Sydney Economic Impact Report

FINAL REPORT The Economic Impact of Growth at Sydney Airport
Prepared for
Sydney Airport Corporation Limited

1 Link Road Mascot
09th
January 2008
43187196
C:\DOCUME~1\txritch0\LOCALS~1\Temp\notesE1EF34\Final Economic Impact Report January 2008.doc The Economic Impact of Growth at Sydney Airport
THE ECONOMIC IMPACT OF GROWTH AT SYDNEY AIRPORT
Project Manager: Todd Ritchie Principal URS Australia Pty Ltd
Project Director: Don Miles Principal
Level 3, 116 Miller Street North Sydney NSW 2060 Australia Tel: 61 2 8925 5500 Fax: 61 2 8925 5555 Date: Reference: Status: 09th January 2008 43187196 Final
Prepared for Sydney Airport Corporation Limited
Contents
Contents
Executive Summary ............................................................................................ES-1

Section 1 Introduction .............................................................................................. ES-1 Section 2 About Sydney Airport and SACL ............................................................. ES-1 Section 3 Sydney as a World City ........................................................................... ES-1 Section 4 Sydney Airport Direct Economic Impacts ................................................ ES-1 Section 5 Indirect and Total Impacts of Sydney Airport........................................... ES-1 Section 6 Growth at Sydney Airport......................................................................... ES-1 Section 7 Planning Analysis..................................................................................... ES-1
Introduction ................................................................................................... 1-1

1.1 1.2 1.3 1.4 1.5 Introduction .................................................................................................................. 1-1 Methodology and Approach ....................................................................................... 1-1 Brief Workstream Descriptions .................................................................................. 1-1 What is an Economic Impact Study?......................................................................... 1-1 Why do Airports Conduct Economic Impact Studies .............................................. 1-1 1.5.1 1.5.2 Types of Airport Economic Impacts............................................................... 1-1 Economic Impacts Identified in the Study ..................................................... 1-1
About Sydney Airport & SACL..................................................................... 2-1

2.1 2.2 About Sydney Airport & SACL ................................................................................... 2-1 Scale of Facility............................................................................................................ 2-1 2.2.1 2.2.2 2.3 Physical Scale ............................................................................................... 2-1 Throughput Scale .......................................................................................... 2-1
Scope of Activities....................................................................................................... 2-1 2.3.1 2.3.2 2.3.3 2.3.4 2.3.5 2.3.6 About Sydney Airport Corporation Limited (SACL) ....................................... 2-1 Aviation (Aeronautical services) .................................................................... 2-1 Retail.............................................................................................................. 2-1 Commercial Trading ...................................................................................... 2-1 Property & Development ............................................................................... 2-1 Other Organisations ...................................................................................... 2-1
2.4
Complexity of Operations ........................................................................................... 2-1 2.4.1 2.4.2 Passenger Operations................................................................................... 2-1 Freight Operations......................................................................................... 2-1
Sydney As A World City ............................................................................... 3-1
Prepared for Sydney Airport Corporation Limited, 09th January 2008 C:\DOCUME~1\txritch0\LOCALS~1\Temp\notesE1EF34\Final Economic Impact Report January 2008.doc
i
Contents
3.1 3.2 3.3 3.4 Introduction .................................................................................................................. 3-1 What is a World City .................................................................................................... 3-1 The Role of an Airport in a World City....................................................................... 3-1 Benchmarking World Cities ........................................................................................ 3-1 3.4.1 3.4.2 3.5 Comparable World Cities............................................................................... 3-1 More Qualitative Correlation between Airport and Economy ........................ 3-1
The Role of Sydney Airport......................................................................................... 3-1 3.5.1 3.5.2 3.5.3 3.5.4 Passenger Movements.................................................................................. 3-1 Freight Movements........................................................................................ 3-1 Aircraft Movements........................................................................................ 3-1 Air Routes ...................................................................................................... 3-1
3.6 3.7 3.8 3.9 3.10
Aviation and the Economy.......................................................................................... 3-1 Aviation & Airport as a Sub-Set of Transport & Storage ......................................... 3-1 Sydney Airport & International Trade ........................................................................ 3-1 International Visitors, Sydney Airport & the Economy............................................ 3-1 Sydney Airport A Catalyst for Economic Development........................................ 3-1
Sydney Airport Direct Economic Impacts................................................... 4-1

4.1 Introduction .................................................................................................................. 4-1 4.1.1 4.1.2 4.1.3 4.2 Survey Methodology and Data ...................................................................... 4-1 Incremental Approach & Key Drivers ............................................................ 4-1 Additional Industry Data ................................................................................ 4-1
Summary Direct Economic Impacts .......................................................................... 4-1
Indirect & Total Economic Impacts of Sydney Airport .............................. 5-1

5.1 5.2 5.3 5.4 Introduction .................................................................................................................. 5-1 Input Output Approach............................................................................................. 5-1 Airport Industry and the Input Output Model......................................................... 5-1 Application of the Input Output Model ................................................................... 5-1 5.4.1 5.5 Economic Impact Measures .......................................................................... 5-1
Sydney Airport Summary Economic Impact Results............................................ 5-1 5.5.1 5.5.2 5.5.3 5.5.4 NSW Economic Impacts................................................................................ 5-1 Output, Value Added, Household Income & Employment Impacts............... 5-1 The Industry Distribution of Flow-on Impacts ................................................ 5-1 Capital Investment Economic Impacts .......................................................... 5-1
ii
Contents
5.5.5 5.6 5.7 Sydney Economy Economic Impacts ............................................................ 5-1 Sydney Airport Labour Force ..................................................................................... 5-1 Average Wages ............................................................................................................ 5-1
Growth At Sydney Airport ............................................................................ 6-1

6.1 6.2 Introduction .................................................................................................................. 6-1 Growth Predictions for Sydney Airport ..................................................................... 6-1 6.2.1 6.2.2 6.2.3 6.3 Passengers.................................................................................................... 6-1 Freight............................................................................................................ 6-1 Capital Expenditure ....................................................................................... 6-1
Drivers of Growth......................................................................................................... 6-1 6.3.1 6.3.2 6.3.3 6.3.4 Population...................................................................................................... 6-1 Economy, Income and Employment.............................................................. 6-1 Business Investment ..................................................................................... 6-1 Tourism Local and International ................................................................. 6-1
6.4
Airport Growth What does it mean for the Sydney and New South Wales Economy ........................................................................................................... 6-1 6.4.1 6.4.2 6.4.3 6.4.4 GSP Impacts of Airport Growth ..................................................................... 6-1 Employment Impacts of Airport Growth......................................................... 6-1 Capital Expenditure Growth........................................................................... 6-1 Summary of Passenger and Capital Growth ................................................. 6-1
6.5
Sydney Airport in the context of Sydney and New South Wales Growth .............. 6-1
Planning Analysis ......................................................................................... 7-1

7.1.1 7.1.2 7.1.3 7.2 Federal Government...................................................................................... 7-1 New South Wales Government ..................................................................... 7-1 Local Government ......................................................................................... 7-1
Airport Precincts.......................................................................................................... 7-1 7.2.1 7.2.2 7.2.3 7.2.4 What Role do Airports Play in the Economic Life of a City ........................... 7-1 Other Global Examples ................................................................................. 7-1 Sydney Airport Precinct ................................................................................. 7-1 Implications for Economy of Precinct Restriction .......................................... 7-1
7.3
Transportation and Infrastructure.............................................................................. 7-1 7.3.1 7.3.2 Airport Users.................................................................................................. 7-1 Existing Traffic & Infrastructure Base Airport and Airport Precinct ............ 7-1
iii
Contents
7.3.3 7.3.4 7.3.5 Impact of the Airport and Airport Precinct Growth on Traffic and Infrastructure ................................................................................................. 7-1 Comparisons between Airport and Airport Precinct Traffic and Infrastructure Impacts.................................................................................... 7-1 Requirements for Infrastructure..................................................................... 7-1
8 9 10
Conclusions................................................................................................... 8-1 References..................................................................................................... 9-1 Limitations ................................................................................................... 10-1
iv
Tables, Figures & Appendices

Tables, Figures, Plates, Drawings Appendices
Tables
Table 1-1 Table 2-1 Table 2-2 Table 2-3 Table 3-1 Table 3-2 Table 3-3 Table 3-4 Table 3-5 Table 3-6 Table 3-7 Table 3-8 Table 3-9 Table 3-10 Table 3-11 Table 3-12 Table 3-13 Table 3-14 Table 4-1 Table 4-2 Table 4-3 Table 4-4 Table 5-1 Table 5-2 Table 5-3 Table 5-4 Table 5-5 Table 5-6 Table 5-7 Table 5-8 Table 5-9 Table 6-1 Airport Business Activities................................................................................................... 1-1 Comparisons of Land Mass ................................................................................................ 2-1 Comparison of Scale of Sydney Airport Facilities............................................................... 2-1 Comparisons of Daily Activity Flows................................................................................... 2-1 World Cities Airport Statistics.............................................................................................. 3-1 World Cities Populations ('000s)......................................................................................... 3-1 Gross Metropolitan Product ................................................................................................ 3-1 Gross Metropolitan Product per Capita .............................................................................. 3-1 Household Income .............................................................................................................. 3-1 International Merchandise Trade ........................................................................................ 3-1 International Visitors (millions) ............................................................................................ 3-1 Direct International Air Routes 2006................................................................................... 3-1 Direct Australia Domestic Air Routes 2005/06.................................................................... 3-1 Description of Aviation & Airport Related Industry Sub-Categories.................................... 3-1 Aviation & Airport Industries Gross Product & Employment 2005/06................................. 3-1 Air Freight Exports 2005/06 ................................................................................................ 3-1 International Visitors to Australia ........................................................................................ 3-1 Direct International Airlinks 2005/06 ................................................................................... 3-1 Survey Responses By Industry Group................................................................................ 4-1 Key Drivers by Industry Group............................................................................................ 4-1 Additional Data Sources ..................................................................................................... 4-1 Direct Impacts Summary by Category ................................................................................ 4-1 Industry Classification of Defined Activities ........................................................................ 5-1 Sydney Airport Economic Impacts on NSW ....................................................................... 5-1 Sydney Airport Impacts on Employment in NSW ............................................................... 5-1 Total Economic Impact: Sydney Airport Industry & SACL Capital Investments ................. 5-1 Sydney Airport Economic Impacts on Sydney.................................................................... 5-1 Sydney Employment Impacts of Sydney Airport................................................................. 5-1 Sydney Airport Labour Force .............................................................................................. 5-1 Average Weekly Earnings for Sydney Airport..................................................................... 5-1 Average Weekly Earnings for Persons in Selected Industries - 2006 ................................ 5-1 Population Forecasts - Greater Sydney, NSW & Australia (2006/07 to 2015/16) .............. 6-1
v

Table 6-2 Table 6-3 Table 6-4 Table 6-5 Table 6-6 Table 7-1 Table 7-2 Table 7-3 Table 7-4 New South Wales Forecast GSP Growth (2006/07 to 2015/16) ........................................ 6-1 Employment Growth Forecasts - Sydney & NSW (2006/07 to 2015/16)............................ 6-1 Household Disposable Income Forecasts (2006/07 to 2015/16)........................................ 6-1 Forecast Visitor Numbers in NSW ...................................................................................... 6-1 Growth in Economic Impact at Sydney Airport ................................................................... 6-1 Modal Split of Container Handled at Port Botany ............................................................... 7-1 Current Population Accessing Sydney Airport.................................................................... 7-1 Forecast Airport Population Accessing Sydney Airport ...................................................... 7-1 Estimated Ground Transport Split 2023/24 ........................................................................ 7-1
Figures
Figure 1-1 Figure 2-1 Figure 2-2 Figure 3-1 Figure 3-2 Figure 3-3 Figure 3-4 Figure 3-5 Figure 3-6 Figure 3-7 Figure 3-8 Figure 3-9 Figure 3-10 Figure 3-11 Figure 3-12 Figure 3-13 Figure 3-14 Figure 3-15 Figure 3-16 Figure 4-1 Figure 5-1 Figure 5-2 Figure 5-3 Project Workstreams........................................................................................................... 1-1 SACL Revenue By Source 2006/07 ................................................................................... 2-1 SACL Revenue Growth....................................................................................................... 2-1 Study Process Workstream 1 - World City Economic Benchmarking ................................ 3-1 Passengers by Population .................................................................................................. 3-1 Sydney Airport Share of the Total Passenger Market 2006/07 .......................................... 3-1 Sydney Airport Share of International Passenger Market 2006/07 .................................... 3-1 Sydney Airport Share of Domestic Passenger Market 2006/07 ......................................... 3-1 Sydney Airport Share of Regional Passenger Market 2006/07 .......................................... 3-1 Sydney Airport Passenger Numbers 1995/96 to 2005/06 .................................................. 3-1 Sydney Airport Freight Volumes 1995/96 - 2005/06........................................................... 3-1 International Australian Airfreight Market Share 2005/06................................................... 3-1 International Australian Airmail Market Share 2005/06 ...................................................... 3-1 International, Domestic & Regional Australia Aircraft Movements 2006/07 ....................... 3-1 Aircraft Movement Trends 1995/96- 2005/06 ..................................................................... 3-1 Industry Structure of the Australian Economy 2005/06 ...................................................... 3-1 Top 10 Commodities Air Imports into Sydney 2005/06 ...................................................... 3-1 Commodities Air Exports from Sydney 2005/06 ................................................................. 3-1 Market Share of International Tourism 1996/97 2005/06 ................................................ 3-1 Study Process Workstream 2 - Airport Direct Economic Impacts ...................................... 4-1 Study Process - Workstream 3 - Indirect Economic Impact Analysis................................. 5-1 The Structure of Sydney Airport Activities .......................................................................... 5-1 NSW Production Induced Value Added & Employment Effects by Industry Groups.......... 5-1
vi

Figure 5-4 Figure 6-1 Figure 6-2 Figure 6-3 Figure 6-4 Figure 6-5 Figure 6-6 Figure 6-7 Figure 6-8 Figure 6-9 Figure 7-1 Figure 7-2 Figure 7-3 Figure 7-4 Figure 7-5 Figure 7-6 Figure 8-1 Figure 8-2
Error! No table of figures entries found.
NSW Consumption Induced Value Added & Employment Effects by Industry Group ....... 5-1 Study Process Workstream 4 - Airport Growth Strategy and Forecasting ......................... 6-1 Sydney Airport Passenger Forecasts ................................................................................. 6-1 Aircraft Movements Forecast .............................................................................................. 6-1 Forecast Freight Volumes................................................................................................... 6-1 Real Output Growth Forecasts - NSW and Australia (2006/07 to 2016/17)....................... 6-1 Employment Growth Forecasts - NSW & Australia (2006/07 to 2016/17).......................... 6-1 Business Investment Forecasts - NSW (2006/07 to 2016/17)............................................ 6-1 Forecast GSP Outcomes of Growth ................................................................................... 6-1 Forecast Employment Outcomes of Growth....................................................................... 6-1 Study Process Workstream 5 - Planning Analysis.............................................................. 7-1 Airport Precinct Concept ..................................................................................................... 7-1 Types of Businesses Attracted to Airport Precincts............................................................ 7-1 Current Modes of Access.................................................................................................... 7-1 Access by Market Segment - Weekdays ............................................................................ 7-1 Access by Market Segment - Weekend.............................................................................. 7-1 Forecast GSP Outcomes of Growth ................................................................................... 8-1 Forecast Employment Outcomes of Growth....................................................................... 8-1
Appendices
A. B. Sydney Economic Impact Study Invitation Letter & Survey Sector Classification
vii
Executive Summary
Executive Summary
ES 1
Headline Findings/Results
About Sydney Airport: The economic impact of the activities at Sydney Airport includes the generation of: 206,133 full and part-time jobs about 6% of the Sydney labour force 120,162 full-time equivalent jobs
the largest piece of contiguously owned commercial real estate in Sydney handles 46% of Australias international traffic 31 million passengers in 2006/07, with forecast growth of 4.2% per annum till 2023/24
good quality jobs average wages for airport workers is about 18% higher than the NSW average around $30.4 billion in gross output/turnover
serves 43 airlines and connects to 50 international, 23 domestic and 28 regional destinations around 650 separate businesses operating on or in connection with the airport is forecast to invest over $1.2 billion in capital expenditure over the next 5 years
around $16.5 billion in contribution to NSW GSP
around $7.4 billion in contribution to household incomes
The economic impact of Sydney Airport is equivalent to: approximately 2% of the Australian economy 6% of the New South Wales economy
Prepared for Sydney Airport Corporation Limited, 09th January 2008

ES-1
Executive Summary
Section 1 Introduction
Economic impact studies measure the contribution of a major commercial or government activity on a regional, state or national economy. Economic impact is usually measured in terms of four key indicators - output, value added, household incomes and employment and a combination of direct and indirect effects. Airports often conduct economic impact studies because there is no simple way to measure the quantum of economic activity at an airport. This is because the airport operator itself is only a small component of the economic activity at an airport. Servicing the flow of passengers and freight at an airport usually requires the combined effort of hundreds of organisations of varying descriptions (around 650 at Sydney Airport). As a result, measuring the economic impact of an airport requires the gathering of turnover and employment data from these organisations and then modelling that data to determine indirect effects.
Section 2 About Sydney Airport and SACL

Section 2 provides an overview of the scale, scope and complexity of Sydney Airport. To analyse scale, benchmarks are identified for Sydney Airports land mass, its terminal and other building floor space, the number of car parks and the volume of people passing through the facility. Sydney Airport is Australias busiest airport servicing 31 million passengers and 634,000 tonnes of freight in 2006-07. The airport was opened in the 1920s operating continuously since this time. Sydney Airport Corporation Limited (SACL) was established in 1998 as the corporatised entity to run Sydney Airport. In 2002, the airport was privatised for $5.6 billion to a consortium of investors. In terms of scope, the diversity of SACLs business is examined through an analysis of each SACL business units contribution to total revenue, while the size of SACLs overall business is measured relative to other businesses. In terms of complexity, SACL is only one of around 650 operations that undertake business activities in and around the airport. Other organisations include airlines, ground transport operators, airport ground handlers, freight companies and various Government agencies all servicing the flow of passengers and freight through Sydney Airport. In terms of diversity of operations, SACL is an amalgam of aeronautical, retail, property and commercial trading businesses with turnover of $725 million in 2006/07. On any trip through the airport, a passenger or item of freight requires interaction with as many as 30 or 40 individual organisations, even if the trip would appear, on the surface, to be relatively seamless.
Section 3 Sydney as a World City

Part of the scope of this economic impact study was to characterise Sydney as a World City and compare and contrast Sydney with other World Cities. The World City concept and line of thinking comes from the Globalisation and World Cities (GaWC) Study Group and Network. The World City concept refers to various attributes characterising the city as a distinct region playing a pivotal economic, financial, social and cultural role. However, the primary criterion for inclusion in the list of World Cities was the provision of "advanced producer services" such as accountancy, advertising, finance and law by international corporations. Sydney is benchmarked against other cities in the World City network thereby contextualising Sydney in relation to other major cities around the world. By outlining the role of the airport we will show that aviation traffic is as much a function of a World City as it is a driver of a city becoming a World City. URS selected six other cities from the GaWC Inventory of World Cities for benchmarking:

ES-2
Executive Summary
London; New York; Hong Kong; Singapore; San Francisco; Melbourne;
An airport is a critical part of any city but the day to day business that defines a World City requires a modern and efficient airport. In fact, one of the characteristics defining a World City is the existence of a major airport that serves as an established hub for several international airlines. It is a chicken and egg question of whether a city develops as a World City because of it having a first class airport or whether a first class airport develops because the city is a World City. There is clearly an interaction between the economy of a city and the development of its airport. An essential requirement of a World City is to have efficient transport and communications to link it to other cities in the World City network. A city without a first class airport cannot hope to develop as a World City.
Section 4 Sydney Airport Direct Economic Impacts

This section of the report outlines the methodology used in the study to estimate the direct economic impact of Sydney Airport and provides estimates of these direct economic impacts. The data collection process involved a combination of an incremental approach to past studies, survey and company interviews, estimation techniques and the use of industry sources. Measuring direct impacts requires gathering financial and employment data for a variety of businesses whose activities are linked to the airport including airlines, freight companies, retailers, government agencies and other tenants. The operating environment of an airport involves a large number of businesses operating in a variety of different areas in and around the airport, facilitating the movement of passengers and cargo. Given this complex structure, required information such as sales, expenditure, value added, jobs and household income is difficult to obtain through official published sources. Such data is typically sourced through a comprehensive stock-take involving surveys and interview consultations with all airport-related businesses, as well as desk-based research and analysis. Data was collected and estimated by industry groupings to assist in the calculation of impacts and the economic modelling process. The industry groupings include: Scheduled passenger airlines; General aviation operators; Air cargo carriers; Freight handlers; Air services management operators; Government operators; Retailers; Car rentals; Car parking operators; Other commercial providers; Hotels;

ES-3
Executive Summary
Ground passenger transport operators; and Airport service providers.
Data gathering and estimation for each of the above categories involved the following: a survey of major businesses; and the identification of key benchmarks and drivers to update the 2001 base data used in the 2002 study
Economic impacts (both direct and indirect) can be measured using a range of variables. The usual measures calculated in economic impact studies are: Gross output or turnover this is a guide to business operation impacts that business operators can readily relate to. However, it involves double counting of intermediate inputs at each stage of the supply chain and so is not the preferred economic measure. Value added this is a measure that nets out the use of intermediate inputs in the supply chain and approximates the measurement of gross national product (GNP), or as in the case of a State based analysis Gross State Product (GSP), used by the ABS to measure the value of output. Employment this is a socio-economic measure used as an indicator of performance. Employment may be measured in terms of the number of jobs or in terms of jobs adjusted to full-time equivalents. Both measures are used in this analysis. Household income this is a measure of the contribution that these activities make to the income (before tax) of households.
Typically an emphasis is placed on the outcomes of the value added and employment outcomes as being the most useful. The total direct gross output impact is estimated at $14.8 billion, the GSP component (value added) is $8.0 billion, household income $3.3 billion and direct employment impact of 75,580 jobs.
Section 5 Indirect and Total Impacts of Sydney Airport

The next stage of the study involved the measurement of indirect impacts. Indirect economic impacts are those that are not directly associated with operations on the airport, but are the result of flow on activities. Measurement of indirect impacts is typically done via the use of a model of the economy. For the Sydney Airport study an input output model was used to determine the flow on benefits. The results of the study provide sound evidence that Sydney Airport is a major employment generator and wealth creator in the NSW economy. The economic headline results of the study are summarised below:
Employment (NSW)
Direct employment (full-time and part-time jobs) of 75,580, plus indirect employment of 130,553 for a total of 206,133 jobs; 44,389 direct full time equivalent (FTE) jobs, plus 75,774 indirect FTE jobs for a total of 120,162; and average wage levels that are 18% above the NSW average.
Activity Indicators (NSW)

Directly contributing $8.0 billion in NSW Gross State Product (GSP) and after taking into account flow-on impacts contributing a total of $16.5 billion to NSW Gross State Product;

ES-4
Executive Summary
Directly generating $14.8 billion in output and after taking into account flow-on impacts generating $30.4 billion in output; and Directly providing $3.3 billion in household income and after taking into account flow-on impacts providing $7.4 billion of household income.
Section 6 Growth at Sydney Airport

