July school holidays in Australia: Sydney Airport pushes for states to open borders

Sydney Airport is operating at about 2 per cent of its normal passenger volumes. Credit: AAP

Sydney Airport boss Geoff Culbert has urged state premiers to open their borders in time for the July school holidays, saying it offers many tourism operators their only hope of surviving the coronavirus pandemic.

Amid a growing political spat about when states should allow interstate travel, especially into Queensland, Mr Culbert warned the tourism industry was losing $1 billion a week and needed an immediate "shot in the arm".

“If we don't get the tourism industry moving again in the July school holidays then we miss that opportunity and we don’t get another opportunity until the September/October holidays," said Mr Culbert, who is chairing the Business Council of Australia’s tourism and transport taskforce.

"I’m not sure how any business can have the cash flow to survive through to then, so we may see good businesses in the tourism industry go under and we may never see them again."

Sydney Airport used its annual general meeting on Friday to reassure investors it could ride out the pandemic, which saw passenger numbers fall to just 2.5 per cent of its normal volumes in April. Just 92,000 passengers passed through the airport last month compared to 3.6 million in April last year.

Industry intelligence firm CAPA - Centre for Aviation has forecast that Australia's domestic aviation market could recover to 60 per cent of last year's level by December, but Mr Culbert said there was no way to predict how or when the industry will bounce back.

Domestic flying would give airports and airlines the chance to "pressure test" their COVID-19 safety protocols, he said, which in Sydney Airport's case includes billboards, floor signs and public announcements encouraging social distancing, and sanitary stations.

He hoped the safety measures would deliver the confidence needed to open up the proposed "Trans-Tasman bubble" allowing travel between Australia and New Zealand, adding that it could act as a template for Australia to gradually reconnect with other countries.

The airport boss would not be drawn on what kind of airline Virgin Australia could be once it emerges from administration, amid speculation it could be a scaled-back budget operation.

“We all agree that having two domestic airlines competing in Australia would be better than one," he said. "But in any outcome, I don’t believe that any passenger that wants to fly will be left on the ground."

The airport borrowed $850 million in fresh bank debt in April to help it through the COVID-19 shut down, boosting its liquidity to $2.7 billion. Chairman Trevor Gerber said on Friday the business had "more than enough" liquidity to sustain it even if there was no pick up in business for "some time".

RBC Capital Markets analyst James Nevin told clients in a note on Friday that more flying should resume soon which will start to provide earnings to help Sydney Airport stay above its debt covenant levels for the second half of this year.

Mr Nevin estimated domestic and international passenger volumes to hit at 50 per cent and 30 per cent of last year's levels in the second half. However, he cautioned that the forecast "might be on the optimistic side".

All resolutions including the remuneration report passed at Sydney Airport's AGM with "for" votes of 97 per cent or higher.

The company's shares rose 1.9 per cent higher to $5.70. The stock has fallen 33 per cent since the start of the year.