that had not been developed. But there were no plans to build shopping centres or office parks like ­Canberra Airport.

Meanwhile, parking has become an important source of new revenue for the company.

In the six months to the end of June, Sydney Airport generated $77m in revenue from parking — making up 11 per cent of its total revenue, up 2.2 per cent on the first half of 2016.

But the big growth has come in revenue from retail, which was up by 14.3 per cent to $162m, contributing 23 per cent of total revenue. Aeronautic services generated $364m, or 51 per cent of the total, up by 8 per cent.

Ms Mather’s successor will be the one that really has to consider how to respond to the challenge from Western Sydney Airport, which could still be a decade or so away from opening for business.

“The airlines have foreshadowed that they see it as being suitable for their low-cost operations,” she said.

“I imagine they will serve at least the 10 major domestic airports and some international airports.

“That will move some activity from here, but also create more scope for growth here as well.”

The past few years have seen the construction of more than 50,000 new apartments near Sydney Airport and a big increase in traffic around the area, according to Ms Mather.

And the future for Sydney Airport will see greater connections with the rest of the world.

“We still have the potential for very significant growth,” she said.

“There is particularly strong growth on the international side which is such a driver for the ­economy.”