In this section the economic impact of growth, and the drivers of this growth, are analysed. It assesses the future economic impact of airport activities as well as estimating the role Sydney Airport will have on the regional and state economies. This report has analysed these impacts over a 10 year period. The Sydney and NSW economies, as indicated by GSP, are forecast to grow over the next 10 years at an annual average rate of 3.2 per cent. The airport has a role to play in facilitating this growth allowing business and tourism levels to grow. In conjunction with this, Sydney Airport plays an important part in this growth in GSP as shown by the forecast growth in the economic impact of the airport in the preceding section. The future impacts of passenger and capital expenditure growth has been calculated based on forecast passenger growth and capital spending by SACL. The forecast economic impact of Sydney Airport shows a growth in value added or GSP impact from $18.4 billion to $22.3 billion between 2006/07 and 2010/11 and a growth in employment from 230,253 to 279,414 over the same period. Because of limitations in forecast capital expenditure, the combined information can only be provided out to 2010/11.
Section 7 Planning Analysis

In Section 7, the concept of an airport precinct is introduced. Airports around the world have become more than just aviation service suppliers or infrastructure facilities. The trend is for airports to be multimodal and multifunctional with commercial and residential developments on or close to the airport. The development of airport precincts has increased around the world as airports and the businesses locating around the airports grow. There are a number of reasons that airport precincts have begun to develop in importance and why businesses are moving to these areas. These include accessibility to transport networks, in particular air services which can lead to reduced transaction or freight costs; improvements in speed of movements; the development of airport precincts has a flow back effect on airports which can receive greater passenger and freight throughput; connectivity to other business and tourist centres; and access to other businesses who are also located in the airport precinct.
An analysis was undertaken of the traffic and infrastructure requirements of Sydney Airport. The relationship between development and generated traffic was explored and the consequent need for transport infrastructure provision investigated. Growth at Sydney Airport and the surrounding precinct will result in increased requirements for infrastructure. Passenger levels are expected to grow from the 2006/07 level of 31 million to 68 million by 2023/24 and at the same time there will be development within the airport precinct both associated with the airport and not associated with the airport. Development of airport and nonairport facilities will result in increases in employment, residential living and air travel passengers and associated with this will be increases in trip traffic within the airport precinct. This will thereby generate increases in the requirements for new infrastructure. Given the forecasts of economic growth associated with development of Sydney Airport and the airport precinct, it will be necessary for infrastructure development in roads, public transportation and possibly in

ES-5
Executive Summary
the service networks such as electricity, water and sewerage. Without investment there is the possibility or probability of congestion or reductions in service quality which will impact on the ability of the airport precinct to function efficiently. Without sufficient investment in this infrastructure the forecast level of growth for the Sydney Airport precinct will not be achieved and growth in the NSW economy will suffer as a result. In its Ground Transport Plan SACL has provided some suggested infrastructure improvements to the transport network which may assist in meeting possible future capacity constraints. These include: high occupancy vehicle lanes - provision of priority lanes for buses and vehicles with more than 3 passengers on the main roads approaching the airport; realign and augment existing bus services review existing bus services and change routes to meet travel profiles of employees and passenger segments; reposition or reduce kerbside drop offs and pick ups kerbside drop offs and pick ups account for 25 per cent of traffic around the airport. This option may encourage more public transport use and hence reduce congestion around the airport; and flexible ticketing arrangements on Airport Rail link provide cheaper, more flexible ticketing for airport employees to encourage rail use.
This section also assesses the government framework and strategy for the Sydney Airport, including the policy and administrative framework imposed by Councils, State and Federal Governments for the transport industry. The impact of the growth of Sydney Airport on all levels of government can not be considered in isolation. As we have discussed within this report, a growing Sydney Airport contributes significantly to economic and job growth and hence to the governments ability to provide positive economic outcomes for the broader community. Growth at the airport impacts governments in a number of ways: roads; public transport; and security.
A review of the NSW Government Metropolitan Strategy and the implications for Sydney Airport is undertaken as well as review of the Federal Governments Auslink policy as a way of addressing transport infrastructure capacity constraints.

ES-6
Section 1
1 Introduction
Introduction
1.1
Introduction
The last report into the economic impact of Sydney Airport was completed in 2002 using base data from 2001. This report updates the economic impact of the airport, but also adopts a forward looking view of growth in conjunction with the growth of the Sydney and NSW economies. The aims of this report, therefore, are to provide SACL with: a study measuring the impact that the operation of Sydney Airport has and will have on the economy, utilising measures such as output, value added, household income and employment. SACL requires that this study both provides a snapshot of existing impacts but also provides SACL with a flexible model/tool to enable the calculation of impacts to be refreshed at annual intervals (or as required), in between major periodical updates of the study; a study linking Sydney Airports growth with the Sydney region and NSW economic growth. The objective of this analysis will be to highlight that aviation traffic at Sydney Airport is as much a function of Sydneys standing as a global city as it is a contributor to it; a study putting the growth of aviation and non-aviation development at Sydney Airport into the context of growth and development in the surrounding community, including the development of airport precincts; and a study addressing the implications of the airports growth and economic role on Government policy.
1.2
Methodology and Approach
Due to the complex and inter-related nature of the elements of this study, it has been organised into a number of workstreams. When put together, these will provide SACL with an ability to understand the alignment of growth at Sydney Airport with the economic growth of Sydney and NSW. The workstreams have been organised around specific tasks and functional inputs, as set out in Figure 1 below.
Figure 1-1
Project Workstreams

1-1
Section 1
Introduction
The project workstreams will guide the reporting of the Sydney Airport economic impact study. A brief description of each of the workstreams is provided in the next section, however, more detailed descriptions of the methodology and approach used for each of the workstreams is provided within the report.
1.3
Brief Workstream Descriptions
The report takes a workstream approach to the study. A brief description of each of the workstreams is set out below: World City Economic Benchmarking - the purpose of the world cities section of the report is to characterise Sydney as a World City and to outline the role of the Airport and related drivers of growth; Airport Direct Economic Impacts this workstream takes a snapshot measurement of the direct economic impact of the airport and the on-airport business community (aviation and non-aviation related); Indirect Economic Impact Analysis this workstream involves using the direct impacts measured in the direct impacts workstream to determine the indirect or consequential impacts, utilising economic modelling; Airport Growth Strategy and Forecasting this workstream will utilise the direct and indirect impacts measured in the direct and indirect workstreams to generate forecasts of future increases in economic impacts arising from the implementation of the Sydney Airport Master Plan; Planning Analysis - in the planning workstream, the process of comparing the airport to the precinct in which it is located is undertaken. How does growth at Sydney Airport (historical and future) compare to growth in the surrounding regions? What is driving the growth and what will the future growth be within the precinct zone? The analysis also quantifies the impact of development (current and future) at Sydney Airport and in surrounding precincts in terms of population (resident and working) and transport (ie private and public transport).
1.4
What is an Economic Impact Study?
An economic impact study measures the contribution of a major commercial or government activity to a regional, state or national economy. Economic impact is usually measured in terms of contribution to four key economic indicators: output; employment; value added (i.e. GDP); and household incomes.
There are typically two components to an economic impact study a direct component and an indirect or flow-on component. While the direct employment and economic activity impacts of an industry are usually obvious, the flow-on impacts are not so obvious, referring to the multiplier effect of the direct activity. By way of explanation, the jobs of employees in an industry or working on a project is an example of a direct impact, while the jobs created in other industries by those employees spending their wages on various items of consumption is an example of a flow-on impact. Some examples of the types of activity usually subject to an economic impact study include:

1-2
Section 1

Introduction
entire industries for example, the economic impact of the mining industry or the horse racing industry; major sporting and cultural events for example, the economic impact of the Olympic Games, the Formula 1 Grand Prix or a major conference/convention; major projects for example, the construction of a new shopping centre, an industrial or residential development or a new road/seaport/railway line; and major facilities or pieces of infrastructure for example, the economic impact of Sydney Airport or a major sporting stadium.
1.5
Why do Airports Conduct Economic Impact Studies?
Aviation and airports have become deeply embedded into our economic and social fabric. Air travel, for both business and leisure, is growing at an historical average of 1.5 to 2 times the rate of GDP and an increasing proportion of global trade is being undertaken via air transport. As a result, the beneficial impact that airports have on our economy and society has also grown. Although there is little debate about the ability of an airport to generate economic activity and growth, measuring that contribution can be difficult. This is because an airports contribution to economic activity is actually the amalgam of the contribution of hundreds of diverse organisations. At Sydney Airport, for example, around 650 organisations actually carry on commercial or government activity in and around the airport. SACL, the owner of the facility, is but one of those organisations and in relative terms is not the largest in revenue or employment terms. In this sense, an airport is akin to a business park. It is a facility that a wide range of people can and do use to generate economic activity. The difficulty in measuring the economic impact of an airport is in identifying the myriad of organisations that carry on activities at an airport and then calculating, in a standardised way, the activity of those firms. In addition, the nature of the activity occurring at airports and the scale of many modern airports means that they have many external impacts and stakeholders, including commercial organisations, governments, neighbouring communities and the travelling public. It is common practice internationally for airports to conduct an economic impact study to provide quantitative and qualitative evidence on the importance of the airport to the economy. Some examples of situations where airport economic impact studies have been undertaken to aid decision making include: promoting an understanding of the economic role and impact of the airport among key decision makers and stakeholders; allowing an informed view to be taken of the balance between the benefits and costs associated with airport development; making the economic case for investment in off site infrastructure, such as new access roads, railways and rapid transit systems; and influencing planning policy, such as in relation to proposals for housing and commercial development in the area around the airport.
The objective of this study is to measure the economic impact that Sydney Airport and airport associated businesses, often labelled the Sydney Airport Community, has on the economy.

1-3
Section 1
1.5.1
Introduction
Types of Airport Economic Impacts
Although economic impact analysis practices differ around the world, for the purposes of this study, the economic impact of Sydney Airport is defined as that activity associated with servicing the flow of passengers and freight. The study is not intended to measure the economic impact or the value of the flow itself. That is, no attempt has been made to include the economic impact of the expenditure of tourists and visitors to Sydney passing through the airport or the value of goods transported by air. In addition, in measuring the economic impact of Sydney Airport, no attempt has been made to limit the analysis to those activities that take place within the airport boundary. Over the years in which Sydney Airport has been operating, some economic activity has moved over the fence into neighbouring areas. The economic activity generated by the Qantas Flight Catering Centre, for example, although not strictly located on Sydney Airport (it is on the other side of Qantas Drive), has been counted as part of the overall impact of the airport. In broad terms, economic impacts for airports can fall into three categories: Direct impact activity, employment and income that is wholly or largely related to airport operations or usage of the services provided by the airport, either on site or in the surrounding area; Indirect or flow-on impact activity, employment and income generated in the economy of the study area by the spending of incomes generated by the direct impacts; and Catalytic impact - employment and income generated in the economy of the study area by the wider role of the airport in attracting economic activities, such as inward investment and inbound tourism.
Direct Impacts
The direct economic impact of the airport relates to the jobs and incomes which are generated wholly or largely by the operation of an airport and generated either on site or in the surrounding area. Examples of direct activities generally associated with an airport include the following activities:
Table 1-1
Airlines Airport Operations Aircraft Maintenance Air Traffic Control Car Parking Car Rentals
Airport Business Activities

Government Agencies Customs, Immigration & Quarantine Freight Forwarders Fuel Services Ground Handling Hotels In-Flight Catering Passenger Handling Security Retail Outlets
Cargo Terminal Operators Cleaning Couriers Airport Service Providers Ground Transport rail, taxi & buses
Some direct activities, such as aircraft maintenance, air traffic control and ground handling are required to be located on site at the airport. Other direct activities, however, such as car parking, hotels, in flight catering and other airport industry service providers, can be located off-airport, usually in the surrounding area, but are still considered to be directly associated with the airport.

1-4
Section 1
Introduction
Indirect or Flow-on Impacts

Expenditure and economic activity occurring at Sydney Airport result in beneficial flow-on impacts due to purchases made by businesses situated in and around the airport. Ideally, for airport related studies, this is measured through the use of an input output model. An input output model provides the interrelationships of industry sectors of an economy in order to estimate the total impact an operation or industry, such as Sydney Airport has on the economy in terms of output, employment, value added and household incomes. The model allows the calculation of multiplier effects, enabling the calculation of the total economic impact that Sydney Airport has on the economy.
Catalytic Impacts
Airports and other large infrastructure facilities can act as major generators of economic growth and as catalysts for a wide range of economic activities. For example, an airport will influence company location decisions and competitiveness; attract new investment to the economy; retain existing companies and secure their expansion projects; promote exports through airfreight; enhance competitiveness of an economy through the provision of efficient passenger and freight services; and attract businesses, leisure activities and tourism generating income and employment.
1.5.2
Economic Impacts Identified in the Study
This economic impact study identifies and calculates the direct and indirect / flow-on impacts of the activities in and around Sydney Airport and does this in a current and forward looking manner. Direct economic impacts were calculated through the use of survey methodology, estimation techniques based on survey data, SACL databases, various publicly available sources of company information and company interviews. Indirect / flow-on impacts were calculated through the use of an input output model. Estimates of catalytic economic impacts are provided in qualitative terms, due to the lack of robust data. In addition to measuring the economic impact of airport related activities, the study also sought to capture other data relevant to understanding the scale, scope and complexity of operations related to Sydney Airport. In particular, data was gathered on: the value of assets employed in servicing Sydney Airport related activity; the level of capital expenditure expended in recent years by SACL and other airport users; and the skill level and occupation of employees.
Although these measures are not strictly part of an economic impact analysis, they reinforce the importance of Sydney Airport as a generator of economic activity and a positive influencer of growth in the Sydney and NSW economies.

1-5
Section 2
2 About Sydney Airport & SACL
About Sydney Airport & SACL
2.1
Sydney Airport is Australias busiest Airport and serviced 31 million passengers and 634,000 tonnes of freight in 2006-07. The airport was opened in the 1920s operating continuously since that time. SACL was established in 1998 as the corporatised entity to run Sydney Airport. In 2002, the Airport was privatised for $5.6 billion to a consortium of investors. Section 2 provides an overview of the scale, scope and complexity of Sydney Airport. To analyse scale, benchmarks are identified for Sydney Airports land mass, its terminal and other building floor space, the number of car parks and the volume of people passing through the facility. In terms of scope, the diversity of SACLs business is examined through an analysis of each SACL business units contribution to total revenue, while the size of SACLs overall business is measured relative to other businesses. In terms of complexity, SACL is only one of around 650 operations that undertake business activities in and around the airport. Other organisations include airlines, ground transport operators, airport ground handlers, freight companies and various Government agencies all servicing the flow of passengers and freight through Sydney Airport.
2.2
Scale of Facility
There are two primary aspects to understand the scale of Sydney Airport: a physical aspect and a throughput aspect.
2.2.1
Physical Scale
While Sydney Airport is small by comparison with many other airports, in terms of its land footprint, by any other measure of infrastructure asset size, it is an extraordinarily large facility. Sydney Airport is one of the largest contiguously owned pieces of real estate in the Sydney area. At 907 hectares, the site is much larger than other major facilities in the Sydney region (as set out in Table 2.1 below). Sydney Airport is larger than Sydney Olympic Park and larger than the SCG, Moore Park and Centennial Park combined. It is also larger than a number of Sydneys industrial estates and business parks. In addition to sheer land size, Sydney Airport also has a substantial amount of other facilities. Table 2.2 below sets out the amount of tarmac, terminal building floor space and car parking contained within Sydney Airport, as well as comparisons with some of Sydneys largest CBD office towers, Sydney motorways and major Sydney regional shopping centres. Sydney Airport has an estimated 1,687,986 square metres (sqm) of runways, roadway and aprons1 and 75 aircraft parking gates.2 Sydney Airport has more tarmac than the M2, M5 and Eastern Distributor motorways combined.
1 This figure does not include the taxiways area. 2 34 international gates, 31 domestic gates, 5 domestic express gates and 5 airfreight specific gates (3 international and 2 domestic).

2-1
Section 2

Table 2-1
Facility Sydney Airport Sydney Olympic Park Wetherill Park Industrial Estate Huntingwood Industrial Estate Norwest Business Park Centennial Park SCG & Moore Park
and the Moore Park Trust.
Comparisons of Land Mass

Land Size (hectares) 907 641 600 600 377 210 175
Source: SACL, Sydney Olympic Park Authority, Bankstown City Council,
In terms of terminal buildings, Sydney Airport has 361,941 square metres (sqm), comprising the 3 level international terminal (T1), the two level T2 domestic common user terminal and T3, the Qantas domestic terminal. In comparison with Sydney CBD office towers, Sydney Airport passenger terminals are 3.6 times the size of the MLC Centre office tower, and in terms of floorspace larger than the combined office towers of Chifley Tower, Governor Phillip Tower and Grosvenor Place in terms of sqms of space. A number of large car parking facilities provide passenger access to the Sydney Airport terminal buildings. Sydney Airport car parking spaces number 11,000, significantly outnumbering the car parking facilities of Sydneys largest regional shopping centres. In addition, SACL is landlord to an extensive portfolio of commercial and industrial property comprising approximately 945,000 sqm of space, which is available to be let, with the potential to make available another 700,000 sqm for non operational uses. To put this in perspective, this is double the size of four of Sydneys largest office buildings, the MLC Centre, Governor Phillip Tower, Chifley Tower and Grosvenor Place. The property portfolio includes long term lease sites for the domestic terminals, airline offices, lounges and check in counters within the International Terminal. Additional major property leases include the Qantas Jet Base, airfreight, maintenance facilities and long term leases for rail underground stations.
Table 2-2
Comparison of Scale of Sydney Airport Facilities

2-2
Section 2
Facility Paved Surfaces Runways Roadways Aprons

Scale 441,986 sqm 561,000 sqm 685,000 sqm Comparison M2 motorway M4 motorway M5 motorway Eastern Distributor Scale 554,000 sqm 1,122,000 sqm 450,000 sqm 145,000 sqm 100,000 sqm 90,000 sqm 90,000 sqm 55,000 sqm 4,280 spaces 2,850 spaces 4,500 spaces 3,700 spaces 3,300 spaces
Terminal Buildings International (T1) Domestic (T2 & T3) 246,630 sqm 115,311 sqm MLC Centre Chifley Tower Grosvenor Place Governor Philip Tower Car Parking 11,000+ spaces Westfield Parramatta Westfield Chatswood Westfield Miranda Westfield Hornsby Westfield Bondi
Source: SACL, Sydney Olympic Park, Macquarie Infrastructure Group, Westfields and skyscapers.com
2.2.2
Throughput Scale
Sydney Airport is Australias busiest airport in terms of both domestic and international passenger throughput. Sydney Airport accounts for nearly half of all Australias international passengers and a quarter of the domestic passengers. It is also one of the busiest facilities, of any type, in Australia. The substantial throughput scale of Sydney Airport is evident in its key operating statistics for 2006/07, as set out below:3 31 million passengers; 260,344 aircraft movements; and 634,000 tonnes of freight.
In terms of other Australian transport facilities, Sydney Airport is one of the largest. It has, for example, 40 per cent more passengers, 53 per cent more aircraft movements, 38 per cent more freight and 36 per cent more mail freight than the next busiest airport, Melbourne Airport. It is also worthwhile comparing the throughput scale of Sydney Airport with the throughput scale of other transport facilities within Sydney. This allows a broader appreciation of Sydney Airports throughput scale. Comparisons with other transport facilities are set out on Table 2.3 below. These comparisons highlight the fact that by any measure, Sydney Airport is an extremely busy facility. In terms of average daily passenger throughput, Sydney Airport is twice as busy as the busiest ferry terminal and more passengers pass through than Town Hall Railway Station, the busiest train station in Australia.
3 Sydney Airport Annual Report 200

2-3
Section 2

Table 2-3 Comparisons of Daily Activity Flows
Daily Passenger Flow
79,000 70,050 38,356 Source: RailCorp, Sydney Ferries
Facility
Sydney Airport Town Hall Railway Station Circular Quay Ferry Terminal
Daily Vehicle Flow

775 aircraft 2,000 trains 301 ferries
2.3
Scope of Activities
Although Sydney Airport is owned and operated by a company Sydney Airports Corporation Limited there are around 650 individual organisations with substantial activities related to the movement of passengers and freight at the airport.
2.3.1
About Sydney Airport Corporation Limited (SACL)
SACL is a large and diverse organisation with revenue derived from aeronautical, retail, property and commercial trading business units totalling $725 million4 in 2006/07. The revenue contribution of each of SACLs trading business units in 2006/07 is set out in Figure 2.1 below, highlighting the scale and diversity of the activities carried out by SACL followed by a short description of each of these key trading activities.
4 Sydney Airports Corporation Limited Annual Report 2007.

2-4
Section 2

Figure 2-1 SACL Revenue By Source 2006/07
Property and Development 13% Commercial Trading 13% Retail 23%
Other 2% Aeronautical and Aeronautical Security recovery 49%
Source: Sydney Airport Corporation Limited Annual Report 2007.
Since privatisation of SACL, operating revenues have continued to grow as the commercial potential of the airport is realised. The revenues achieved by SACL over the last five years are presented in the figure below.

2-5
Section 2

Figure 2-2 SACL Revenue Growth
Revenue CAGR: 10%
800 700
Privatisation
(Financial Years)
725 659 619
548 600 498 454
500
400 $'m 300
200
100
2002
2003
2004
2005
2006
2007
Since privatisation in the 2002 financial year, SACL revenue has grown from $454 million to $725 million in 2006-07, a CAGR of 10.0%.
2.3.2
Aviation (Aeronautical services)
SACLs aeronautical assets and services facilitate the movement of aircraft, passengers and freight. These assets include the runways, airfield lighting, taxiways and some of the terminals at Sydney Airport. The primary source of income is the fees paid by airlines, individual aircraft owners and ancillary customers to use the aviation assets. These charges represent a significant source of revenue for Sydney Airport and are primarily levied on per aircraft tonnage or per passenger basis. Additional revenue is sourced from aeronautical security recovery fees. This involves fees collected from activities such as passenger screening, baggage screening and other security services and covers the actual costs of providing these mandated security services. Sydney Airport is subjected to various legislated restrictions that affect aviation movements. For example, aircraft movements are limited to a maximum of 80 per hour, and a jet curfew operates between 11:00pm and 6:00 am. In addition, certain protections are provided for regional airlines access to the airport.

2-6
Section 2
This aeronautical revenue represents the highest source of revenue for the airport. In 2006/07 aeronautical revenue (excluding the aeronautical security recovery) was $294 million, which represented 41 per cent of SACLs total revenue.5 The airport is the home base of Qantas, Australias largest airline and a vital destination airport for other international airlines such as Air New Zealand, British Airways, Singapore Airlines, United Airlines, Emirates and Cathay Pacific6 - all of which use Sydney Airports aeronautical assets and services.
2.3.3
Retail
SACL is a major retail landlord in its own right. Retail revenue is primarily earned from concessions to trade given to retail operators in the T1 and T2 terminals. In 2006/07, these concessions generated $169 million in revenue for SACL, which represents approximately 23 per cent of total revenue and is SACLs largest non-aeronautical source of revenue. SACLs retail tenants comprise a range of duty free, foreign exchange, food and beverage and other speciality retail operators. There are currently around 136 retail outlets in Sydney Airports International Terminal. The product offer now available at T2 has more than doubled to 50 retail outlets with total area at T2 expanded by some 2,200 sqms to almost 5,000 sqms. URS Airport Retail Study acknowledged Sydney Airports retail success by ranking it the top performing airport in the Asia Pacific region and second only to London Heathrow on a global basis.7 There are also a small number of retail outlets around the airport, most of which are open to the general public, for which SACL also receives concession income. Sydney Airports retail operations also include advertising revenue within the T1 and T2 terminals and from a range of outdoor sites around the airport.
2.3.4
Commercial Trading
SACLs car parking, car rental and commercial ground transportation services generated approximately $93 million in revenue, accounting for approximately 13 per cent of SACLs total revenue in 2006/07. The car parks provide more than 11,000 spaces for public and staff use. Sydney Airports commercial parking facilities comprise a major multi-storey car park in the domestic terminal precinct, a large car park in the international terminal precinct and a long term car park. In addition, SACL also owns a number of staff car parks around the airport. Other major sources of commercial revenue for SACL include: car rental facilities (rental of desks within terminals, rental of storage and maintenance facilities and rental of car parking facilities within the major commercial car parks); and ground transport operations (service and access fees, bus and other commercial transportation accessing Sydney Airport).
5 6 7
Sydney Airports Corporation Limited Annual Report 2007. Sydney Airport website International Airline listings, 2006. For further details, visit the website: www.URS.com.au/airportretailstudy

2-7
Section 2
2.3.5
Property & Development
SACLs property portfolio has over 140 tenants occupying almost 500 sites across 82 hectares of lettable property, which in 2006-07, generated approximately $93 million in revenue, accounting for 13 per cent of SACLs total revenue. This lettable space includes: long term lease sites for the domestic terminals; space within the international terminal including airline offices, lounges and check in counters; aircraft maintenance facilities including the Qantas Jet Base; hangars, buildings and other operational sites leased to general aviation operators; airfreight facilities; and long term leases for the rail underground station boxes at the Domestic and International Terminals.
2.3.6
Other Organisations
Although SACL is a substantial organisation with diverse operations, it is only one of around 650 other organisations carrying out various forms of activity at Sydney Airport. The types of activities carried out by these other organisations include: airlines there are 44 passenger airlines operating out of Sydney Airport; other aircraft operators there are 25 general aviation operators; Freight there are at least 130 organisations involved in freight activities including transport companies, handlers and forwarders; Airport service providers - there are 205 airport service providers such as fuel providers, maintenance companies, in-flight caterers and security organisations; Retailers there are at least 157 retail operators on-airport (some of which operate multiple outlets); Hotels there are 7 hotels around the airport; Government there are 6 Federal and State Government departments; Car rental and car parking there are as many as 14 such operators; and Ground transport there are at least 54 ground transport providers.
Each of these organisations has a role to play in the movement of passengers and freight through Sydney Airport.
2.4
Complexity of Operations
SACL is essentially the provider and asset manager of infrastructure at Sydney Airport. That infrastructure is then augmented and used by the approximately 650 other organisations carrying out activities related to the movement of passengers and freight through the airport. As a passenger or cargo customer, the service provided by Sydney Airport is seamless. Any trip through the airport by a passenger or an item of freight requires interaction with as many as 30 or 40 individual organisations. For the most part, passengers and freight customers are oblivious to this complexity of operations.

2-8
Section 2
2.4.1
Passenger Operations
Airline passengers require goods and services from a range of people and businesses. Airline passengers need to arrange travel through an airline or associated business and then require transport to the airport. According to the NSW Taxi Association, there are around 90,000 taxi trips a week to Sydney Airport. Other than the use of taxis, passengers will arrive at the airport using buses, trains and private transport, some requiring parking (long and short term) and others returning rental cars before their departure. Passengers are required to check-in at airline counters and are allocated seating. Passengers are then provided with a wide range of retail outlets. For international passengers to cross to airside, they are required to pass through passport control, Australian Customs and various screening and security measures. The Government agencies involved in this process are the Australian Customs Service (ACS) and the Department of Immigration and Citizenship (DIAC). ACSs policy role at the airport is to facilitate trade and assist in the movement of people across the Australian border while protecting the community and maintaining appropriate compliance with Australian laws. The main activities of the Department of Immigration and Citizenship relate to the processing of people moving into and out of Australia through Sydney Airport.8 The Australian Quarantine and Inspection Service (AQIS) is an operating group within the Department of Agriculture, Fisheries and Forestry charged with protecting Australia against exotic pests and diseases while helping the international movement of people and providing export certification for agricultural produce and other commodities. The key activities of AQIS at Sydney Airport are the monitoring of the quarantine status of passengers and goods passing through the airport.9 SACL also provides various security and screening services via SACL and specialised security staff. Also located in and around Sydney Airport are the Australian Federal Police who provide policing services at the airport. Customers who have purchased duty free from non-airside duty free stores have their dockets collected by Australian Duty Free Association (ADFA) officials as they enter the departure points of the airport. Once passengers are cleared to enter airside, they are provided with a wide array of retail, duty free, food and beverage, foreign exchange services and speciality shops for travellers convenience while awaiting departure. In addition, there is a wide range of firms and people involved in the preparation of an aircraft for departure. In-flight catering needs to be prepared and loaded, along with baggage, mail and other cargo. Cleaning, fuelling and maintenance of an aircraft also needs to be undertaken along with the operation of aerobridges enabling passengers to embark. All these services are provided by airline staff, SACL staff and / or specialist airport service providers such as ground handling agents. Departure and arrival of aircraft is controlled by Sydney Airport Traffic Control, which is managed by Airservices Australia. Airservices Australia also manages air traffic within Australian air space. The key services offered by Airservices Australia in regard to air traffic management are airspace management, air traffic control and navigational services and aeronautical information.10 Landing and departure times or slots also need to be allocated to aircraft due to the high demand for the use of Sydney Airport facilities and this is undertaken by Airport Co-ordination Australia (ACA).
8 9
Department of Immigration and Multicultural Affairs Annual Report 2005/06 Department of Agriculture, Fisheries and Forestry, AQIS agency, Internet site 2006 Air Services Australia, Corporate Profile, Internet site 2006
10

2-9
Section 2
2.4.2
Freight Operations
As well as the operations facilitating the movement of passengers through Sydney Airport there are operations facilitating the movement of freight. There are a number of organisations involved in the airfreight business, the key ones being airlines (passenger and cargo and cargo specific), cargo terminal operators, freight forwarders and government agencies. The owner of the goods can be a company or an individual wishing to transport perishable or general freight. The receiver of the goods can also be a company or individual. Many passenger airlines also carry freight in the belly hold of the aircraft. There are also airfreight specific airlines. These airlines allocate and sell space to freight forwarders, who then sell on to exporters and importers. In general, airfreight operators and freight forwarders perform a variety of functions including: arranging transportation to and from the airport, whether that be with their own transport division or other road transport operators to and from the cargo terminal operator; securing airfreight capacity on aircraft; preparing and executing export / import documents; loading / unloading airfreight containers once collected from the airport cargo terminal operator and arranging destination customs and delivery services; and providing cool room facilities for perishables.
When freight is delivered to the airport it is directed to a Cargo Terminal Operator (CTO). Sydney Airport has five CTOs, three located on airport and two off airport. CTOs are primarily responsible for loading/unloading freight, physically allocating freight to cargo containers and aircraft and working with ACS and AQIS to obtain their approval and clearance for goods to be transported. Independent customs brokers or customs clearance divisions within international freight forwarding companies often provide import customs brokerage. Brokers are licensed by the ACS to classify and enter goods on behalf of importers and to assess the amount of duty payable. Companies that are regular importers normally use customs brokers. The ACSs key responsibility is ensuring compliance with local laws prior to export and import. The AQIS are also involved in the process of exporting and importing goods at airports. AQIS provides inspection and documentation services for many types of perishable freight to meet mandatory requirements. Once freight is cleared by customs brokers, ACS and AQIS, it is loaded onto aircraft for departure. There are a range of firms and people involved in the preparation and departure of cargo aircraft. Fuelling and maintenance of aircraft need to be undertaken along with services provided by air traffic control, Airservices Australia and the ACA.

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Section 3
3 Sydney As A World City
Sydney As A World City
3.1
Introduction
Part of the scope of this economic impact study was to characterise Sydney as a World City and compare and contrast Sydney with other World Cities. The purpose of this section of the report is to outline the role of the Airport, highlighting that aviation traffic is as much a function of a World City as it is a driver of a city becoming a World City.
Figure 3-1
Study Process Workstream 1 - World City Economic Benchmarking
3.2
What is a World City
The World City concept comes from the Globalization and World Cities (GaWC) Study Group and Network11. It refers to various attributes characterising the city as a distinct region playing a pivotal economic, financial, social and cultural role. However, the primary criterion for inclusion in the list of World Cities is the provision of "advanced producer services" such as accountancy, advertising, finance and law, by international corporations. World Cities make up a global network which transcends national boundaries and the historical ties in which business is conducted within the network with more emphasis on existing financial institutions. Part of this analysis will include benchmarking Sydney against other cities in the World City network. The aim of this section is to contextualise Sydney Airport in relation to other major cities around the world. By outlining the role of the airport we will show that aviation traffic is as much a function of a World City as it is a driver of a city becoming a World City.
3.3
The Role of an Airport in a World City
An airport is a critical part of any city but the day to day business that defines a World City requires a modern and efficient airport. In fact, one of the characteristics defining a World City is the existence of a major airport that serves as an established hub for several international airlines.
11
http://www.lboro.ac.uk/gawc/rb/rb6.html

3-1
Section 3
The World City concept describes a network of cities with international firms who have offices in many different cities all over the world. Fast efficient air transport is critical to these multi-national firms and without a well run airport, operation as a World City would not be possible. This report will show that Sydney Airport has a significant beneficial impact on the city, the state and the country. But apart from the employment and revenue it adds to the economy, this report will show that Sydney Airport provides one of the most critical services to Sydney in its role as a World City.
3.4
Benchmarking World Cities
The GaWC Study Group compiled an inventory of World Cities. To be a World City the city must have a major international firm or two major domestic firms in at least one of four sectors, accountancy, advertising, banking/finance and law. The number and size of the firms are then assessed and a score between zero and three is assigned, zero (not qualified), one (minor), two (major) and three (prime). The scores from each sector are added up and a mark out of twelve is assigned to each city. A Greek letter is then assigned to each group of cities, Alpha (Prime), Beta (Major) and Gamma (Minor). URS selected seven cities from the GaWC Inventory of World Cities for benchmarking: London (Alpha 12) New York (Alpha 12) Hong Kong (Alpha 10) Singapore (Alpha 10) San Francisco (Beta 9) Melbourne (Gamma 6) Sydney (Beta 9)
These cities were chosen for their geographical location and for their similarities and differences with Sydney.
London
London is the capital of the United Kingdom and, with approximately 7.5 million people (2006) is also the biggest city in the country. London is the financial centre of Europe and all the top international firms, in all sectors, have a presence in the city. London is considered to be both a destination and hub, as people travel to London to specifically visit the city and also use it to transfer to other parts of the U.K and Europe. It has four major airports Heathrow (LHR), Gatwick (LGW), Luton (LTN) and Stansted (STN), which serviced 137 million passengers in 2006.
New York
New York City is the most populous city in the United States, with a population of approximately 8.2 million (2006). New York is the financial centre of North America and all the top international firms, in all sectors, have a presence in the city. New York is considered to be both a destination and hub airport, as people travel to New York to specifically visit the city and also use it to transfer to other parts of North America. It has three major airports John F Kennedy (JFK), LaGuardia (LGA) and Newark (EWR).
Hong Kong
Hong Kong is a part of the Peoples Republic of China but is defined as a Special Administrative Region within China. It has a population 6.9 million (2006). Hong Kong is one of Asias major financial centres, with accounting and banking/finance firms having a major presence in the city. Hong Kong is considered a hub, with people mostly using it as a transit stop. Hong Kong International Airport (HKG) is the citys main airport.

3-2
Section 3
Singapore
Singapore is a city state and the centre of commerce in South East Asia. It has a population of 4.5 million (2006). Singapore has many accounting and banking/finance firms in the city, on top of many other large firms from different sectors. Singapore is considered a hub, with people mostly using it as a transit stop. Changi Airport (SIN) is the main airport.
San Francisco
San Francisco city is the fourteenth most populous city in the United States. However, San Francisco City is often combined with Oakland and Fremont for purposes of population statistics. The metropolitan statistical area thus formed has a population of 4.1 million (2006). San Francisco has many major firms in all sectors but the lower number of international firms means it receives a Beta 9 rating. San Francisco is considered a destination, with people travelling there to specifically see the city. San Francisco International Airport (SFO) is the citys main airport.
Melbourne
Melbourne is Australias second largest city, with a population of 3.7 million. Melbourne is the smallest city of the seven being examined, a limited number of firms in all sectors means it receives a Gamma 6 rating. Melbourne is considered a destination, with people travelling there to specifically see the city. Tullamarine (MEL) is the citys main airport.
Sydney
Sydney is Australias largest city and has a metropolitan statistical area population of 4.3 million. Sydney has many large firms across all sectors but a lower number compared with other World Cities means it receives a Beta 9 rating. Sydney is considered a destination, with people travelling there to specifically see the city. Over half of all international visitors to Australia visit Sydney. Sydney Airport is the citys main airport.
3.4.1
Comparable World Cities
Passenger and freight levels are good indicators of the economic vibrancy of a city. The following data collected from a range of sources illustrates the growth trends in aviation activity of the selected cities since 2001.
Table 3-1
City
London Passengers (M) Freight ('000 tonnes) Movements ('000) New York Passengers (M) Freight ('000 tonnes) Movements ('000) 83.0 2,449.6 1,277.2 81.2 2,501.4 1,256.5 113.8 1,758.5 973.1 117.1 1,776.6 965.6
World Cities Airport Statistics

2003 2004 2005 2006
2001
2002
120.5 1,759.5 978.3
128.9 1,904.2 1,018.0
133.8 1,899.4 1,052.4
137.2 1,821.9 1,079.0
83.7 2,645.7 1,256.0
93.9 2,719.1 1,359.7
99.9 2,608.2 1,387.4
104.2 2,631.2 1,412.2

3-3
Section 3
City
Hong Kong Passengers (M) Freight ('000 tonnes) Movements ('000) Singapore Passengers (M) Freight ('000 tonnes) Movements ('000) San Francisco Passengers (M) Freight ('000 tonnes) Movements ('000) Melbourne Passengers (M) Freight ('000 tonnes) Movements ('000) Sydney Passengers (M) Freight ('000 tonnes) Movements ('000)
Source:

2001 2002 2003 2004 2005 2006
32.0 2,074.3 196.8
33.5 2,478.8 206.7
26.8 2,642.1 187.5
36.3 3,089.9 237.3
39.8 3,402.3 263.5
43.3 3,580.4 280.4
28.1 1,529.9 179.4
29.0 1,660.4 174.8
24.7 1,632.4 154.4
30.4 1,795.7 184.9
32.4 1,854.6 204.0
35.0 1,931.9 214.0
34.6 613.5 311.1
31.5 589.7 285.7
29.3 622.2 315.1
32.3 594.3 333.1
32.8 587.9 331.3
33.5 594.9 359.2
16.9 196.4 174.7
16.0 186.3 147.2
16.4 196.1 146.8
18.6 187.1 154.5
20.3 207.9 170.0
21.0 204.5 169.6
25.8 337.0 283.4
23.2 325.4 227.6
23.4 313.8 225.3
26.1 315.5 239.5
28.0 355.1 253.3
29.0 373.7 254.7
http:// www.caa.co.uk Port Authority of New York and New Jersey (2006), 2006 Air Traffic Report, New York. http://www.cad.gov.hk/english/facts_statstics.html http://www.changiairport.com/changi/en/about_us/fact_sheets/air_traffic_statistics/2006/index.html http://www.transtats.bts.org http:// www.aviationboom.com http://www.aci-na.org/asp/traffic.asp?art=217 http://www.btre.gov.au/Info.aspx?NodeId=96

3-4
Section 3
The above table indicates that London and New York, the only cities in the sample with multiple airports, have more than double the passengers than any of the cities with just one main airport. The figures above on passenger and freight levels are normal, with numbers of both usually increasing each year. But in the data there are some differences caused by external shocks. In both Hong Kong and Singapore passenger numbers in 2003 were significantly lower than in 2002. This reduction can be attributed to the SARS outbreak in the early half of 2003. In 2002 the passenger numbers decreased in New York and San Francisco compared with the year before. This reduction can be attributed to the 2001 September 11 attacks on New York. Sydneys and Melbournes passenger numbers also decreased in 2002. The September 11 attacks and the failure of Ansett Airlines are likely causes of the decrease.
Economic Activity Indicators

Population and economic activity data for the different cities were obtained from the different countries statistical bureaus. Although the economic data collected comprise some of the factors influencing activity at the citys airport, they by no means form the complete picture. Other variables such as air fares and exchange rates are also very important determinants of airport activity. Nevertheless the following section, as well as presenting the economic data collected, also presents some simple analyses comparing and contrasting the influence the variables have on passenger activity at each of the World Cities in the sample.
City Populations Table 3-2

2001
London New York Hong Kong Singapore San Francisco Melbourne Sydney
Source:
World Cities Populations ('000s)

2002
7,371.20 8,107.40 6,744.10 4,176.00 4,162.60 3,513.63 4,167.00
2003
7,387.90 8,130.00 6,730.80 4,186.10 4,154.85 3,555.89 4,198.54
2004
7,428.60 8,164.70 6,783.50 4,238.30 4,146.98 3,593.54 4,225.09
2005
7,517.70 8,213.80 6,813.20 4,341.80 4,152.69 3,636.08 4,255.95
7,322.40 8,075.60 6,714.30 4,138.00 4,176.95 3,472.21 4,128.27
http://www.london.gov.uk/gla/publications/factsandfigures/dmag-briefing2006-35.pdf https://www.esrcsocietytoday.ac.uk/ESRCInfoCentre/facts/UK/index9.aspx?ComponentId=6992&SourcePageId=181 34 http://www.census.gov http://www.censtatd.gov.hk/showtableexcel2.jsp?tableID=001 Singapore Department of Statistics (2006) Singapore 2006 Statistical Highlights, Singapore. ABS (2007) Cat. 3218.0 - Regional Population Growth, Australia. Canberra
Generally cities with higher populations, regardless of other factors like geographical location, will have busier airports with more passengers and freight moving through the airports. The chart below illustrates the relationship between population and passenger number growth for the seven cities.

3-5
Section 3

Figure 3-2 Passengers by Population
160.00
140.00
120.00 Passenger index (2001 = 100)
100.00 London Hong Kong Singapore New York San Francisco Melbourne Sydney
80.00
60.00
40.00
20.00
0.00 99.00
100.00
101.00
102.00
103.00
104.00
105.00
106.00
107.00
108.00
109.00
Population index (2001 = 100)
Source: URS Analysis
Clearly New York and Hong Kong stand out from the other cities showing a much stronger passenger growth per percentage increase in population. A likely cause is the high number of international visitors visiting both New York and Hong Kong. Hong Kong is unique among the world cities in that it has the huge population of China as a source of visitors and consequently airline passengers to draw upon. It is the increasing number of tourists from mainland China that would significantly increase passenger numbers using Hong Kong airport regardless of changes in Hong Kongs population. New York has a much higher proportion of transit passengers (approximately 25 per cent) compared with London (less than 1 per cent), which may explain the difference in the relationship between passengers and population shown in the above chart. Although population is an important determinant of airport traffic growth, it seems that the proportion of transit passengers is also a factor.
Gross Metropolitan Product

Gross Metropolitan Product (GMP) is a measure of the wealth of a city. It is a reasonable assumption that the higher the GMP the more residents will travel by air. All the cities show a statistically significant relationship between GMP and passenger numbers, except for San Francisco which has seen only modest growth in passenger numbers over the six year period. In Australian dollar terms (based on mid 2006 exchange rates) an extra A$1 million was associated with an increase in passenger numbers from 28 for San Francisco to 370 for Hong Kong.

3-6
Section 3

Table 3-3 Gross Metropolitan Product
2004
164,961 902,140 1,291,425 181,540 201,500 217,105 290,746
2001
Source:
2002
150,655 820,900 1,276,757 157,694 186,100 201,010 260,307
2003
159,442 847,100 1,233,983 160,890 190,800 206,283 275,658
2005
170,542 952,160 1,382,675 194,242 213,500 222,221 305,437
2006
177,662 999,768 1,473,925 209,991 224,300 228,198 319,940 Million US$Million HK$Million SG$Million US$Million A$Million A$Million
2006 (A$ M)
438,779 1,345,040 255,309 177,928 301,762 228,198 319,940
140,366 779,855 1,298,813 153,165 176,600 193,241 247,208
http://www.statistics.gov.uk/articles/economic_trends/ET627_Marais.pdf http://www.usmayors.org/metroeconomies/0107/GMPreport.pdf Government of the Hong Kong Special Administrative Region, First Quarter Economic Report 2007, Hong Kong Singapore Department of Statistics (2006) Singapore 2006 Statistical Highlights, Singapore.
Gross Metropolitan Product Per Capita

GMP per capita is also a measure of the wealth of the population of a city. Simple regression analysis resulted in a statistically significant relationship between GMP per capita and passenger numbers for most of the cities analysed. The two exceptions were San Francisco and Melbourne. As mentioned before, San Francisco had only modest growth in passenger numbers during the period analysed so that there is unlikely to be any significant relationship between the economic data collected and passenger numbers. In contrast Melbourne had a growth in passenger numbers typical of the world cities in percentage terms (25 per cent compared with an average of 21 per cent for all cities), but had a low growth in GMP per capita (18 per cent compared with an average of 26 per cent for all cities).
Table 3-4
2001
London New York Hong Kong Singapore San Francisco Melbourne Sydney 19,169 96,569 193,440 37,014 42,280 55,663 59,881
Gross Metropolitan Product per Capita

2003
21,582 104,194 183,334 38,434 45,922 58,021 65,656
2002
20,438 101,253 189,315 37,762 44,708 57,181 62,469
2004
22,204 110,493 190,377 42,833 48,590 60,426 68,801
2005
22,943 115,921 202,941 44,738 51,412 61,147 70,865
2006
23,809 121,354 214,949 46,832 54,184 61,967 73,821 US$ HK$ SG$ US$ A$ A$
2006 (A$)
58,802 163,264 37,233 39,682 72,897 61,967 73,821

3-7
Section 3
Household Income Levels
Household income can be expected to be a superior predictor of air travel than GMP per capita because it more accurately reflects the disposable income available to residents of the city. The analysis here supports that view. The simple linear regressions on household income and passenger numbers were statistically significant for all cities, even San Francisco which did not show up as significant for the earlier economic variables. Hong Kong was the only odd result. The regression resulted in a negative relationship between passenger numbers and household income. During the six year period Hong Kong household income declined, but passenger numbers increased. A possible explanation is that the effect of large numbers of visitors from mainland China overwhelmed any income effects on travel by residents of Hong Kong.
Table 3-5
2001
Source:
Household Income
2004
36,745 140,270 297,821 62,040 94,341 60,425 68,801
2002
34,402 133,962 303,845 60,240 93,978 57,218 62,469
2003
35,924 134,224 300,818 60,360 92,732 58,021 65,584
2005
38,148 141,973 294,854 64,800 94,609 61,147 70,865
2006
40,110 143,803 291,917 67,496 94,901 61,966 72,991 US$ HK$ SG$ US$ A$ A$
2006 (A$)
99,061 193,466 50,565 57,190 127,675 61,966 72,991
33,653 133,396 306,902 63,600 96,726 55,663 59,882
http://www.statistics.gov.uk/articles/nojournal/Regional_Household_Income_article _March_2007.pdf http://www.statistics.gov.uk/StatBase/ssdataset.asp?vlnk=6208&More=Y http:// www.censtatd.gov.hk http://www.singstat.gov.sg/papers/op/op-s12.pdf http://www.singstat.gov.sg/keystats/annual/ghs/r2/chap3.pdf http://www.getforme.com/previous2005/180605_keyfindingshouseholdexpendituresurvey20022003_more.htm
Total International Merchandise Trade

Merchandise trade from a city is measure of industrial activity in a city. The larger the international trade it generates the greater the need for international travel to negotiate and administer trade deals. Therefore larger volumes of trade can be expected to be associated with larger numbers of passengers. World Cities can be expected to experience trends of this type because of their global network connections. However, simple regression analysis did not indicate a strong relationship. Although the relationship was statistically significant for most cities it was not significant for San Francisco and Melbourne. San Francisco was not significant for reasons given before. Melbourne had a low growth in trade volumes (10 per cent compared with an average of 37 per cent for all cities). Hong Kong and Singapore have much larger volumes of trade in financial terms than the other cities. This is principally because both of these cities are transit points for freight as well as air passengers. Singapore and Hong Kong were the ports with the largest throughput of containers in the world in 2005.

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Section 3

Table 3-6 International Merchandise Trade
2003
61,374 87,714 3,548,206 515,894 96,215 63,805 73,457
2001
Source:
2002
65,131 85,578 3,179,936 432,213 95,062 61,254 71,013
2004
62,258 100,914 4,130,237 628,952 102,931 62,512 70,308
2005
69,713 116,347 4,579,643 715,723 117,079 68,508 78,029
2006
78,484 130,938 5,060,831 810,483 125,183 64,653 81,899 M US $ M HK$ M S$ M US $M A$ M A$ M
2006 ($M)
193,835 176,157 876,623 686,734 168,415 64,653 81,899
64,487 86,033 3,049,181 425,718 104,612 59,014 71,173
http://194.223.26.124/HMRC/TableViewer/tableView.aspx http://www.uktradeinfo.com/index.cfm http://www.census.gov/foreign-trade/statistics/state/data/ny.html http://www.census.gov/foreign-trade/Press-Release/current_press_release/exh5.pdf http://www.censtatd.gov.hk http://www.singstat.gov.sg/keystats/mqstats/ess/essa61.pdf http://www.singstat.gov.sg/keystats/annual/yos/trade.pdf http://www.btre.gov.au http://www.airfreightstats.com
International Visitors
For the most part international visitors will travel by air. Therefore it would be unusual if there were no statistically significant relationship between international visitor numbers and total passenger numbers. As expected, the simple linear regression analyses of the relationship for the seven cities were statistically significant. The four alpha cities (London, New York, Hong Kong and Singapore) had much higher growth in tourist numbers than the other cities. The average growth for these cities was 50 per cent compared with just 8 per cent for the remaining three cities. The growth rate of the alpha cities ranged from 30 per cent for Singapore to 84 per cent for Hong Kong. It is an interesting question as to why the alpha cities are so successful in attracting international visitors. Size may have some relevance, certainly London, New York and Hong Kong are the largest of the seven cities, but Singapore has a population similar to San Francisco and Sydney. Location as a major point for transiting passengers may also be relevant. Certainly Hong Kong on the door step to mainland China has a unique advantage in attracting tourists.

3-9
Section 3

Table 3-7
2001 2002
11.6 5.1 16.6 7.6 1.64 1.15 2.50
International Visitors (millions)

2003
11.7 4.8 15.5 6.1 1.64 1.16 2.30
2004
13.4 6.2 21.8 8.3 1.83 1.15 2.50
2005
13.9 6.8 23.4 8.9 1.96 1.26 2.60
2006
15.2 7.3 25.3 9.7 2.03 1.28 2.60
Source:
11.5 5.7 13.7 7.5 1.97 1.12 2.40
http://www.nycvisit.com/content/index.cfm?pagePkey=57 http://tinet.ita.doc.gov/cat/f-2002-45-561.html http://www.tourismtrade.org.uk/MarketIntelligenceResearch/STATS/Regional.asp?Display=Table&ptable=4&area=10 0&table=4&perc= Singapore Department of Statistics (2006) Singapore 2006 Statistical Highlights, Singapore. http://www.sfcvb.org/research/ http://www.sfvisitor.org/memberinfo/html/AboutBureau.html http://www.tra.australia.com/content/documents/IVS/New%20Documents/IVS%20March%202007.pdf
3.4.2
More Qualitative Correlation between Airport and Economy
It is a chicken and egg question of whether a city develops as a World City because of it having a first class airport or whether the airport develops because the city is a World City. Clearly there is interaction between the economy of a city and the development of its airport. An essential requirement of a World City is to have efficient transport and communications to link it to other cities in the World City network. A city without a first class airport cannot hope to develop as a World City. City location appears to be an important factor in the growth of an airport. All the alpha cities have airports which are major hub airports and consequently they have a larger proportion of transit passengers than the other cities in the sample. It is also likely that some tourists will stay at the transit city for a few days because of its convenience on the way to their major destinations. For example, travellers from Australia and New Zealand to Europe often stop over in Singapore for a short stay to break what is otherwise a long journey. Destination airports such as San Francisco, Melbourne and Sydney do not have this advantage. The alpha cities also have much larger volumes of air freight than the other cities. Hong Kong has by the far the largest volume of air freight, reflecting its proximity to southern China. Airports that are transit airports also have part of their growth more or less independent of the economic conditions within the city. On the other hand, the existence of large numbers of transit passengers and air freight requires resources at the airport to handle them. As such these activities contribute to the economic development of the city.

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Section 3
3.5
The Role of Sydney Airport
This section looks at how Sydney Airport fits within the Sydney region. Sydney Airport is the major gateway for international visitors to Australia handling just under half of all international visitors. It is also the primary domestic and regional airport for New South Wales. It is one of the most significant pieces of transport infrastructure within Sydney. In its role as part of a World City, Sydney Airport has connections with over 50 international destinations and 23 domestic and 28 regional destinations which supports Sydneys role as Australias major financial centre. Sydney Airport is predominantly a destination airport. It is probable that many international travellers also visit other Australian cities as well as Sydney, after their initial arrival in the city. For example, the recent Tourism Australia International Visitor Survey (IVS) shows that international business travellers arriving in Australia spend 36 per cent of their nights in Sydney and 21 per cent in Melbourne. Backpackers are more likely to travel widely in Australia, typically visiting New South Wales, Victoria and Queensland. Because of the distances involved many of these will travel by air and so will use Sydney Airport for more than the arrival and departure on the international part of their journey. One of Sydney Airports key roles is to facilitate Sydney as a World City by maintaining the efficiency of the links Sydney has with the network of other cities around the world, particularly other World Cities. The airport also has the more local role of contributing to the economic growth of the Sydney region. This section will highlight the importance of Sydney Airport in the Australian airport and air transport industry and as the international gateway to Australia. The chapter provides information on associated market segments such as passenger movements, freight throughput and international and domestic air routes and their contribution to the dominance of Sydney Airport in the Australian airport and air transport industry network.
3.5.1
Passenger Movements
In terms of overall passenger movements, Sydney Airport is the dominant airport in Australia, with approximately 28 per cent of the overall market, including international, domestic and regional passengers. The passenger market share of each major airport in Australia is set out in Figure 3.3 below. With 31 million passengers in total, Sydneys passenger throughput is 39.9 per cent higher than that of its nearest rival, Melbourne Airport whose passenger level reached 22.2 million in 2006/07. Sydney Airports share of the passenger market however varies by segment as set out in Figures 3.3, 3.4 and 3.5 below.

3-11
Section 3
Figure 3-3

Sydney Airport Share of the Total Passenger Market 2006/07
Adelaide 5.5% Other 12.4%
Brisbane 15.5%
Cairns 3.4% Sydney 27.7 Canberra 2.4% Darwin 1.3% Gold Coast 3.4% Hobart 1.5%
Perth 7.1%
Melbourne 19.8%
Source: Department of Transport and Regional Services - Avstats
Figure 3-4
Sydney Airport Share of International Passenger Market 2006/07

Adelaide 2% Other 0.2%
Brisbane 17.4%
Cairns 3.3% Canberra 0% Darwin 0.6% Sydney 45.5% Gold Coast 0.9% Hobart 0%
Melbourne 20%
Perth 9.9%

3-12
Section 3
Figure 3-5

Sydney Airport Share of Domestic Passenger Market 2006/07
Adelaide 6.6% Other 11.7%
Brisbane 15.8%
Cairns 3.4% Sydney 23.8% Canberra 2.6% Darwin 1.5% Gold Coast 4.5% Hobart 2%
Perth 6.7% Melbourne 21.4%
As shown in Figure 3.4 above, Sydney Airport by far dominates the international passenger market segment, accounting for approximately 46 per cent of the market, with over 2.3 times more passengers than Melbourne Airport and 2.6 times more passengers than Brisbane Airport. As the primary international business and tourism gateway for Australia, Sydney Airport is able to generate significantly more international passengers than other Australian airports. Domestic passenger numbers, on the other hand, are much more reflective of the population in each city and in this respect, the market share of Sydney Airport reflects Sydneys share of the overall population of Australia. Figure 3.5 above provides a breakdown of market share for the domestic passenger market. Consequently, Sydney Airport has around 24 per cent of the domestic passenger market, which is reasonably close to the domestic share of traffic at Melbourne Airport, the next largest with 21%. It is perhaps reflective of current booming economies that Brisbane and Perth have achieved increases in domestic market share since 2001. Figure 3.6 below provides a breakdown of regional passenger market share. Sydney Airport handles approximately 19 per cent of the regional passenger market, which is approximately 3 times the volume of Melbourne Airport.

3-13
Section 3
Figure 3-6

Sydney Airport Share of Regional Passenger Market 2006/07
Adelaide 4.3% Brisbane 9% Cairns 3%
Canberra 6.2% Darwin 0.9% Gold Coast 0% Other 46.7% Hobart 0% Melbourne 6.5%
Perth 4.2%
Sydney 19.2%
Figure 3.7 shows passenger growth over the past 10 years in terms of total, international, domestic and regional passengers. Overall, there has been a positive trend in passenger levels across all categories, with a compound average growth rate of approximately 4.1 per cent. International passengers grew at a compound average growth rate of approximately 4.2 per cent, while regional and domestic passenger growth was 2.3 and 4.3 per cent, respectively. All categories see a dip in patronage in 2001 which is likely due to the Ansett collapse and the terrorist attacks of September 11. The industry has gained ground since this time, but it impacts on the growth outcomes when calculated using a time series methodology.

3-14
Section 3
Figure 3-7
35

Sydney Airport Passenger Numbers 1996/97 to 2006/07
Total CAGR: 4.1%

30
25
Passengers ('m)
Domestic CAGR: 4.3%

20
15
International CAGR: 4.2%

10
Regional CAGR: 2.3%
0 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
International
Domestic
Regional
Total
3.5.2
Freight Movements
In 2006/07, Sydney Airport handled approximately 634,000 tonnes of freight (including mail), of which approximately 60 per cent was international freight. There are currently two domestic freight terminals and three international freight terminals located at Sydney Airport with 150 freight forwarders and integrators located within five kilometres of the Airport. Figure 3.8 below outlines freight volumes over the past 10 years. Over this period there has been a positive trend in freight volumes. Overall the compound average growth rate for freight over the period was approximately 1.8 per cent, or 2.8 per cent for international freight and -0.5 per cent for domestic freight.

3-15
Section 3
Figure 3-8
600

Sydney Airport Freight Volumes 1995/96 - 2005/06
Total Freight CAGR: 1.8%
500
Freight ('tonnes)
400 International CAGR: 2.8%
300
200
Domestic CAGR: 0.5%
100
1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06
International total
Domestic total
Total
Source: SACL, AvStats, BTRE & URS Analysis
Freight and mail is predominantly carried in the belly hold of major passenger aircraft. As Sydney is the dominant passenger destination, Sydney Airport is therefore the major Australian freight hub. Sydney Airport is the busiest airport in Australia for freight and mail and is the largest non-seaport import / export facility in the country. Figures 3.9 and 3.10 below provide a breakdown of the international freight and mail market share for 2005/06 respectively (the 2006-07 data is not presently available). The freight volumes handled at Sydney Airport exceed that of Melbourne Airport and that of Brisbane Airport by 160 and over 400 per cent, respectively. Sydney Airport handles approximately 49 per cent of international airfreight volumes and 61 per cent of international airmail volumes. This market dominance is linked to Sydney being the largest city in Australia and the capital of Australias most populous state, New South Wales. Sydney is also Australias major financial and commerce centre and tourism destination, facilitating the need for travel and trade in and out of Sydney.

3-16
Section 3
Figure 3-9

International Australian Airfreight Market Share 2005/06
Cairns, 2% Perth, 8%
Brisbane, 12%
Adelaide, 2%
Sydney, 49%
Melbourne, 27%
Figure 3-10
International Australian Airmail Market Share 2005/06
Darwin, 1% Perth, 4%
Brisbane, 9% Adelaide, 1%
Melbourne, 24% Sydney, 61%
3.5.3
Aircraft Movements
Sydney Airports importance in terms of passengers and freight, contributes to the fact that it has the largest number of aircraft movements for an Australian scheduled regular passenger airport. In 2006/07, Sydney Airport handled 260334 passenger and freight aircraft movements, approximately 22 per cent of

3-17
Section 3
national aircraft movements in Australia, followed by Melbourne (14 per cent) and Brisbane (12 per cent). When general aviation is included total aircraft movements were 281,534. Sydney Airports share of total aircraft movements is therefore between 1.5 and 1.8 times larger than its nearest rival airport. A breakdown of the proportions of aircraft movements in each Australian airport is provided below in Figure 3.11.
Figure 3-11
International, Domestic & Regional Australia Aircraft Movements 2006/07

Adelaide 6%
Other 28.9%
Brisbane 11.9%
Cairns 3.8% Canberra 3.1% Darwin 1.4% Gold Coast 2.3% Hobart 1.1%
Melbourne 14.4% Sydney 22%
Perth 5.1%
Growth in aircraft movements by international, domestic and regional aircraft movements over the past 10 years is shown in Figure 3.12. There has been a marginally positive growth trend in the total number of aircraft movements over the period. The growth in aircraft movements spiked in 2000/01, possibly due to the additional demand generated from the Sydney 2000 Olympic Games, but then fell rather sharply in 2001/02, with possible causes being the terrorist attacks of September 11 and the Ansett collapse. Since that time, the number of aircraft movements has risen steadily, but have faced the threat of SARS and Avian Flu which have impeded growth at various stages.

3-18
Section 3

Figure 3-12 Aircraft Movement Trends 1996/97- 2006/07
300
Total CAGR: 0.7%

250
200
Movements
150
Domestic CAGR: 2%
100
Regional CAGR: -2.6%
50
International CAGR: 3.1%
0 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
International
Domestic
Regional
Total
Over the period of analysis, international aircraft movements have increased at a CAGR of 3.1 per cent, while domestic and regional movements have increased by 2.0 per cent and decreased 2.6 per cent respectively. Over the last 4 years, the growth rates have been significantly higher than for the period as a whole for international and domestic aircraft movements with growth rates of 5.3 per cent and 5.2 per cent respectively.

3-19
Section 3
3.5.4 Air Routes
Sydney Airport is well positioned to serve both domestic and international travellers with many airlines providing direct air routes to a wide range of destinations. Table 3.8 below provides a breakdown of the top 10 Australian direct international city air routes by passenger. For the leading Sydney services, Auckland is the most popular international city air route, accounting for 5.5 per cent of total international passenger movements, closely followed by Singapore with 4.6 per cent and Hong Kong with 4.0 per cent.
Table 3-8
Airlink
Auckland - Sydney Singapore - Sydney Hong Kong - Sydney
Direct International Air Routes 2006

Passengers (000s)
1,191 977 869 831 818 764 697 661 636 552 7,996 13,484 21,480
% of Total
5.5% 4.6% 4.0% 3.9% 3.8% 3.6% 3.2% 3.1% 3.0% 2.6% 37.2% 62.8% 100.0%
Singapore - Melbourne Singapore - Perth Auckland - Brisbane Singapore - Brisbane Auckland - Melbourne Los Angeles - Sydney Bangkok - Sydney Top 10 City Pairs Other City Pairs ALL CITY PAIRS
Sydney Airport services 53 per cent of the passenger volume to the top 10 city links. This is almost three times the level serviced by Melbourne Airport, which services approximately 19 per cent of the top 10 city link passenger volumes. An increase in the number and affordability of services to Auckland from other Australian capital cities has meant the representation of Sydney in the top 10 international routes has diminished. Sydney is still dominant on the mid to long haul routes. In terms of domestic links, Sydney Airport is well connected on interstate and regional destinations. Table 3.9 outlines the number of passengers flying to interstate destinations for 2005/06 on domestic airlines.

3-20
Section 3
Table 3-9

Direct Australia Domestic Air Routes 2005/06
Air Route
Melbourne-Sydney Brisbane-Sydney Brisbane-Melbourne Gold Coast-Sydney Adelaide-Melbourne Melbourne-Perth Adelaide-Sydney Perth-Sydney Melbourne-Gold Coast Brisbane-Cairns Other Total Domestic Network
Passengers (000s)
6,408 3,823 2,544 1,910 1,851 1,455 1,424 1,258 1,237 1,113 21,186 44,208
Percentage Total
14% 9% 6% 4% 4% 3% 3% 3% 3% 3% 48% 100%
The Sydney to Melbourne route is the busiest in Australia, accounting for approximately 14 per cent of domestic passenger numbers in Australia and the fourth busiest in the world according to Tourism Futures International. The Sydney to Brisbane route accounts for approximately 9 per cent of domestic passengers in Australia. The key importance of Sydney Airport is again emphasised through the two main city routes in Australia involving Sydney Airport. The overall strength of Sydney Airport is driven by it being located in Australias largest city and most populous state. Sydney and NSW provide Sydney Airport with a strong international, domestic and regional passenger base, as well as the associated mail and freight. Over time, this has led to a consistent level of growth and market dominance in all facets of the international, domestic and regional markets.
3.6
Aviation and the Economy
As the airport interacts with a city, it also interacts with the economy. Analysis undertaken here provides an understanding of how the core sectors of the aviation and airport industries contribute to the Australian economy. The core industry sectors are identified and their contribution to the national economy over time is analysed. In addition, the role of Sydney Airport in the facilitation of international trade and tourism is outlined, as well as the role an international airport such as Sydney Airport can play in attracting investment, acting as a catalyst for economic development. According to the Australian Bureau of Statistics (ABS), Australias Gross Domestic Product (GDP) was A$931 billion in 2005/06.12 The ABS produces a breakdown of GDP figures by industry sector that allows some assessment to be made of the contribution of the aviation and airports industries. The industry breakdown of GDP is set out in Figure 3.13 below.
12
2005/06 prices.

3-21
Section 3
Figure 3-13
14% 12% Percentage Share of GDP (%) 10% 8% 6% 4% 2% 0%
Business Services Manufacturing Dwellings Finance

Industry Structure of the Australian Economy 2005/06
Australia is increasingly becoming a service driven economy. This is represented in the GDP industry figures which show that Business Services provide 11.5 per cent of national GDP. Manufacturing is the second largest industry representing approximately 10.4 per cent of GDP, followed by Dwellings at 7.9 per cent and Financial Services at 7.0 per cent of GDP. The aviation and airport industries are generally included in the broader Transport and Storage industry sector that includes air, water, road, rail and associated services. As a whole, the Transport and Storage sector accounts for 4.5 per cent of GDP in 2005/06.
Construction
Source: ABS Cat. No.5204.0 National Accounts
Mining
Health
Retail Trade
Wholesale Trade
Transport
Education
Government
Agriculture
Communications
Utilities
Accommodation
Personal Services
Recreation Services
3.7

Aviation & Airport as a Sub-Set of Transport & Storage

services to air transport; scheduled international air transport; scheduled domestic air transport; and non-scheduled air and space transport.
There are four sub-categories that specifically refer to the aviation and airport industries as set out below.
A brief description of each sub-category is set out below in Table 3.10. These sub-categories provide some way of measuring the contribution of the aviation and airport industries to GDP. Unfortunately, these figures do not correlate with the data gathered in this study for the direct GDP contribution of the activity at Sydney Airport (see Sections 4 and 5), largely for definitional reasons. Much of the activity at Sydney Airport for example, is not strictly aviation (as defined by the ABS) but includes activities such as retail, freight handling and ground transport. As a result, the GDP figures show a smaller contribution than the data gathered for this study, although this is for valid, explainable reasons. Nevertheless, the ABS GDP data does provide some form of measure which is comparable to the other industries defined in the ANZSIC classifications and importantly, provides us with a time series in order to be able to analyse changes in the contribution of the aviation and airport industries to GDP over time.

3-22
Section 3
Table 3-10

Description of Aviation & Airport Related Industry Sub-Categories
Description Includes organisations primarily involved in the provision of airport and space port facilities, aerospace navigation and other services to air transport. Major Australian organisations included in this category are Airservices Australia, the Civil Aviation Safety Authority of Australia (CASA) and airport operators such as SACL. Includes businesses involved in operating aircraft on scheduled routes for the transportation of passengers and freight between Australian and foreign ports. Includes businesses involved in operating aircraft on scheduled routes for the transportation of passengers and freight domestically. Includes businesses involved in operating aircraft on other than scheduled routes for the transportation of passengers and freight. It also includes flying schools.
Source: IBIS
Industry Sub-Category Services to Air Transport
Scheduled to International Air Transport Scheduled to Domestic Air Transport Non Scheduled Air and Space Transport
Table 3.11 below outlines the direct gross product and employment generated by each of the core aviation and airport industry sectors as at 2005/2006. The airport and aviation industry core sectors directly contributed around $8.6 billion towards gross product and 63,425 direct jobs to the Australian economy.
Table 3-11
Aviation & Airport Industries Gross Product & Employment 2005/06

Industry SubCategory Gross Product AUD $m 2,980 3,911 1,211 466 8,568 Percentage of GDP 0.32 0.42 0.13 0.05 0.92 Percentage of Total Jobs 0.21 0.20 0.14 0.04 0.60
Jobs
Scheduled Domestic Air Transport Scheduled International Air Transport Services to Air Transport Non-Scheduled Air and Space Transport Total
22,341 21,767 15,067 4,250 63,425
Source: IBIS & URS analysis
Of all the core aviation sectors, scheduled air transport is the most significant contributor to the economy. The domestic air transport sector employs slightly more people than the international air transport sector, while gross product for international air transport is slightly higher than for domestic air transport. Services to air transport contributes significantly less than the scheduled air transport sectors, although it plays a crucial role in operating airports and assisting airline carriers with flight paths and airspace. Employment for this sector was 15,067 for 2005/06, while gross product was $1,211 million.

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Section 3
Non-scheduled air transport is the smallest sector. This sector is characterised by single aircraft operators and flying enthusiasts. Although aviation and airport industries only account for approximately 0.92 per cent of GDP, their importance to the economy has increased over time.
3.8
Sydney Airport & International Trade
Sydney Airport is Australias airport hub in terms of air exports and imports. In 2005/06, around 550,000 tonnes of freight passed through the airports freight terminals via airfreight only carriers and in the under belly of passenger aircraft. Around 90 per cent of airfreight is transported in the under belly of passenger aircraft.13 In terms of imports in 2005/06, approximately $28 billion worth of imports were transported by air to Australia via Sydney Airport. This represents around 46% per cent of all goods imported by air. According to data from Business NSW, the value of exports passing through Sydney Airport is $10.2 billion for 2005/06, which is 38% of all Australian export air freight by weight and 36% by value.
Table 3-12
Exports (tonnes)
101,993 84,454 37,642 30,364 8,586 7,591 270,631
Air Freight Exports 2005/06

% of Australian exports
37.7 31.2 13.9 11.2 3.2 2.8 100
Source: Business NSW
Airport
Sydney Melbourne Brisbane Perth Adelaide Other Australia
Exports (A$ million)

10,182.60 4,886.00 1,139.60 11,259.80 453.4 435 28,356.40
% of Australia
35.9 17.2 4 39.7 1.6 1.5 100
The top ten air imports are shown in Figure 3.14 below. The top ten imported commodities by value consist of high value equipment, including computer equipment, telecommunications, pharmaceutical and scientific equipment.
13
NSW Airfreight Council

3-24
Section 3
Figure 3-14
6,000

Top 10 Commodities Air Imports into Sydney 2005/06
5,000
4,000
$'millions
3,000
2,000
1,000
ADP (computer) equipt Telecommunic & sound recording eq Confidential Medicinal & pharmaceutical products Electrical mach, apparatus & appl nes Misc manuf articles Other Misc articles nes Professional, scientific, instruments nes Aircraft, incl parts & spares Organic Chemicals Photographic equipment, optical, watches, nes
Source: ABS, International Cargo Statistics, unpublished
The top ten air exports are shown in Figure 3.15 below. The top ten exported products by value consist of high value equipment, including computer equipment, telecommunications, pharmaceutical and scientific equipment.

3-25
Section 3
Figure 3-15
4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0

Commodities Air Exports from Sydney 2005/06
$'millions
Professional, scientific, instruments nes
Electrical mach, apparatus & appl nes
Telecommunic & sound recording eq
Photographic equip, optical, watches nes
Misc Articles
Non-metallic mineral products nes
Aircraft incl. Parts & spares
Confidential
Medicinal & pharmaceutical products
Source: ABS International Cargo Statistics, unpublished
ADP (computer) equipt
3.9
International Visitors, Sydney Airport & the Economy
In 2005/06, Tourism Australia estimated that 5.2 million international visitors came to Australia. By 2015/16 international visitor numbers to Australia are expected to rise to around 8.7 million. Major growth markets include China, South Korea and India as outlined in Table 3.13 below. Information sourced from tourism organisations indicate that tourism, particularly international tourism, provides significant benefits to the Australian economy.

3-26
Section 3

Table 3-13
Origin
International Visitors to Australia

2005/06 (Million)
1.1 0.7 0.7 0.5 0.3 0.2 0.3 0.2 0.2 0.2 1.0 5.2
2001/02 (million)
0.8 0.6 0.7 0.4 0.2 0.2 0.3 0.1 0.1 0.2 1.2 4.8
2015/16 (million)
1.3 0.9 0.7 0.8 1.0 0.4 0.3 0.2 0.2 0.2 2.6 8.7
Growth rate (Per cent)

3.5% 3.5% 1.8% 7.0% 13.1% 6.2% 3.8% 4.2% 5.0% 5.9% 8.3% 6.0%
New Zealand United Kingdom Japan USA China Korea Singapore Germany Hong Kong Malaysia Rest of the World All Markets
Source: Tourism Australia, Forecast 2007
As we have already noted when talking about the share of international passengers by Australian capital cities, Sydney is the international gateway to Australia and Sydney Airport plays a critical role in facilitating the transportation of international visitors to NSW, Sydney and other locations in Australia. Sydney Airport accounts for just under 50 per cent of all arrivals and departures of international travellers.14 NSW plays a dominant role in the international tourism and visitor market. Over the last decade NSW has been the favoured destination of international visitors. In 2005/06, NSW had approximately 40 per cent market share of international tourism in Australia, approximately 1.3 times higher than Queensland, 2.3 times higher than Victoria and 2.7 times the remaining states and territories combined. The dominance of NSW as a destination for international tourism has remained relatively constant over the last 10 years, as is illustrated in Figure 3.16 below.
14
Tourism Australia.

3-27
Section 3
Figure 3-16
6,000

Market Share of International Tourism 1996/97 2005/06
5,000
4,000
Visitors ('000s)
3,000
2,000
1,000
0 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06
New South Wales
Victoria
Queensland
Other States and Territories
Australia
Source: ABS Tourism Data
International visitor spending has a significant impact on both the Australian and NSW economies. The Tourism Satellite Account 2005/06 estimated that tourism spending in the Australian economy was worth $80.7 billion, up from $71.2 billion in 2001/02. Of this, international tourism accounted for 26 per cent or $20.5 billion worth of goods and services consumed. In 2005/06, tourism was responsible for the employment of 464,500 persons. The tourism share of total employed persons remains fairly constant at 5 per cent in each year. As has been presented, NSW has a large market share of international visitors and these visitors have a significant and beneficial impact on the States economy. Estimates provided by NSW Tourism indicate that tourism consumption for 2003/04 was estimated to be $23.3 billion or around 33 per cent of Australias total tourism expenditure. NSW Tourism also estimate that there are 185,000 jobs associated with NSW tourism or 6% of the total NSW workforce. Analysis undertaken on the indirect benefits of tourism in NSW gives a total estimate of the number of tourism jobs within the NSW economy of 246,000 or 8.1% of the workforce.

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Section 3
3.10
Sydney Airport A Catalyst for Economic Development
Major international airports such as Sydney Airport contribute to the economy by providing catalytic economic benefits that is, contributing to the attraction of investment, international travellers and promoting exports through airfreight. For an airport to contribute catalytic economic benefits to a regions economy, it must have sufficient demand for air travel, a good geographic location and well developed infrastructure to handle passengers and freight. Such airports are usually characterised by offering a large number of direct services that give travellers flexibility in the timing of their trips and often the ability to avoid the costs of overnight accommodation.15 Given that these characteristics apply to Sydney Airport, it can be described as providing catalytic benefits to the Sydney and NSW regional economies. Sydney Airport has over 500 scheduled international passenger services per week with over half of these services destined for Asia. Sydney Airport is serviced by more international airlines than other Australian airports, ensuring flexibility and choice when travelling as outlined in Table 3.14. Sydney Airport is well supported by infrastructure in terms of roads, rail and other facilities to service the flow of passengers and freight.
Table 3-14
Direct International Airlinks 2005/06

Average Number of Airlines 38 22 20 12 7 6 6 4
Source: AvStats
City
Sydney Brisbane Melbourne Perth Cairns Adelaide Darwin Gold Coast/Coolangatta
Total Departures Per Week 519 217 220 99 61 23 21 20
15
Source: Airports as Engines for Economic Development and The Benefits of Being a Hub Airport City

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Section 3

There are many advantages of such a large critical mass of international air services including: airlines and airports gain economic benefits in terms of scope and scale in their operations; the local economy benefits from increased activity and employment opportunities via visitors spending money locally; and the local economy can benefit by attracting new businesses for whom efficient, convenient and cost effective air travel is a key location determinant.
Airports such as Sydney Airport also contribute to the quality of life of the citys citizens by providing benefits in terms of choice of flights, frequency of service, flexibility in rescheduling and generally lowering the cost of travel in terms of time and less likelihood of overnight accommodation being required. The provision of extensive international air links has helped Sydney achieve the status of the business and finance capital of Australia, assisting it in attracting business and trade. Extensive and frequent services are important in attracting conventions and trade shows and assist in the location of corporate and regional headquarters, service companies, research and development facilities and manufacturing facilities. This type of business attraction is reflected in Sydneys experience in attracting major events and investment. Sydney has built up a strong international conferences and exhibition industry. Sydney is also the Australian leader in attracting regional headquarters and service industry businesses such as finance, health industries, information technology and legal services. The latest figures from the NSW Department of State and Regional Development reveal that NSW (predominantly Sydney) is the location for: 65 per cent of Australian Asia Pacific Regional Headquarters; 81 per cent of Asia Pacific finance and insurance regional operations in Australia; 80 per cent of bank head offices; 44 per cent of the specialist information and communications technology companies in Australia; 40 per cent of Australias Biotechnology companies; and 46 per cent Australian and New Zealands top 500 companies (according to revenue) head offices.
Some examples of businesses that have recently located to Sydney are set out below. While these businesses did not locate to Sydney solely because of Sydney Airport, the extent and frequency of services out of Sydney Airport and the connections it offers to the rest of the world were likely important considerations: American Express; Air France; Accor; Allianz; Oracle; Vodafone; Alstom; DuPont; Electrolux;

3-30
Section 3
Fuji; Xerox; Nestle; and Siemens.
Sydney is home to 43 of Australias largest companies in terms of revenue such as Woolworths, Commonwealth Bank, Westpac, AMP, Lend Lease and QBE. A properly functioning airport is one of a number of conditions that need to be met for a city to attract business opportunities and to become a World City. The requirements include: Market size; Industry leadership; Skilled multilingual workforce; Cost competitiveness; Telecommunication frameworks; Time zone advantages; Low risk business environment; and Excellent quality of life.
Sydney Airport contributes to many of these requirements.

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Section 4
4 Sydney Airport Direct Economic Impacts
Sydney Airport Direct Economic Impacts
4.1
Introduction
This section of the report outlines the methodology used in the study to estimate the direct economic impact of Sydney Airport. The data collection process involved a combination of an incremental approach to past studies data, survey and company interviews, estimation techniques and the use of industry sources.
Figure 4-1
Study Process Workstream 2 - Airport Direct Economic Impacts
The first step in any airport economic impact analysis is to measure the direct impact of the airport. The prevailing convention (as recommended by Airports Council International) is that such studies measure the impact of servicing the flow of passengers and freight through Sydney Airport (together with ancillary activities) but not the impact of the flow itself (ie not the impact of visitor spending by tourists in Sydney, for example). This convention is consistent with the view that the level of traffic at an airport is more of an outcome, rather than a contributor to the standing of a city. The URS methodology used in this study conforms to this convention. Measuring direct economic impacts requires gathering financial and employment data for a variety of businesses whose activities are linked to the airport including airlines, freight companies, retailers, government agencies and other tenants. The operating environment of an airport involves a large number of businesses operating in a variety of different areas in and around the airport, facilitating the movement of passengers and cargo. Given this complex structure, required information such as sales, expenditure, value added, jobs and household income is difficult to obtain through official published sources. Such data is typically sourced through a comprehensive stock-take involving surveys and interview consultations with all airport-related businesses, as well as desk-based research and analysis. Given that a comprehensive survey of 650 companies was conducted relatively recently under the previous economic impact study of Sydney Airport (for financial year 2000/01), SACL and URS have adopted an incremental approach which involves leveraging off the 2001 data and updating it with fresh data gathering from major businesses in and around the airport and from firms that are known to be new to the airport or to have expanded considerably.

4-1
Section 4
Data was collected and estimated by industry groupings to assist in the calculation of impacts and the economic modelling process. The industry groupings include: Scheduled passenger airlines; General aviation operators; Air cargo carriers; Freight handlers; Air services management operators; Government operators; Retailers; Car rentals; Car parking operators; Other commercial providers; Hotels; Ground passenger transport operators; and Airport service providers.
Data gathering and estimation for each of the above categories involved the following: a survey of major businesses; the identification of key benchmarks and drivers to update the 2001 base.
4.1.1
Survey Methodology and Data
The first step of the study methodology involved gathering information from key organisations located in and around the airport. Selected businesses for each of the industry groups were invited to participate in the study and to complete a survey. The selection of key businesses and the identification of contacts within these organisations involved the use of published individual companies information, industry data, previous Sydney Airport economic impact data, data and contacts held by URS, desk-based research and information from SACL. In particular, SACL assisted in ensuring that for each of the industry groups the list included all major businesses in and around the airport and firms that are known to be new to the airport or to have expanded considerably. The objective of the survey was to obtain key economic data so that the direct impacts could be calculated and applied to an economic input output model. The key requested information included: revenue data; expenditure data; staff costs; and full time employees.
In addition, the survey requested businesses to provide current and future capital investment estimates, the current value of assets, employee occupation by ABS category and current and expected size of premises. The survey collected information for the year 2005/06.

4-2
Section 4
In November 2006, the survey was emailed to a list of 164 key organisations and was accompanied by a letter of invitation from SACL's Chief Executive Officer as well as a project fact sheet detailing the objectives of the study. A copy of the invitation letter, notes to the survey and the actual questionnaire have been attached in the Appendix. Six weeks after the survey had been sent out a follow up procedure was undertaken. A web-page was designed for businesses to access the questionnaire on-line and all key organisations were invited a second time to participate in the study with the possibility of completing the survey on-line. The follow up procedure also involved phone calls and interviews. Organisations that did not respond to the questionnaire were contacted by telephone and e-mail to determine if there were any issues or problems in completing the survey and to obtain information on incomplete questionnaires. Follow up phone interviews also focused on gathering information from key businesses on major change in the business structure and activities that would have occurred in the past five years including data on number of employees. Some individuals, who had received the survey, sent it to their head office or to another staff member for completion and required longer to complete and return the survey. Some businesses declined to participate in the survey and others would only provide full time employee numbers given the data requested involved confidential financial information. The table below provides for each of the industry groups a breakdown of the data gathering procedure and responses from invited businesses:
Table 4-1
Industry Group
Airlines General Aviation Operators Cargo Airlines Freight Handling Air Services Management Government Operations Retailers Car Rentals Car Parking Other Commercial Hotels Ground Pax Transport Airport Services Providers Total Percentage
Survey Responses By Industry Group

Invited Companies
45 8 3 15 4 6 22 6 6 2 7 3 37 164 100% 8 23 14% 1 1 1 1 18 11% 3 1 4 2 2 2 4 2 2
Completed Surveys
3
Follow-up Partial data

2 2
Total Participating
5 2 1 6 2 2 5 4 2 1 1 1 9 41 25%
Source: URS analysis
Data were provided by 25% of invited businesses: 14% completed the survey and 11% provided partial information during the follow up procedure such as employee numbers and office space size. Although the response rate may appear low, it is consistent with response rates for Sydney Airports previous study, where 169 of the 629 invited companies (24%) participated in the study.

4-3
Section 4
4.1.2
Incremental Approach & Key Drivers
In addition to the data directly gathered from key businesses, the incremental approach involved the use of the previous economic impact report and survey results as a base for data estimation and the identification of key drivers to update the direct impact estimates. The 2001 direct impacts were calculated from an extensive survey of 629 organisations and industry estimates. This provides a database to be updated through the use of key drivers for each industry group in order to estimate the 2006 direct impacts. These key drivers were identified from various sources including data directly gathered from businesses, industry studies, SACL information and annual reports, businesses annual reports and industry associations. The choice of drivers was also guided by the identification of major changes within the airport industry and key stakeholders between 2001 and 2006. Some of the major changes identified between the current study and the previous economic impact study include: Airline Industry: the collapse of Ansett Australia in 2001, the establishment and growth of Virgin Blue (2000) and Jetstar (2004) within the low cost carrier market; Freight: consolidation within the freight industry with DHL acquiring forwarders Danzas and Excell Toll acquired Patrick, Mayne Express, TNT; Airport Ownership and Operation: the privatisation of SACL in June 2002; Government Operations: increased focus on security and border control; Car parking: significant increase in number of car spaces; Hotels: establishment of F1 within the airport precinct; and Ground Passenger Transport: introduction of the Airport Rail Link 2000.
The key industry drivers used to supplement the survey data are shown in the table below.
Table 4-2
Industry Group
Airlines
Key Drivers by Industry Group

Key Drivers
Numbers of passengers transported by Australian airlines to and from Sydney Numbers of passengers transported by foreign airlines to and from Sydney
General Aviation Operators Freight Activities (including cargo airlines, belly freight and freight handling) Air Services Management Government Operations Retailers Car Rentals Car Parking Other Commercial Hotels
Number of general aviation movements to and from Sydney airport Number of tonnes of freight transported to and from Sydney Number of full time employees Number of full time employees Total retailing gross sales at Sydney airport Total car rental gross sales at Sydney airport Number of full time employees Total advertising revenues at Sydney airport Capacity of hotels
Sources: SACL, industry and businesses reports, URS analysis.

4-4
Section 4
4.1.3
Additional Industry Data
To assist in the data gathering process, information was sourced from other official sources. This involved estimates for ground passenger transport including bus companies, taxi drivers and hotels. Industry outputs were estimated using company survey data in conjunction with industry information to create benchmarks and rules of thumb to build the full industry picture within the Airport precinct. Data on passenger ground transport operators, such as bus companies and other transport companies other than taxis, were estimated through information provided by the NSW Tourism office at Sydney Airport, the Australian Tourism and Export Council (ATEC) and the Australian Securities and Investment Commission (ASIC). NSW Tourism provided a list of the transport operators serving the airport including bus companies. ATEC provided estimates on the number of people employed by individual operators servicing the airport and ASIC provided information on bus operators cost structure to assist with the economic modelling of cost items and estimates for turnover. Taxi information was obtained from the NSW Taxi Association and the NSW Independent Pricing and Regulatory Tribunal (IPART). The NSW Taxi Association provided estimates on the proportion of taxis utilised to service passenger flows. IPART provided operating costs and revenue for a single taxi. URS assumed two drivers per taxi.
Table 4-3
Industry Category
Airlines Freight Handling Air Services Management Government Operations Retailing Car rentals Car parking and other Hotels Pax Ground Transport Airport Service Providers Airlines Freight Handling Air Services Management
Additional Data Sources

Description of Estimate
Based on industry estimates, passenger market share, SACL and annual reports. Based on industry estimates, freight forwarding association and annual reports of freight forwarding companies For the purposes of the modelling Government organisation turnover was assumed to be equivalent to costs For the purposes of the modelling Government organisation turnover was assumed to be equivalent to costs SACL estimates and SACL annual report SACL estimates and SACL annual report SACL estimates and SACL annual report Arthur Andersen Hotel Benchmarking Study SACL, industry estimates, IPART and annual reports of transport companies Turnover estimates not required as economic impacts of these are captured in the economic modelling process Based on industry estimates, passenger market share, SACL and annual reports. Based on industry estimates, freight forwarding association and annual reports of freight forwarding companies For the purposes of the modelling Government organisation turnover was assumed to be equivalent to costs

4-5
Section 4
As in the 2002 Sydney Airport Economic Impact Study, in some cases it was not possible to gain complete data on all participants in each of the sectors. The airlines industry consists of a number of small charter airlines, of which there is little official information. However, given its small role and contribution compared to major airline carriers, omission of some participants only marginally effects the results.
4.2
Summary Direct Economic Impacts
Data have been organised for modelling with demand or expenditure items categorised and established in a database. In examining the net economic impact and to ensure not to over estimate the economic impact, URS considered: Displacement impacts of economic activity whereby economic activity is simply relocated from one area to another; and Substitution expenditure where demand for one industrys output is switched to another, therefore providing little net stimulus to an economy.
The end result requires adjusting data for any double counting, imports or any cross industry substitution. For airports, this typically occurs with regard to: Airport Operator (SACL) not included as this is captured within the other industry category data; and Hotel information does not include crew as this is captured in Airline data.
Direct economic impacts were estimated for each of the industry groups under the key following measures: turnover or output; value added or contribution to GSP; household income; and employment.

4-6
Section 4
These results by industry category are presented in the table below. The total direct gross output impact is $14.8 billion, the GSP component is $8.0 billion, household income $3.3 billion and direct employment impact of 76,000 jobs.
Table 4-4
Direct Impacts Summary by Category

Value Added ($000s)
6,238,945 69,981 36,788 718,133 138,806 211,287 81,154 388,101 9,087 49,392 26,840 7,968,513
Category
Airlines Air Services General Aviation Freight Government Operations Ground Transport Hotels Retail Car Parking Car Rental Other Commercial Total
Gross Output ($000s)

11,768,596 109,091 101,916 934,336 307,784 253,803 159,125 997,183 10,879 85,694 30,960 14,759,366
Household Income ($000s)

2,411,889 41,457 22,396 245,252 130,062 129,258 55,694 208,357 5,890 20,557 15,226 3,286,037
Employment
49,741 650 269 7,761 1,926 3,942 2,380 7,853 83 640 335 75,580

4-7
Section 5
5 Indirect & Total Economic Impacts of Sydney Airport
Indirect & Total Economic Impacts of Sydney Airport
5.1
Introduction
The next stage of the Sydney Airport Economic Growth study involves the measurement of indirect impacts. Indirect economic impacts are those that are not directly associated with operations on the airport, but are the result of flow on activities. Measurement of indirect impacts is typically done via the use of a model of the economy. For the Sydney Airport study an input output model is used to determine the flow on benefits.
Figure 5-1
Study Process - Workstream 3 - Indirect Economic Impact Analysis
5.2
Input Output Approach
To estimate the economic impact of Sydney Airport an input output methodology has been chosen as the appropriate method for calculating flow on impacts of the Airport. This approach is consistent with those recommended by the ACI for airport economic impact assessments. These methods were developed so that the transactions among industries, referred to as inter-industry transactions, could be studied as well as the transactions where industries sell their goods and services to final users (e.g. consumers, exports, government and capital formation). The calculation of these transactional impacts involves working backwards from the sale to final users to examine the various contributions to the creation of that final product. This works through the supply (or value) chain for that product or service and identifies all of the trades that take place between contributing businesses. The approach begins with the identification of the sales to final users. In general, that is travel services to people and the transport of goods. The value of those services is estimated and is referred to as gross output or turnover. For passengers, the total cost of making a trip would include the cost of the ticket, costs of getting to/ from the airport, purchases that are made at the airport and any accommodation associated with the trip. Those expenses associated with the Sydney end of the air travel are included in this study. They include: air travel; ground transport (bus, taxi, car rentals and car parks); retail; and

5-1
Section 5
hotels.
In addition to the above operations, there is the on-ground handling of airfreight and the various public sector services associated with the operation of the airport and its activities (immigration, police, customs, and quarantine and air services management). In total, these represent the sales to final demand or turnover of those activities. For each of these activities, the next step involves describing and measuring the flow-on effects that they generate through production-induced and consumption-induced linkages. Input output methods were developed for this purpose. The core component of input output methods is the transactions table (also referred to as an interindustry table). This is a matrix where there is a row and column for each defined industry sector. At the national level, 107 sectors are defined which represent aggregations of activities that are similar in products and processes. The rows of the input output table indicate how the turnover of each industry is sold to other industries or to final users (consumers, exports, government and capital formation). The columns of the table indicate how the turnover value is allocated to purchases from other industries (intermediate inputs), payments for labour, capital costs, imports, indirect taxes and business profit. The flow-on effects are generated through industry expenditure on locally provided intermediate inputs and labour. The use of imported supplies and the funds paid as indirect taxes, capital returns and profits can generate flow-on effects but they are not included in the estimated flow-on effects in the input output model. Thus, the composition of the inputs used and the capacity of the defined economy to supply those inputs determine the size and industry composition of the flow-on effects.
5.3
Airport Industry and the Input Output Model
The operation of the airport and the range of activities associated with airport and air services operations highlight the complex way the modern economy operates. It involves the provision of infrastructure, a variety of administrative and regulatory functions of government and a variety of services provided by aircraft operators that are supported by a vast array of specialist support services. In a way, it resembles a considerable economy itself. This sets this study apart from most economic impact studies where the focus is on a particular industry, business or project. The implication of the above is the need to conceptualise the project carefully to ensure completeness and to avoid double counting of impacts. The structure of the study is illustrated in Figure 5.2. This structure is shown in a way that is compatible with input output analysis. The activities are shown as a value chain of linked activities that extends from the many support activities that provide a range of goods and services to air service providers who, in turn, sell air services to people, businesses and government.This value chain is driven by the demands for those air services.

5-2
Section 5

Figure 5-2
Support Activities (Impact Sectors)
Transport * Car Parking & Rental* Retail*
The Structure of Sydney Airport Activities

Air Service Providers Air Service Users (Expenditure)
Support Services
Passenger Services
Airlines**
Passengers
Hotels*
Catering Aeronautical Security Property Capital Expenditure* Immigration Customs AQIS Police Air Services Management Freight Forwarders Logistics Transport Aircraft Repairs Aircraft Handling Airport Operation SACL Other Government * International Domestic Regional Business Tourists
Passengers Airport SACL Airport General Freight
Freight Handling *
Freight** Cargo Couriers
Freight Business Consumers
Other
Other Services
General Aviation**
Private/Charter
Helicopter Air Ambulance
General Aviation Consumers Government Business
* Included in direct impacts as designated activities ** Included in direct impacts as 'airlines' operations

5-3
Section 5
Support Services and Activities
The providers of air services operate large complex businesses themselves but they also purchase a large number of services provided by specialist firms. Among these services are those provided by SACL, the operator of the Sydney Airport. These include aeronautical services and security services, while all of the operators lease sites and buildings from SACL. All of these charges appear as costs to the airlines and are included in the flow-on effects that arise from airline operations. The airlines also purchase a range of services from other providers including: catering services; security services; aircraft handling; aircraft repair and maintenance; and hotels for crew accommodation.
The handling of airfreight includes an air carriage component and a ground-handling component. The majority of the carriage of airfreight is in the belly hold of passenger services with a small proportion carried in specialist freighters. For the purpose of this study, the air carriage component is included in the operations of the airlines. That leaves the ground operations for freight, covering freight forwarders, logistics and transport, as a separate component of the study. There are a number of other services associated with the operation of the airport that are not directly linked to the air service operators. These include the government services of: immigration; customs; AQIS; and police.
There are also activities associated with the administration of air services and operations including: Airservices Australia; CASA; and Airport Co-ordination Australia.
These activities are funded as public sector activities, although there are a variety of revenues that approximate forms of cost recovery including airport departure taxes and licence fees for aircraft operators. All of these are identified separately as activities.

5-4
Section 5
retail operations; car parking; car rentals;
In addition, there are businesses that provide services to passengers. These have been identified as:
ground transport to and from the airport; and hotel accommodation in the vicinity of the airport (excluding crew accommodation).
All of these activities are included as part of the overall airport complex. None of these are activities that are paid for by airlines under a supply arrangement rather the users of the airport pay for them. Thus, they are included as separate activities in the analysis. Most of these activities involve the lease of space or facilities from SACL or are operated by SACL itself. These would represent all or part of the retail revenue, property revenue or commercial trading revenue earned by SACL. For this purpose of the model operation SACL itself is not included as a direct activity in the analysis. SACL is not a provider of many services to final users. In general, it is a supplier of intermediate services to other operators who sell to final users such as airlines, retailers, transport operators and freight handlers. Thus, the ordinary operations of SACL, which in the year 2005/06 amounted to $659 million, appear as the flow-on impacts from those operations providing final demand services or as identified activities such as car parking.
5.4
Application of the Input Output Model
This project attempts to estimate the economic impact of Sydney Airport on the NSW and Sydney economies. The analysis involves estimating the economic impacts on NSW and Sydney using the respective input output tables for NSW and Sydney. Economic impact studies of particular industries are normally best carried out through the construction of specific sectors to be included in the input output table. This is because the sector specification used in the tables involves the aggregation of a number of related activities to make them manageable. Thus, the industry may not be appropriately represented by the aggregated sector as not all of the industries in a sector are homogeneous in terms of products produced, markets served, technologies used or source of inputs used. The compilation of specific sectors that are superior to the sector in the input output table is a considerable task and requires access to detailed information on the cost structure of the industries. Further, if the industry to be studied comprises a dominant part of the relevant sector in the input output table, then that sector will tend to reflect the characteristics of the dominant sector. This is likely to be the case for airline operations in the air transport sector. For some sectors, there is likely to be little variation in its characteristics from region to region. The retail sector would fit that situation. For the above reasons, no additional sectors have been compiled for this study. The various activities have been matched with the respective sectors in the input output table. These sectors are outlined in Table 5.1. The airline activities represent a dominant part of air transport and do not justify construction of a new sector. Freight handling, air services management and car parking are all part of transport services (other than road). While they are individually different activities, collectively the mix reflects a number of the components in the sector. Government operations at the airport would be similar to government operations overall. Retailing at the airport would not include the vast array of establishments in the sector but is not likely to be markedly different in its characteristics. Similarly, hotel activity is likely to be similar to the general accommodation and restaurants activity. There could be some significant differences in car rentals, which is part of the larger property services group and ground transport that is part of road transport, which includes road freight. However the size of these activities is relatively small and the likely differences do not justify the development of specific sectors for the impact analysis.

5-5
Section 5
Table 5-1
Activity Airlines

Industry Classification of Defined Activities
Industry Classification Air transport Transport services Transport services Public administration Retail trade Property services Transport services Accommodation and restaurants Road transport Other construction
Freight handling Air services management Government operations Retailing Car rentals Car parking Hotels Ground pax transport Capital expenditure Building & construction
Source: Australian Bureau of Statistics
5.4.1
Economic Impact Measures
As has been mentioned throughout the report, economic impacts can be measured using a range of variables. The usual measures calculated in economic impact studies are: Gross output or turnover this is a guide to business operation impacts that business operators can readily relate to. However, it involves double counting of intermediate inputs at each stage of the supply chain and so is not the preferred economic measure. Value added this is a measure that nets out the use of intermediate inputs in the supply chain and approximates the measurement of gross national product (GNP), or as in the case of a State based analysis Gross State Product (GSP), used by the ABS to measure the value of output. Employment this is a socio-economic measure used as an indicator of performance. Employment may be measured in terms of the number of jobs or in terms of jobs adjusted to full-time equivalents. Both measures are used in this analysis. Household income this is a measure of the contribution that these activities make to the income (before tax) of households.
Typically an emphasis is placed on the value added and employment outcomes as being the most useful. Results for employment need to be interpreted carefully. The employment outcomes are increasingly complicated by the growing flexibility in employment arrangements. This is particularly the case for activities such as airport operations where the level of activity varies during the day, over the days of the week and the time of the year. As a result, there are a variety of employment arrangements to meet these needs that make common measures of number employed and full-time equivalents difficult to achieve. It is also difficult to put the full time equivalent estimates into a perspective of other measures calculated in a similar way. The number employed is valuable as an indicator of the number of households that have some degree of dependence on employment earnings from the airport. A particular feature of flow-on impacts estimated in this model is the information on how the flow-ons are distributed among the industry sectors. These are shown separately for production-induced and consumption-induced impacts. The industry composition of the consumption-induced impacts is common among the component activities because they are dependent on income. However, that is not the case

5-6
Section 5
with production-induced impacts that will vary among the component activities at the airport. The production-induced impacts are shown in a set of summary figures.
5.5
Sydney Airport Summary Economic Impact Results
The headline results show that Sydney Airport is a major employment generator and wealth creator in the NSW economy based on the operations at Sydney Airport and those businesses connected with airport operations: Employing 206,133 people (total jobs - full time and part time); Employing 120,162 full time equivalent (FTE) people; Contributing $16.5 billion to NSW Gross State Product; Generating $30.4 billion of output; and Providing $7.4 billion of household income with average wage levels 18% above the NSW average.
In terms of a labour force skill comparison, the Sydney Airport work force has a medium to high skill level. Around one third are skilled workers with trade persons accounting for 20 per cent and professionals and managers accounting for 11 per cent of the labour force. In comparison with the Australian labour force, proportionally Sydney Airport has almost double the amount of trade persons and 3 times the number of intermediate / production and transport workers. Sydney Airport has a significantly lower proportion of professionals and managers, however, it has around half the level of labourers and unskilled workers.
5.5.1
NSW Economic Impacts
The estimated economic impacts on the NSW economy of Sydney Airport are calculated using the estimated levels of economic activity and the multipliers from the NSW input output table. The results are presented in the following three sections.
5.5.2
Output, Value Added, Household Income & Employment Impacts
The estimated economic impacts on gross output, value added and household income are shown in Table 5.2 for each of the Sydney Airport industries. The impacts are shown for each of the component activities with the flow-on effects shown as production-induced and consumption-induced effects. The direct gross output or turnover is $14.8 billion with the airlines operations accounting for 80 per cent. This includes all of the passenger services and the air carriage of freight (but not the ground handling of freight). These activities generate $5.3 billion of production-induced flow-on effects and $7.0 billion of consumption-induced flow-on effects. Among the activities, there is some variation in multipliers above and below the level for the airlines. Most of those with higher multipliers tend to have higher labour intensities and so have high production-induced multipliers. For the total Sydney airport operations, the total impact on gross output is about $24.1 billion with the airline operations accounting for just under 80 per cent of the total. A similar interpretation can be placed on the estimates for the other measures. Generally, the value added impacts represent the best economic measure of the impacts. The value added directly by Sydney airport is $8.0 billion and $16.5 billion including flow-on effects, representing a significant contribution to the NSW economy. Household income is a measure of the contribution of Sydney airport to household welfare. The total impact of $7.4 billion represents 5.0 per cent of the total employment earnings for NSW in 2005/06.

5-7
Section 5
Table 5-2

Sydney Airport Economic Impacts on NSW
Indicator / Sydney Airport Industry
Direct Effect
Production Induced
Consumption Induced
Total Flow on
Total Impact
Gross Output ($000)

Airlines Air Services General Aviation Freight Government Operations Ground Transport Hotels Retail Car Parking Car Rental Other Commercial Total 11,768,596 109,091 101,916 934,336 307,784 253,803 159,125 997,183 10,879 85,694 30,960 14,759,366 5,331,174 25,418 46,168 217,700 186,517 137,054 94,361 437,763 2,535 47,988 7,214 6,533,893 7,037,621 67,309 60,946 576,485 317,326 179,439 154,510 614,265 6,712 68,383 19,102 9,102,098 12,368,795 92,727 107,113 794,185 503,843 316,493 248,871 1,052,028 9,247 116,372 26,316 15,635,991 24,137,391 201,818 209,029 1,728,521 811,627 570,296 407,996 2,049,211 20,125 202,065 57,276 30,395,357
Value Added ($000)

Airlines Air Services General Aviation Freight Government Operations Ground Transport Hotels Retail Car Parking Car Rental Other Commercial Total 6,238,945 69,981 36,788 718,133 138,806 211,287 81,154 388,101 9,087 49,392 26,840 7,968,513 2,979,698 12,027 17,570 123,426 109,166 72,879 53,033 241,668 1,513 27,907 4,469 3,643,356 3,820,719 28,958 22,529 297,167 172,232 97,450 88,413 333,479 3,643 37,120 10,761 4,912,471 6,800,418 40,985 40,099 420,592 281,399 170,329 141,446 575,146 5,156 65,027 15,230 8,555,826 13,039,363 110,966 76,887 1,138,725 420,204 381,616 222,599 963,247 14,243 114,419 42,070 16,524,340

5-8
Section 5

Production Induced Consumption Induced Total Flow on Total Impact
Direct Effect
Household Income ($000)

Airlines Air Services General Aviation Freight Government Operations Ground Transport Hotels Retail Car Parking Car Rental Other Commercial Total 2,411,889 41,457 22,396 245,252 130,062 129,258 55,694 208,357 5,890 20,557 15,226 3,286,037 1,374,324 10,942 12,761 64,735 55,919 36,360 25,670 120,558 1,416 14,535 3,660 1,720,880 1,810,854 24,992 16,815 147,850 84,903 46,187 39,048 158,054 3,231 17,593 8,354 2,357,881 3,185,178 35,934 29,576 212,586 140,822 82,546 64,717 278,613 4,647 32,128 12,014 4,078,761 5,597,066 77,391 51,972 457,838 270,884 211,805 120,411 486,970 10,537 52,686 27,239 7,364,798
Note: does not include the capital expenditure as modelled separately.
Source: NSW Input Output Tables
The employment impacts are shown in two forms in Table 5.3. The total employment estimates are the number of jobs without adjustment for hours worked. This is the form shown in the NSW input output table for the calculation of multipliers. On this basis, the number of direct jobs is 75,580. When flow-on effects are included, the total is estimated at 206,133. That reflects an employment multiplier of 2.72, which is higher than the multipliers for the other measures. The second set of measures show employment measured as FTEs.To approximate the flow-on effects, the multipliers relating to the number of jobs have been applied to the direct FTE employment estimates. That has the implicit assumption that the ratio of FTEs in the flow-on industries to the FTEs in the direct industries is the same as the ratio of (unadjusted) employment. We do not have information to test the validity of that assumption. Given the qualification above, the estimated total FTE generated by Sydney Airport industry is 120,162. The airline activity contributes 74 per cent of that employment. The consumption-induced effects amount to 63 per cent of the flow-on impacts.

5-9
Section 5
Table 5-3

Sydney Airport Impacts on Employment in NSW
Indirect Effects
Direct Effect
Production Induced
Consumption Induced
Total Flowon
Total Impact
Total Employment
Airlines Air Services General Aviation Freight Government Operations Ground Transport Hotels Retail Car Parking Car Rental Other Commercial Total 49,741 650 269 7,761 1,926 3,942 2,380 7,853 83 640 335 75,580 39,470 171 213 2,038 886 1,028 693 3,537 20 462 82 48,601 64,134 483 347 5,767 1,795 1,637 1,218 5,603 56 686 226 81,952 103,605 653 560 7,805 2,681 2,665 1,911 9,140 76 1,148 308 130,553 153,345 1,303 829 15,566 4,607 6,607 4,292 16,993 160 1,788 643 206,133
FTE Employment
Airlines Air Services General Aviation Freight Government Operations Ground Transport Hotels Retail Car Parking Car Rental Other Commercial Total 28,809 441 156 4,045 1,751 3,942 1,023 3,491 83 314 335 44,389 22,860 116 124 1,062 805 1,028 299 1,572 20 226 82 28,193 37,145 327 201 3,007 1,632 1,637 523 2,490 56 337 226 47,581 60,005 443 324 4,069 2,437 2,665 822 4,062 76 562 308 75,774 88,814 884 480 8,113 4,188 6,607 1,845 7,553 160 876 643 120,162
Note: does not include the capital expenditure as modelled separately.
Source: NSW Input Output Table

5-10
Section 5
5.5.3
The Industry Distribution of Flow-on Impacts
The detailed economic impact tables indicate the spread of the flow-on effects over the 107 sectors identified in the input output tables. The sectoral distribution of the production-induced flow-on effects are shown in Figure 5.3 in both value added and employment terms. In terms of production induced value added, the largest flow-on effects accrue to transport and communication and business services, followed by trade and accommodation and manufacturing. When considered in employment terms, the high labour intensity activities of business services and trade and accommodation become relatively more important and transport and communication relatively less important than for the impacts measured as value added.
Figure 5-3
NSW Production Induced Value Added & Employment Effects by Industry Groups
39,454 27,787 813 675
100% 90%
Personal Services
984,662
80% 70% 60% 50% 40% 30%

529,735 1,400,965
15,240
Public Admin Education Health Community Business Services
Transport Communication
13,334
Trade Restaurants Accommodation Utilities Construction Building
11,540
Manufacturing
20%
107,944 750
Primary Industries
10% 0%
515,909 36,900
5,763 487
Total Value Added ($'000)
Total Employment (no)

5-11
Section 5
The sectoral distribution of the consumption-induced flow-on effects are shown in Figure 5.4, indicated in both value added and employment terms. These will reflect the consumption patterns of households and in value added terms, show large flow-on effects to business services, trade and accommodation, manufacturing and various public services. When expressed in terms of employment, the pattern shows a much greater importance of trade and accommodation and public services. This reflects the sectors where wages and salaries form a high share of total costs and there is a large amount of part time and junior employment. The effect on employment in business services is relatively small because of the predominance of full-time, high-value employment.
Figure 5-4
NSW Consumption Induced Value Added & Employment Effects by Industry Group
157,559 5,119
100% 90% 80% 70% 60% 50% 40%
Personal Services
526,742 13,779
Public Admin Education Health Community Business Services
1,620,786
12,373
5,432
Transport Communication
478,709
Trade Restaurants Accommodation

30,674
Utilities Construction Building
30% 20% 10% 0%
1,100,058
Manufacturing
263,901 3,545 655,297 109,419 8,852 2,179
Primary Industries
Total Value Added ($'000)
Total Employment (no)
Source: NSW Input Output Tables

5-12
Section 5
5.5.4
Capital Investment Economic Impacts
The expenditure on capital for 2005/06 of SACL was modelled to determine its impact on the NSW economy. SACL regularly improves, expands and maintains its infrastructure facilities and this economic activity has significant flow-on effects to the NSW economy. The table below outlines the direct and flow on impacts of SACLs capital expenditure (net of the estimated import component) in terms of output, value added, household income and employment and these impacts are added to the industry impacts to provide estimates for the total economic impact of Sydney Airport.
Table 5-4
Total Economic Impact: Sydney Airport Industry & SACL Capital Investments
Indirect Effects
Direct Effect
Production Induced
Consumption Induced
Total Flow-on
Total Impact
Gross Output ($000)

Sydney Airport Industry SACL Capital Expenditure Total 14,759,366 180,400 14,939,766 6,533,893 124,269 6,658,161 9,102,098 165,727 9,267,825 15,635,991 289,996 15,925,986 30,395,357 470,396 30,865,753
Value Added ($000)


Total Employment
Sydney Airport Industry SACL Capital Expenditure Total 75,580 1,691 77,271 48,601 836 49,437 81,952 1,512 83,464 130,553 2,347 132,900 206,133 4,038 210,171
FTE Employment
Sydney Airport Industry SACL Capital Expenditure Total 44,389 1,691 46,080 28,193 836 29,029 47,581 1,512 49,092 75,774 2,347 78,121 120,162 4,038 124,201

5-13
Section 5
5.5.5
Sydney Economy Economic Impacts
The economic impacts of Sydney Airport on the Sydney region have been calculated using an input output table for the Sydney region. The Sydney region is defined as the Sydney Statistical Division. This stretches from Wyong in the north to Wollongong in the south and west to include the Blue Mountains. A regional analysis typically uses an approach which differentiates the inputs purchased by the industry according to the region of origin. That would include the possibility of some employees or airport operations living outside the Sydney region (e.g. some pilots). In this case, the regional differentiation has not been done due to the fact that the inputs from regional areas are likely to be small, difficult to identify and require significant detail on sources of input purchases. The Sydney table includes activities for Sydney that are matched with the various airport activities as for the NSW analysis. Where there is a significant leakage of impacts to the regions of NSW, the multipliers for Sydney will be lower than for NSW to reflect that structure. In terms of airport activities, it is likely that the consumptioninduced multipliers will be lower because these linkages are more likely to extend into regional areas (such as food supplies) than are the production-induced linkages related to the airport. The NSW values are all larger than the Sydney values in terms of the multipliers. For some of the disaggregated multipliers the Sydney values are higher than the equivalent NSW values. This can arise in situations where there are small leakages outside of Sydney and in cases where there is high technology and strong linkages within the region that are not diluted by weak linkages in the rest of NSW. Where that occurred in this study, the impacts for NSW were adjusted to that estimated for Sydney.
Table 5-5
Sydney Airport Economic Impacts on Sydney
Direct Effect
Production Induced
Consumption Induced
Total Flow on
Total Impact
Gross Output ($000)

Airlines Air Services General Aviation Freight Government Operations Ground Transport Hotels Retail Car Parking Car Rental Other Commercial Total 11,768,596 109,091 101,916 934,336 307,784 253,803 159,125 997,183 10,879 85,694 30,960 14,759,366 5,325,537 25,241 46,119 216,185 186,545 137,073 87,873 427,692 2,517 36,754 7,162 6,498,697 6,658,887 63,717 57,666 545,722 314,484 171,462 143,320 574,671 6,354 49,385 18,082 8,603,750 11,984,424 88,958 103,785 761,908 501,029 308,535 231,194 1,002,362 8,870 86,139 25,244 15,102,447 23,753,020 198,049 205,700 1,696,243 808,814 562,338 390,319 1,999,546 19,749 171,832 56,204 29,861,813

5-14
Section 5

Production Induced Consumption Induced Total Flow on Total Impact
Direct Effect
Value Added ($000)

Airlines Air Services General Aviation Freight Government Operations Ground Transport Hotels Retail Car Parking Car Rental Other Commercial Total 6,238,945 69,981 36,788 718,133 138,806 211,287 81,154 388,101 9,087 49,392 26,840 7,968,513 2,979,698 11,886 17,570 121,970 109,166 72,879 49,878 236,922 1,495 30,152 4,416 3,636,033 3,629,791 27,529 21,403 282,495 171,426 93,465 82,343 313,255 3,463 39,867 10,230 4,675,268 6,609,490 39,415 38,973 404,465 280,592 166,344 132,222 550,178 4,958 70,019 14,646 8,311,301 12,848,435 109,396 75,761 1,122,598 419,398 377,631 213,375 938,279 14,045 119,411 41,486 16,279,815

Airlines Air Services General Aviation Freight Government Operations Ground Transport Hotels Retail Car Parking Car Rental Other Commercial Total 2,411,889 41,457 22,396 245,252 130,062 129,258 55,694 208,357 5,890 20,557 15,226 3,286,037 1,374,324 10,832 12,761 64,077 55,919 44,585 24,344 118,398 1,400 11,682 3,619 1,721,942 1,674,362 23,122 15,547 136,793 82,246 57,179 35,396 144,499 2,991 14,257 7,733 2,194,124 3,048,685 33,955 28,309 200,870 138,165 101,763 59,739 262,898 4,391 25,939 11,352 3,916,065 5,460,574 75,411 50,704 446,122 268,227 231,022 115,433 471,255 10,281 46,496 26,578 7,202,103
Note: Capital Expenditure not included. Source: Sydney Input Output Tables
Source: Sydney Input Output Tables

5-15
Section 5
Table 5-6

Sydney Employment Impacts of Sydney Airport
Indirect Effects
Direct Effect
Production Induced
Consumption Induced
Total Flowon
Total Impact
Total Employment
Airlines Air Services General Aviation Freight Government Operations Ground Transport Hotels Retail Car Parking Car Rental Other Commercial Total 49,741 650 269 7,761 1,926 3,942 2,380 7,853 83 640 335 75,580 39,470 162 213 1,941 886 1,028 629 3,331 19 441 78 48,199 56,516 426 306 5,086 1,658 1,456 1,052 4,882 49 575 199 72,205 95,986 588 519 7,027 2,544 2,484 1,682 8,213 69 1,016 277 120,404 145,727 1,238 788 14,788 4,470 6,426 4,062 16,066 152 1,656 612 195,984
FTE Employment
Airlines Air Services General Aviation Freight Government Operations Ground Transport Hotels Retail Car Parking Car Rental Other Commercial Total 28,809 441 156 4,045 1,751 3,942 1,023 3,491 83 314 335 44,389 22,860 110 124 1,012 805 1,028 270 1,481 19 217 78 28,004 32,732 289 177 2,651 1,506 1,456 452 2,170 49 282 199 41,964 55,593 399 301 3,663 2,311 2,484 723 3,651 69 499 277 69,968 84,402 840 456 7,708 4,062 6,426 1,746 7,142 152 812 612 114,357
Note: Capital Expenditure not included as modelled separately for the NSW economy only.
Source: Sydney Input Output Tables

5-16
Section 5
5.6
Sydney Airport Labour Force
In the survey distributed to Sydney Airport businesses, participants were asked to categorise staff by occupation using ABS categories. The categories included: Managers / professionals; Trade-persons; Advanced clerical / service; Intermediate clerical / sales / service; Intermediate production and transport; Elementary clerical / sales / service; and Labourers and unskilled workers.
The number of jobs categorised by occupation was captured within the survey, but estimated, based on average data and industry data, when survey data was unavailable. The purpose of seeking the occupation of employees in and around the airport is to see how the labour force compared to the national labour force in terms of proportion of occupations. A comparison is outlined in the table below.
Table 5-7
Occupation
Sydney Airport Labour Force

Australian Labour Force Per cent
40 12 4 17
Sydney Airport Labour Force Per cent Total

8,314 15,116 7,558 10,581
Total
4,073,957 1,178,200 409,100 1,575,600
Managers / Professionals* Trades Persons Advanced / Clerical service Intermediate clerical / sales service Intermediate / production and transport Elementary clerical / sales services Labourers / unskilled Total
11 20 10 14
24 16 5 100
18,139 12,093 3,779 75,580
8 10 9 100
777,200 906,500 869,900 10,076,017
Note: * Includes managers and administrators, professionals and associate professionals
Source: URS Economic Impact Survey and ABS Catalogue 6203.0
The available data shows that the Sydney Airport work force has a medium to high skill level. Around one third are skilled workers with trade-persons accounting for 20 per cent and professionals accounting for around 11 per cent of the labour force. Consistent with the activity at Sydney Airport, intermediate production and transport workers account for 24 per cent. Other major types of occupation include elementary clerical/ sales workers (16 per cent) and intermediate clerical / sales workers (14 per cent).

5-17
Section 5
Advanced clerical workers / services workers and labourers and unskilled workers only accounted for 10 per cent and 5 per cent respectively. In comparison with the Australian labour force, the Sydney Airport labour force is quite different. Proportionally, Sydney Airport has approximately double the amount of trade-persons and around 3 times the number of intermediate / production and transport workers. In terms of professionals and managers, Sydney airport has significantly less of these types of workers, however, Sydney Airport also has around half the level of labourers and unskilled workers compared to the national labour force.
5.7
Average Wages
The table below provides a breakdown of the average weekly earnings for employees of the Sydney Airport labour force. The average level of earnings is approximately $1,313 per week, with a range of $1,809 to $874 per week for Air Services to Other Commercial, respectively.
Table 5-8
Average Weekly Earnings for Sydney Airport

Category Sydney Airport ($)
1,610 1,809 1,166 1,428 1,428 1,047 1,148 1,361 1,260 874 1,313
Source: URS Economic Impact Survey & analysis
Airlines Air Services Freight Government Operations Ground Transport Hotels Retail Car Parking Car Rental Other Commercial Average

5-18
Section 5
The table below outlines the average weekly earnings for persons in selected industries in 2005/06 on both a state and national level. The average level of wages on a state and national level is $1,112 and $1,102, respectively. On a state and national level the highest average weekly wage is earned by employees of the Air and Space Industry, with the lowest average weekly wage being earned by employees of the accommodation industry.
Table 5-9
Average Weekly Earnings for Persons in Selected Industries - 2006

Category NSW ($)
893 935 885 1,880 1,055 1,326 879 1,065 1,086 1,112
Source: Average Weekly Earnings, ABS Catalogue 6302.0
Australia ($)
939 924 949 1,779 1,092 1,341 884 983 1,025 1,102
Food Retailing Personal & Household Good Retailing Motor Vehicle Services Air and Space Transport Other Services to Transport Government administration Accommodation Accommodation, Cafes and restaurants Road Passenger Transport Average
The industries in the table above have been selected to provide a high level comparison for the average weekly earnings for employees of Sydney Airport. The industries are not perfectly aligned, however, it does provide an indication of the relative level of average weekly earnings between Sydney Airport employees and employees in the state and national economies. Given the limitations and the comparability of the data, average weekly earnings of Sydney Airport employees are approximately 18 per cent higher than the NSW average and 19 per cent higher than the national average weekly earnings for these specific industries. This could potentially be because Sydney Airport operates on an around the clock basis, with a significant proportion of workers working at night and on weekends. This contributes to the higher average weekly earnings for Sydney Airport employees. For Sydney Airport, employees in the Air Services industry earn the highest average weekly earnings. Out of the sample of industries selected, the highest level of average weekly earnings is earned in the Air and Space Industry.

5-19
Section 6
6 Growth At Sydney Airport
Growth At Sydney Airport
6.1
Introduction
In Section 6, the economic impact of growth and the drivers of this growth are measured. It is the forward looking section of the study, aimed at measuring the future economic impact of airport activities as well as estimating the role Sydney Airport will have on the regional and state economies. One of the major output requirements for this Sydney Airport Economic Impact report was to construct a forward looking document which captured the impact of growth at Sydney Airport on the Sydney and NSW economy. This report will analyse the effects over a 10 year period.
Figure 6-1
Study Process Workstream 4 - Airport Growth Strategy and Forecasting
6.2
Growth Predictions for Sydney Airport
The economic importance of Sydney Airport is expected to grow over the next 10 years with the expected increase in air travel and the use of airfreight. Growth at Sydney Airport is driven by its use and the demand for Airport facilities is driven by the demand for air travel, be it for passengers or freight. Therefore to develop a picture of growth at the Airport, an analysis of its derived demand from users must be constructed. In terms of constructing a growth profile for the Sydney Airport impact on the NSW economy over the next 10 years, three indicators of growth have been produced to provide the derived demand drivers of economic outputs at the Airport. These indicators are: passenger levels; freight volumes; and capital development.
6.2.1
Passengers
The major driver of any airport growth is passenger volumes. In 2006/07 the passenger levels at Sydney Airport reached 31 million. Over the last 4 years, average annual passenger growth (CAGR) at Sydney Airport has been 7.2%, which has resulted in overall growth of 32.3 per cent.

6-1
Section 6
population;
The drivers of airport passenger levels include:
economic growth, income and employment; business performance and investment; and tourism.
For the analysis undertaken in this report, the passenger forecasts were supplied by SACL based on the 2003/04 Master Plan. The passenger movements are shown by international, domestic and regional groupings. Figure 6-2 below shows that passenger levels are forecast to increase from their current levels to 68.3 million by 2024. This is made up of growth in passenger levels for international flights of 4.9 per cent per annum, domestic patronage growth of 3.9 per cent per annum and regional patronage growth of 2.3 per cent per annum. Over all, the average annual growth rate for Sydney Airport passengers over the period until 2024 is 4.2 per cent.
Figure 6-2
Sydney Airport Passenger Forecasts
80.0 70.0 60.0

International CAGR: 4.9% Domestic CAGR: 3.9% Regional CAGR: 2.3% Total CAGR: 4.2%
50.0 Pax millions 40.0 30.0 20.0
10.0 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
International
Domestic
Regional
Source: Sydney Airport Master Plan 2003-2004
The drivers of passenger growth are discussed in section 6.3 of this report. For the purpose of developing economic growth forecasts at the Airport, this study will only use the next 10 years worth of passenger forecasts. In order to accommodate the increases in passenger demand for services, the number of aircraft movements will also have to increase. The forecast growth in aircraft movements is shown in the figure below. The growth rate of aircraft movements annually until 2023/24 is forecast to be 2.4 per cent. This growth is forecast to come from a 3.3 per cent increase in international movements, a 3.0 per cent

6-2
Section 6
increase in domestic movements and a 0.2 per cent increase in regional movements per annum over the analysis period.
Figure 6-3
400,000
Aircraft Movements Forecast
350,000
International CAGR: 3.3% Domestic CAGR: 3.0% Regional CAGR: 0.2% Total CAGR: 2.4%
300,000
250,000
Aircraft Movements
200,000
150,000
100,000
50,000
2008
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
International
Domestic
Regional
6.2.2
Freight
Growth in the demand for air freight will also have an impact on growth at Sydney Airport. In recent times the growth rates for air freight have been approximately 4 per cent per annum. The freight tonnage growth is expected to continue in the foreseeable future driven by strong economic growth and business performance. The CAGR for freight tonnage growth is forecast to be 4.9 per cent over the analysis period. This growth is derived from a forecast international freight CAGR of 6.0 per cent and a domestic freight CAGR of 2.2 per cent. The result of this forecast growth is volumes increasing from the current levels of approximately 634,000 tonnes to an estimated 1.3 million tonnes by 2023/24.

6-3
Section 6

Figure 6-4 Forecast Freight Volumes
1,400 International CAGR: 6.0% Domestic CAGR: 2.2% 1,200 Total CAGR: 4.9%
Tonnage ('000s)
1,000
800
600
400
200
2008
2009
2010
2011 2012 2013
2014
2015 2016
2017 2018
2019
2020 2021 2022
2023
2024
International Domestic
6.2.3
Capital Expenditure
Capital expenditure at an airport is an important source of economic growth for the local economy. Typically, the growth associated with capital investment impacts on the local economy in two ways. Firstly, there is the economic impact associated with the works themselves, for example, the expenditure and employment associated with constructing a runway or terminal. Secondly, there can be economic impacts associated with the outcomes of the capital works, for example, the ability to increase passenger throughput and hence the increased economic outcomes associated with more passengers. Since airport privatisation, expenditure on capital works at Sydney Airport has been approximately $725 million. The types of capital projects that have been undertaken over the last 5 years include: Redesigned International Terminal (T1) - designed to improve various elements of its operations, from aircraft parking areas, aerobridge design, self service check-in, passport controls, security and baggage delivery to the retail, food and beverage offerings. The T1 project is designed to take the terminal through its next phase of expansion to cater for new generation aircraft and significantly enhanced passenger processing facilities; An upgrade of the Domestic Terminal (T2) the refurbishment improved the airside facilities at the terminal, providing better food and beverage and retail facilities for passengers as well as enhanced waiting areas and amenities; and A380 related upgrades - upgrading the airport to prepare for the arrival of the A380 involved widening of pavement shoulders, strengthening the General Holmes Drive Tunnel and constructing new aerobridges.

6-4
Section 6
Other capital investments over the last 5 years include: Investment in the check baggage security systems.
Over the next 5 years SACL plans to spend an estimated $1.2 billion on capital investments at Sydney Airport.
6.3
Drivers of Growth
Because the performance of an airport is typically linked to the size and strength of the local economy, the external drivers of growth include population, income, employment, business performance and tourism levels. The NSW economy has not been particularly strong over the past three years and this has impacted on the opportunities for growth at Sydney Airport. Economic performance is however forecast to improve over the next 10 years.
6.3.1
Population
Population provides the base for the possible passenger levels at an airport. Without a significant population or population growth, the volume of traffic through an airport is likely to be limited. There are exceptions to this notion, for example major transfer hubs and large scale tourist destinations. However, to be classified within World City type airports, a combination of population and tourist travel is necessary. The New South Wales population has been growing at a rate less than 1.0 per cent per annum over recent years. Based on forecasts, this trend is set to continue over the 10 year analysis period. The table below highlights the population forecasts for both Sydney and the New South Wales. The forecasts, drawn from a combination of the NSW Transport and Population Data Centre (TPDC) and ABS data, highlight that the CAGR for population over the period to 2015/16 is expected to be 0.99 per cent for New South Wales and 0.89 per cent for Sydney. The Australian population is expected to record a CAGR of 1.24 per cent over the 10 year analysis period. By 2015/16, it is estimated that the New South Wales population will grow from its current level of 6.9 million to around 7.4 million, while the Sydney population will grow from its current level of 4.3 million to around 4.7 million.

6-5
Section 6
Table 6-1

Population Forecasts - Greater Sydney, NSW & Australia (2006/07 to 2015/16)
Greater Sydney Population (000) %
0.85% 0.96% 0.94% 0.92% 0.90% 0.89% 0.87% 0.85% 0.84% 0.83% 0.82% 0.89%
Year
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 CAGR
NSW Population (000)

6,868 6,935 7,005 7,075 7,146 7,217 7,287 7,359 7,430 7,503 7,575
Australian Population (000)

20,767 21,032 21,300 21,568 21,837 22,108 22,379 22,651 22,925 23,201 23,478
%
0.88% 0.98% 1.00% 1.00% 1.00% 0.99% 0.98% 0.98% 0.97% 0.97% 0.97% 0.99%
%
1.27% 1.28% 1.27% 1.26% 1.25% 1.24% 1.23% 1.22% 1.21% 1.20% 1.20% 1.24%
5,150 5,200 5,248 5,297 5,345 5,392 5,439 5,485 5,531 5,577 5,623
Source: TPDC (2004-2051 Forecasts), ABS and Access Data
6.3.2
Economy, Income and Employment
Sydney Airport has an impact on the NSW economy, as was shown in section 5 of this report. But the performance of the NSW and Australian economy also impacts on the growth of the Airport. A growth in the economy impacts on employment and income levels and therefore the ability to travel, for business and for recreational reasons. A brief overview of the forecast performance of the NSW economy is shown in this section of the report. The economic growth forecasts for NSW highlight a steady improvement in the economy from 2006/07 onwards, both in terms of employment and GSP. The drivers of this actual and forecast growth include: demand for mineral resources in China; growth in business investment; tourism growth; and forecast improvements in the housing market.
The forecast for the next 10 years highlights an economic recovery with growth at the national average. The figure below provides forecasts of Gross State Product growth for the New South Wales economy and of Gross Domestic Product for the Australian economy.

6-6
Section 6
Figure 6-5
5.0 4.5

Real Output Growth Forecasts - NSW and Australia (2006/07 to 2016/17)
% Change from Previous Year
4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2006-07 2007-08 2008-09 2009-10 2010-11 NSW GSP 2011-12 2012-13 Australia GDP 2013-14 2014-15 2015-16 2016-17
Source: Access Economics Data
The figure highlights that economic activity is likely to improve from existing levels in 2005/06 to 4.1 per cent in 2007-08 and then remain around the 3 per cent level over the analysis period. The data in the table below highlights that real economic activity growth is forecast to average 3.2 per cent over the next 10 years.
Table 6-2
New South Wales Forecast GSP Growth (2006/07 to 2015/16)

Year $m
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 CAGR 308,411 320,910 332,665 342,604 353,585 366,668 379,153 389,844 399,230 410,140
Real GSP % Change

0.5% 4.1% 3.7% 3.0% 3.2% 3.7% 3.4% 2.8% 2.4% 2.7% 3.2%
Source: URS Finance & Economics analysis using ABS and Access Inputs

6-7
Section 6
Growth in the economy tends to lead to growth in employment levels. The figure below highlights, that for the period to 2016/2017, employment growth in New South Wales is expected to match the national average. The New South Wales employment forecasts show growth of approximately 1.0 per cent per annum over the forecast period, however employment growth is forecast to moderate over the next 10 years.
Figure 6-6
2.5%
Employment Growth Forecasts - NSW & Australia (2006/07 to 2016/17)
2.0%
% Change from Previous Year
1.5%
1.0%
0.5%
0.0% 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
-0.5%
New South Wales
Australia
Source: Access Economics
The detailed employment forecasts for Sydney are shown in the table below. The table highlights that Sydney employment growth is also expected to be less than 1.0 per cent per annum over the forecast period, which could reflect the strong position of the existing labour market and the lack of labour supply.
Table 6-3
Employment Growth Forecasts - Sydney & NSW (2006/07 to 2015/16)

Year
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 CAGR
Sydney Employment (000)

2,188 2,215 2,246 2,281 2,310 2,340 2,353 2,374 2,378 2,377
%
1.3% 1.3% 1.4% 1.6% 1.3% 1.3% 0.6% 0.9% 0.2% 0.0% 0.92%

6-8
Section 6
Changes in economic activity and changes in investment all contribute to growth in household disposable income, which in turn drives expenditure within the economy. One form of expenditure that increases as wealth and income rises is travel.
Table 6-4
Household Disposable Income Forecasts (2006/07 to 2015/16)

Year
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 CAGR
Sydney HDI
187,686 192,174 200,421 208,326 216,964 224,711 231,745 241,270 251,786 262,971
NSW HDI
217,173 222,366 231,909 241,055 251,051 260,015 268,154 279,176 291,344 304,285
% Change
5.6% 2.4% 4.3% 3.9% 4.1% 3.6% 3.1% 4.1% 4.4% 4.4% 3.8%
The table above presents household disposable income (HDI) forecasts for both the New South Wales and Sydney economies. HDI for New South Wales is forecast to grow by 3.8 per cent per annum. Sydney HDI is projected to maintain its share of the NSW total over the forecast period.
6.3.3
Business Investment
Business investment is also linked to the economic performance of the economy. Business performance is also important to the aviation industry. In a strong economy the level of business travel is likely to be higher. The investment outlook for the New South Wales is strong with investment expected to be above $40 billion per annum for much of the forecast period. Investment in the New South Wales is being driven by the resource and service sectors and by major New South Wales government spending, particularly on major road, rail and water supply projects. The forecast level of investment in the New South Wales over the next 10 year is shown in the figure below.

6-9
Section 6
Figure 6-7
3.5% 3.5% 3.4% 3.4% 3.3%

Business Investment Forecasts - NSW (2006/07 to 2016/17)
45,000 40,000 35,000 30,000 25,000
3.3% 20,000 3.2% 3.2% 3.1% 3.1% 3.0% 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 15,000 10,000 5,000 0
NSW Share of Output
Business Investment NSW
Source: Access Economics, ABS 5206.0
6.3.4
Tourism Local and International
Tourism is an important input to the NSW and Australian economy. In section 3 of this report, the importance of international tourism to passenger levels at Sydney Airport was discussed. Given that a significant proportion of passengers arrive in NSW by aircraft, either as a destination point or as a stop on their travels around Australia, it is reasonable to assume that the number of domestic and international passenger movements at Sydney Airport will be linked closely to interstate and international tourism levels. The table below highlights the New South Wales visitor number forecast for the period to 2015/16. The table highlights the relatively limited growth in the tourism market expected in New South Wales in the next 10 years.

6-10
Value of Business Investment ($'m)
% Share of National Output
Section 6

Table 6-5 Forecast Visitor Numbers in NSW
Interstate* (000)
8,105 8,112 8,137 8,159 8,181 8,216 8,259 8,310 8,361 8,406
Year
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
International (000)
2,111 2,209 2,380 2,418 2,553 2,688 2,836 2,927 2,991 3,043
Total (000)
26,986 27,105 27,352 27,458 27,659 27,903 28,182 28,430 28,652 28,841
%
-1.7% 4.7% 7.7% 1.6% 5.6% 5.3% 5.5% 3.2% 2.2% 1.7%
%
1.8% 0.1% 0.3% 0.3% 0.3% 0.4% 0.5% 0.6% 0.6% 0.5%
%
1.5% 0.4% 0.9% 0.4% 0.7% 0.9% 1.0% 0.9% 0.8% 0.7%
Source: Tourism NSW, Tourism Australia, URS Forecast.
6.4
Airport Growth What does it mean for the Sydney and New South Wales Economy
Over the course of the next 10 years Sydney Airport is expected to experience passenger growth, freight volume growth and capital investment growth. Associated with this growth is likely to be growth of the airport precinct. Growth in passengers, freight and capital investment will likely result in an increase in Sydney Airports economic impact on the Sydney and NSW economies.To capture this growth impact, benchmarking analysis has been undertaken on the value added and employment implications for Sydney Airport. The analysis on growth has been done over a 10 year period, reflecting the impact of uncertainty for any estimates undertaken after this point in time.
6.4.1
GSP Impacts of Airport Growth
Currently Sydney Airport generates approximately $16.5 billion in value added or GSP impact ($8.0 billion direct and $8.6 billion indirect). This represents approximately $568 in economic value add per passenger to the NSW economy. For the purpose of the analysis, it has been assumed output per passenger remains constant over the period. The analysis has been done on the basis of direct and indirect or flow on impacts. Using these benchmark parameters, the figure below presents the estimated economic impacts, in value added terms. In 2006/07 the GSP contribution of Sydney Airport is estimated to be $18.0 billion with a forecast GSP contribution of $27.2 billion by 2015/16.

6-11
Section 6

Figure 6-8 Forecast GSP Outcomes of Growth
30.0 26.0 25.0 24.0 25.0 21.0 19.8 19.0 20.0 18 0 22.0 23.0
27.2
$'b
15.0 10.0 5.0 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16
6.4.2
Employment Impacts of Airport Growth
Currently Sydney Airport generates approximately 206,133 jobs in NSW (75,580 direct and 130,553 indirect), which represents approximately 7.1 jobs per one thousand passengers. Using this ratio as a base indicator we have estimated the number of jobs which will be generated by Sydney Airport over the evaluation period. The outputs are shown in the figure below.

6-12
Section 6
Figure 6-9
400,000

Forecast Employment Outcomes of Growth
350,000 311,643 300,000 261,693 250,000 247,387 286,719 274,264 237,413 298,915
338,771 324,921
Employees
225,103
200,000
150,000
100,000
50,000
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
Based on the assumption of 7.1 jobs (total) per one thousand passengers, the estimated number of jobs directly and indirectly associated with Sydney Airport is 225,103 in 2006/07 and could rise as high as 338,771 by 2015/16. In assuming 7.1 jobs per one thousand passengers over the next decade, improvements in efficiency, employee productivity and economies of scale have not been taken into account. It is likely that as passenger numbers grow and airport size increases, jobs created per one thousand passengers will fall.
6.4.3
Capital Expenditure Growth
Based on the forecast capital expenditure at Sydney Airport over the next 5 years, as discussed at the beginning of this section, the value added or GSP is shown in the figure below. Based on the outputs of the 2005/06 economic impact analysis, for each $1 million spent on capital expenditure there is $1.3 million of economic benefits created including the investment and the subsequent indirect flow on impacts on the broader economy. For capital expenditure, the GSP impacts are short term and only last while the expenditure is being undertaken. Based on the analysis undertaken for the 2005/06 economic impact calculations, for each $1 million spent on capital expenditure there were 22.4 employees required as part of undertaking the work and the subsequent indirect flow on impacts on the broader economy. For capital expenditure, the employment impacts are short term and only last while the expenditure is being undertaken.
6.4.4
Summary of Passenger and Capital Growth
Combining the passenger and capital expenditure impacts on the economic impact of Sydney Airport shows a growth in value added or GSP impact from $18.3 billion to $22.2 billion over the forecast period and a growth in employment of 229,359 to 277,116.

6-13
Section 6
The outputs of passenger growth and capital expenditure on economic impact are detailed in the table below. Because of limitations in forecast capital expenditure, the combined information can only be provided out to 2010/11.
Table 6-6
Year 2006/07
Growth in Economic Impact at Sydney Airport

2007/08 2008/09 2009/10 2010/11
Value Added ($m) GSP - Total Employment Employment - Total 230,253 242,563 252,537 266,843 279,414 18,386 19,372 20,172 21,319 22,327
6.5
Sydney Airport in the context of Sydney and New South Wales Growth
The growth of Sydney Airport is linked to the growth of the Sydney and NSW economies. As has been discussed within this section, the airport and the economy are linked with each driving the other. The Sydney and NSW economies, as indicated by GSP, are forecast to grow over the next 10 years by 3.2 per cent per annum (in CAGR terms). The airport has a role to play in facilitating this growth allowing business and tourism levels to grow. In conjunction with this, Sydney Airport is part of this growth in GSP and employment as shown by the forecast growth in the economic impact of the airport in the preceding section.

6-14
Section 7
7 Planning Analysis
Planning Analysis
Section 7 of the report is designed to assess the planning framework and strategy for the airport, including the policy and administrative structure imposed by Councils, State and Federal Governments for the transport industry. The concept of an airport precinct is introduced and the airports interaction with the precinct and surrounding metropolitan area, including the generated traffic as a consequence of the airport is discussed.
Figure 7-1
Study Process Workstream 5 - Planning Analysis
There are three levels of government within which Sydney Airport must operate, either directly or indirectly, including: Federal/Commonwealth; NSW State; and surrounding Councils.
7.1.1
Federal Government
Sydney Airport, along with other major airports in Australia is subject to Federal legislation, under the Airports Act 1996. The ownership and control of leased Federal Airports are regulated through this Act. The Act: ensures majority Australian ownership of airports; places limits on the ownership of airports by airlines; ensures diversity of ownership and control of certain major airports, and promotes efficient and economic development and operation of airports.
In terms of airport development there are environmental management and building controls are put in place by the Federal Government. The Commonwealth has put in place an integrated regime to protect the environment at leased Federal airports. While the airport operator has the main responsibility for protecting the environment under this approach, everyone operating or working at the airport should be aware of their environmental obligations.

7-1
Section 7
Planning Analysis
Building and construction activities at leased Federal airports must be approved by the Airport Building Controller (ABC). The ABC is appointed under Commonwealth law to administer the airport building control regime. The Airport-Lessee Company (ALC) must also approve the activity from a planning and airport operational perspective.
Transport Policy
One of the options for provision of transport infrastructure is to make use of the Federal governments road funding and policy set under Auslink by the Department of Infrastructure, Transport, Regional Development and Local Government. Auslink was established to provide a co-ordinated policy and funding overview of the Australian transport network, highlighting the areas of most importance and establishing a funding framework for important transport projects. Since 1996/97, the Federal Government has invested $273 million in major Sydney urban road projects. The Auslink White Paper, which is the governments policy paper on transport around Australia, specifically identifies the Sydney Airport/Port Botany connections as one of the most important connections in the Sydney metropolitan region. The paper states, the capacity of the land transport links to accommodate forecast freight and passenger growth is a critical challenge.
7.1.2
New South Wales Government
While the NSW Government does not have direct planning or policy authority over Sydney Airport, the policy of the NSW Government has major impacts on Sydney Airport The NSW Government generally recognises the strategic role played by Sydney Airport and is generally supportive of its development as an aviation gateway to NSW and the broader Australian economy, as shown by its recognition in the NSW Metropolitan Strategy. The NSW Government policy position on the growth of Sydney Airport is that there is a need for a coordinated approach and for growth to be undertaken in a manner consistent with the orderly and planned growth of the remainder of the metropolis. Obtaining this consistency is important for maximizing the economic benefits of growth and for minimizing the impact on both the citys environment and its residents.
The NSW Governments Metropolitan Strategy

The Metropolitan Strategy16 is described as a broad framework to facilitate and manage growth and development over the next 25 years. It sets the parameters for future residential development in new release and existing urban areas. It identifies strategic transport corridors and major centres best placed to focus commercial and residential growth. (NSW Department of Planning 2005, p.3) The strategy expects that Sydneys population will grow to over 5 million people by 2031, requiring an additional 640,000 new dwellings and 500,000 more jobs. Although many of the new dwellings and jobs will be in the western areas of Sydney, there will still be an expected increase in residential development and employment growth in regions surrounding Sydney Airport. These developments will lead to increased demand for road transport on the access routes to Sydney Airport. Not only will road demand be increased by passenger growth, but also by expected growth in container movements through Port Botany. By 2021 Port Botany is expected to handle 3.0 million TEUs17 or twice the number handled by Sydney Ports in 2005-0618. The Metropolitan Strategy envisages rail expanding to
16 17 18
NSW Department of Planning (2005) City of Cities; A Plan for Sydneys Future, Sydney. Twenty Foot Equivalent Units Freight Infrastructure Advisory Board (2005) Railing Port Botanys Containers, Sydney.

7-2
Section 7
Planning Analysis
carry 40 per cent of Port Botanys containers. However, even with an increase of this magnitude in rails share there will still be a substantial increase in containers carried by road by 2021. Implementation of the Metropolitan Strategy will do much to provide capacity for the expected increase in road traffic, but will still lead to a potential adverse impact on accessibility to Sydney Airport. Likewise expected growth in passenger numbers using Sydney Airport coupled with increased employment at the airport will add to road transport demand. The corridor of most significance to Sydney Airport is the global economic corridor that links Macquarie Park in the north to Sydney city and Sydney Airport and Port Botany in the south. Around 40 per cent of Sydneys jobs are located in this corridor and it is the favoured location of those companies that make Sydney a global city. Sydney Airport and Port Botany are identified as a Specialised Centre in the Metropolitan Strategy, performing vital economic and employment roles across the metropolitan area. The increasing importance of trade and business transactions has heightened the role of the gateways to the city. There is, for example, a greater emphasis on businesses related to Sydney Airport and Port Botany as jobs have concentrated in and around these locations. The suburbs surrounding Sydney Airport and Port Botany provide a range of services for these major economic gateways for Australia, and also provide a range of industrial services for the Sydney CBD. Sydney Airport is the main destination for travellers entering and leaving Australia while Port Botany is a critical part of Australias port infrastructure. The Metropolitan Strategy acknowledges the role of Specialised Centres, such as Sydney Airport, and notes that development controls and State Government initiatives should be directed to reinforcing the specialties in these centres. Transport planning should focus on improving accessibility to these centres. Furthermore the Metropolitan Strategy notes the importance of maintaining dialogue with the Commonwealth Government and owners of Sydney Airport to ensure development in and around the airport does not have unforeseen impacts on other centres and on transport networks.
7.1.3
Local Government
Local government has no direct policy or formal planning control over Sydney Airport. However the airports interaction with the rest of the city is complex and growth and change in and around the airport must be carefully planned. The area around Sydney Airport has always been in high demand as a location for business. Airports around the world have become more than just aviation service suppliers or infrastructure facilities. The trend is for airports to be multimodal and multifunctional with commercial and residential developments on or close to the airport19. The local government areas surrounding Sydney Airport include: Marrickville; City of Sydney; Rockdale; Botany; and Leichhardt.
19
Aerotropolis The Rising Airport , ACI Regional Assembly Presentation

7-3
Section 7
7.2
Planning Analysis
Airport Precincts
Airport precincts are designed to meet the needs of a wide range of businesses that either have a direct interest in being located at the airport or businesses that gain a strategic advantage from being located near a major transport hub. Airport precincts are evolving to encompass businesses and services that mirror those of a typical city, the only difference being that they centre specifically around an Airport. Traditionally, the airport precinct has been limited to groups of aviation linked business that clustered around the airport facility, spreading out a few kilometres from the airport. With the trend towards more developed functional airport precincts, or aerotropolis, the airport precinct can stretch for as far as 20-25 km around the airport facility, with significant economic impacts being found up to 75km away from the airport20.
Figure 7-2
Airport Precinct Concept
Airport
Airport Linked Business
General Business In Region
As airports and surrounding infrastructure and visitation to the airport grows the number of different types of businesses that provide services develop. The majority of businesses within the precinct are still likely to be aviation based, but there is increasing diversity in the types of businesses. The types of businesses, in general terms, that develop around the airport include: business parks; logistics parks; industrial estates; retail centers and wholesale facilities, and information and communications technology complexes
More specifically, the types of businesses that are likely to be located within an airport precinct are shown in the figure below.
20
Aerotropolis The Rising Airport , ACI Regional Assembly Presentation

7-4
Section 7
Figure 7-3
Planning Analysis
Types of Businesses Attracted to Airport Precincts
Tourism
Hotels; Shopping Mall; Tourist Districts; Golf Course.
International Business
Trade and Finance; Office Buildings; Exhibition Centre; Convention Centre.
Airport
Industry & Logistics
Aircraft Industry; High Tech R&D; Distribution Centre; Information & Media.
Residential & Other

Administration; Schools & Hospitals; Apartments & Townhouse; Detached Housing.
There are a number of reasons that airport precincts have begun to develop in importance and why businesses are moving to these areas. These include: accessibility to transport networks, in particular air services which can lead to reduced transaction or freight costs; improvements in speed of movements; the development of airport precincts has a flow back effect on airports which can receive greater passenger and freight throughput. connectivity to other business and tourist centres; and access to other business who are also located in the airport precinct.
7.2.1
What Role do Airports Play in the Economic Life of a City
Airports and their precincts provide an important and growing economic benefits for the cities in which they are located. As this study has found, in NSW, Sydney Airport and associated flow on businesses provide between 5 and 6 percent of Gross State Product. This is a significant economic contribution by a single infrastructure asset. The economic impact measured in this study does not calculate the impact associated with tourism and business activities that are generated by individuals who have passed through the airport. That is, a tourist who comes to Sydney or NSW will spend on hotels, taxis/transport and entertainment activities all of which generate other significant economic benefits to the city or the State. Although the airport is not directly responsible for that expenditure it does play a role in facilitating the process and is therefore a significant contributor to the economic development of a city. A recent study by IATA called Aviation Economic Benefits undertook an investigation into the economic benefits of investment in the aviation industry. This study found that the growth of an airport is linked to the growth of an economy and that the growth of an airport also facilitates and contributes to the growth of an economy. The study found that having greater global connectivity, via an airport and aviation industries, can boost productivity within an economy by providing better access to markets, enhancing links between businesses and providing greater access to resources and international capital markets. An efficiently functioning airport can result in: reduced transactions costs; linking markets and increasing competition within an economy;

7-5
Section 7
facilitation of tourism;
Planning Analysis
market integration and scale impacts; and market agglomeration and specialization.
7.2.2
Other Global Examples
There are a number of examples of the growing development of airport precincts around the world and of their importance as stand alone economic entities. The types of developments and their impacts will be briefly discussed for five cities around the world.
Amsterdam
Over the past number of years, Schiphol Airport has developed into an airport city. The airport has become as much as destination as it is an airport. The types of developments that have occurred within the airport fence are: Shopping arcades; Internet cafes; Restaurants; Office buildings, including Ernst and Young, Unilever and Heineken; Two hotels.
It has been estimated that there are approximately 58,000 workers within the airport boundary on a daily basis. Rental rates within the airport precinct are higher than rentals per square metre in the city centre, which confirms the demand for the benefits that come from being located close to the airport.
Dallas - Fort Worth

At Dallas Fort Worth Airport there has been growth next to the airport over recent times, known as the Las Colinas development. The area has over 2,000 companies located within the region including AT&T, Microsoft and Hewlett Packard. The development involves a 12,000 acre airport linked space. The Las Colinas development includes: 21.2 million square feet of office space; 8.5 million square feet of industrial space; 1.3 million square feet of retail space; 13,300 residential houses; 3,700 hotel rooms; and 75 restaurants.
Hong Kong
Hong Kong Airport has developed three commercial districts adjacent to the airport operation. These districts consist of a: logistics district; office and retail district; and entertainment and exhibition facilities.

7-6
Section 7
Planning Analysis
In addition the area has housing for the 45,000 airport workers. The facility has multimodal transport facilities which give it connection to the city and to mainland China, making it an in demand location for business looking for quick and easy access to world markets.
Incheon
Incheon Airport, in Korea, is one of the first and largest purpose built airport cities. The total airport city development is 1,890 hectares. The breakdown of this space includes: Residential 487 hectares; Tourism 86.2 hectares; Commercial 23.1 hectares; Logistics 95.5 hectares; Industrial 60.7; International free trade area 29 hectares; and Public space 1,108.4 hectares.
The types of businesses that have developed within the facility include: a golf course; shopping centres; hotels; exhibition centres; aircraft industries; housing; and a hospital.
Beijing
The Beijing Capital Airport is being developed into an Airport City. The development is planned to encompass 100 square kilometres of which 60 square kilometres is airport operations, 25 square kilometres is commercial and residential and 15 square kilometres encompasses a free trade operating zone. In addition, it is planned that the surrounding 1000 square kilometres will encompass the airport precinct with supporting and supplementary developments all related to the airport city. It is estimated that airport development will employ 100,000 people.

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Section 7
7.2.3
Planning Analysis
Sydney Airport Precinct
Sydney Airport is strategically located 8 kilometres from the Sydney CBD with accessibility to all parts of the Sydney Metropolitan area via multiple modes of transport. This corridor of concentrated jobs and activity from the Sydney central business district to Sydney Airport and Port Botany is identified by the NSW Government as being a major economic corridor and a major contributor to Sydney and Australias economy. The airports interaction with the rest of the city is complex and growth and change in and around must be carefully planned. The area around Sydney Airport has always been in high demand as a location for business. In recent years, this demand for development space within the Sydney Airport precinct has been growing. The Sydney Airport precinct is defined as the three council areas which surround the Airport. These are Botany Bay, Marrickville and Rockdale Councils.
Plate 7-1
Sydney Airport Precincts

7-8
Section 7
Housing
Planning Analysis
In addition to the predicted growth at Sydney Airport, the NSW Government is also encouraging growth and development of the broader airport precinct and the surrounding area in general. The Metropolitan Strategy forecasts a need for an additional 640,000 new dwellings by 2031 compared with 2004. Of these, 20,000 and 35,000 are expected to be constructed in the East Subregion and South Subregion respectively. These two subregions are the ones most likely to impact on traffic volumes in the vicinity of Sydney Airport. A further 40,000 dwellings are expected to be provided in the South West Subregion which also has the potential to influence traffic levels near the airport. Adjacent residential developments in the area such as Green Square and Cooks Cove are located within only a few kilometres of the airport and are projected to provide opportunity for significant increases in population and employment. The growth around the airport region will increase pressure for infrastructure to be put in place to service this growth. The growth and development is residential, industrial and commercial. Cooks Cove is a 100 hectare site, located in the suburb of Arncliffe, approximately 10 kilometres south of the Sydney CBD and lies directly west of Sydney International Airport terminal. This new development would provide a new trade and technology park, a new golf course and enhanced public spaces. The development is designed to capitalise on the prime location opposite the airport and proximity to the Sydney CBD. The Green Square Urban Renewal Area is located between the Sydney Central Business District (CBD) and the Sydney International Airport and Port Botany. Green Square is considered to be the largest urban renewal project in Australia as it comprises 278 hectares of land in Sydneys oldest industrial area. The Green Square area includes the suburbs of Zetland and Beaconsfield, and parts of the suburbs of Alexandria, Rosebery and Waterloo. This development is projected to be home to a resident population of more than 33,000 and the targeted increase in jobs for Green Square is large, being an increase of 140 per cent from 5,827 to 14,000. The proposed development would provide housing for a mix of socioeconomic groups close to new employment opportunities.
7.2.4
Implications for Economy of Precinct Restriction
The growth of airports, the airport precinct and the concept of aerotropolis is not universally supported, and as such, there are often calls for the growth and development of these facilities to be restricted. Some of the concerns that are often raised in conjunction with development at airports include: concerns over traffic levels; competitive issues; safety issues; infrastructure pressures; and noise concerns.
But as has been shown in this study, the economic impact of Sydney Airport is currently $16.5 billion in terms of GSP impact and is forecast to increase to $27.2 billion by 2015/16. The employment impacts are estimated to be 206,133 in 2006-07 and are forecast to increase to 338,771 by 2015/16. If additional restrictions were to be placed on the airports ability to meet the growth projections forecast in the 2003/04 Master Plan, it is likely that the positive economic outcomes, including the predicted 132,638 new jobs, will not be realised. But it is not just the specific airport/airport precinct impacts that need to be considered, when considering restrictions on airport precinct growth and development. As discussed within this section of the report, research has been undertaken that shows that airports and airport precincts play a positive role in facilitating broader economic developments within a city. By improving connectivity with other global destinations productivity and economic development can be improved. Business and tourism are major

7-9
Section 7
Planning Analysis
contributors to NSW Gross State Product. Sydney Airport is one of the links along the chain that allow these industries to operate and produce wealth, jobs and income for the state.
7.3
Transportation and Infrastructure
An analysis has been undertaken on the transport and infrastructure requirements of Sydney Airport. The aim is to discuss the relationship between development and generated traffic and, as a consequence, the need for transport infrastructure provision. SACL aims to improve accessibility to centres and to achieve more sustainable travel. It has the following objectives: improve transport between Sydneys centres; improve existing transport systems; influence travel choices to encourage more sustainable travel; and improve transport decision making: planning evaluation and funding.
The specific actions it proposes that affect Sydney Airport include the following.
North West CBD South West Rail Link

The proposal is to extend existing lines in the north west and the south west. But the project with greatest significance for Sydney Airport is the Harbour Rail Link from south of Central rail station to St Leonards. New stations would be constructed and additional capacity through the CBD would add to the ability of rail to service the airport. The rail link is not expected to be completed until 2017.
Bus services
A network of 43 strategic bus corridors linking major centres is proposed. The corridors are to be progressively implemented with all corridors to have bus priority measures by 2012. Sydney Airport is located on two of the corridors. These corridors are Bondi Junction to Burwood and Bondi Junction to Hurstville. Unfortunately neither of these corridors service destinations that are significant origins or destinations for airport users.
Rail Clearways
The Clearways program aims to improve the capacity of suburban network. The program seeks to separate the network into five independent sub-networks (or clearways) so that an incident on one clearway will not affect services on another clearway. Projects include the additional track, turnbacks, passing loops and platforms designed to reduce bottlenecks. Completion of the program will allow the introduction of an improved timetable. The program is expected to be completed by 2010. The airport is situated on the Airport and South clearway. There is a possibility that extra platforms will be built at Wolli Creek enabling easier interchange between services on the Illawarra and Airport line.
Freight
In 2005/06 about 1,450,000 TEUs were handled at Port Botany. Of these 21.5 per cent were carried by rail, leaving 1,130,000 carried by road. The Freight Infrastructure Advisory Board recommended a target of 40 per cent by rail by 2011. Achievement of the target requires development of intermodal terminals, increased rail freight capacity and segregation of freight and passenger networks. Achievement of this target would result in a small reduction in containers carried by road in the medium term, but would still result in significant growth in the longer term. The trends are illustrated in the following table.

7-10
Section 7
Table 7-1
Planning Analysis
Modal Split of Container Handled at Port Botany
Total (000 TEUs) Rail (%)
21.5 40.0 40.0 40.0
Rail (000 TEUs.)

290 697 899 1160
Road (000 TEUs))

1059 1046 1349 1740
2005/06 2011 2016 2021
1349 1743 2248 2900
Source: Forecast TEUs are from Freight Infrastructure Advisory Board (2005)
By 2021 the number of containers carried by road will be 64 per cent more than in 2005/06, or almost 700 thousand more. An increase of this magnitude will certainly add to road congestion on roads to Port Botany that pass near the airport. The Metropolitan Strategy indicates that improvements to roads, including widening of the M5 and M5 East are planned. It seems that a longer term target of a greater share for rail would be prudent, if not essential. The NSW Government has recently announced that it is considering funding sources for the extension of the proposed M4 East.
7.3.1
Airport Users
Airport users can be classified into three broad groupsemployees, passengers and meeters and greeters. Employees have marked differences in travel patterns compared with the other groups. Over 50 per cent of employees come to the airport from the south or south west. The largest proportion (34 per cent) comes from St George Sutherland with a further 26 per cent coming from the Illawarra, Canterbury Bankstown or Fairfield Liverpool.21 In contrast, passengers are more likely to travel to and from the airport from inner Sydney (36 per cent) and surrounding areas such as the Eastern Suburbs (6 per cent) and the Lower Northern Suburbs (7 per cent). Meeters and greeters have a similar pattern to passengers of origins and destinations, although their origins and destinations tend to be more dispersed than for passengers.
7.3.2
Existing Traffic & Infrastructure Base Airport and Airport Precinct
The airport has been in existence since the 1920s and since that time the number of passengers using the airport and surrounding precinct has continued to grow. To meet the needs of a growing airport and to capture the benefits of this growth for the NSW economy, infrastructure, such as roads and rail, has been put in place to facilitate access to Sydney Airport. The current modes of access to Sydney Airport, as provided in SACLs Ground Transport Study, are shown in the figure below. Road access by private car accounts for 44 per cent of access, rail 11 per cent, bus and minibus 14 per cent, taxis 25 per cent and rental 5 per cent.
21
Sydney Airport Corporation Limited (SACL) (2006), 2006 Airport Ground Travel Plan, Sydney.

7-11
Section 7
Planning Analysis
Figure 7-4 Current Modes of Access
Other, 1% Car - Park, 29%
Minibus, 10% Bus, 4%
Taxi, 25%
Car - Drop Off, 15% Train, 11%
Rental, 5%
Source: SACL Ground Transport Plan
As the above figure shows, currently the majority of trips to the airport precinct are road based. Major State roads that provide access to the airport include: General Holmes Drive; Southern Cross Drive; M5 East; and Princes Highway.
Other key roads according to SACLs Ground Transport Study include: Marsh Street; Foreshore Road; Airport Drive / Qantas Drive; Joyce Drive; ORiordan Street; Canal Road; and Botany Road.
The current population that access Sydney Airport on a day to day basis is shown in the table below. On a typical weekday, the number of people accessing the airport is 89,209, while on a typical weekend day there are approximately 80,000 people accessing the airport.

7-12
Section 7
Table 7-2
Planning Analysis
Current Population Accessing Sydney Airport
Weekday
31,694 31,623 13,779 12,113 89,209
Airport User
Arriving Passengers Departing Passengers Meeter/Greeters Employee Total
Weekend
28,984 29,363 12,488 9,609 80,444
SACL undertook a survey in 2006 to estimate the market segments for ground transport users. The market segments were broken down into the following groups: passengers (business and leisure, resident and non resident); meeters and greeters; and employees (airport and non airport).
On a typical weekday, 70% of people accessing Sydney Airport were air passengers, while meeters and greeters account for a further 15%. Non residents accessing the airport accounted for 47% of the ground access task. The weekday ground access task is shown in the figure below.
Figure 7-5
Access by Market Segment - Weekdays
Meeters and Greeters, 15% Employees Non Airport Based, 1% Employees Airport Based, 13% Business Resident, 8%
Business Non Resident, 17%
Leisure Resident, 16%
Leisure Non Resident, 30%
The weekend ground access task is shown in the figure below. The number of employees accessing the airport (particularly non airport based) as a proportion of the overall task falls on the weekend as does the business access for non residents.

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Section 7
Planning Analysis
Figure 7-6 Access by Market Segment - Weekend
Meeters and Greeters, 16% Employees Non Airport Based, 1% Employees Airport Based, 11%
Business Non Resident, 14%
Leisure Resident, 22%
Business Resident, 8%
Leisure Non Resident, 28%
The transport infrastructure around Sydney Airport and the broader Sydney metropolitan area underpins economic growth and has been one of the main areas of investment for governments over the last ten years. Recent traffic and infrastructure improvements around Sydney Airport include: the Eastern Distributor opened in 1999; the Airport Rail Link opened in 2000; the M5 East opened in 2001; and the Cross City Tunnel opened in 2005.
7.3.3
Impact of the Airport and Airport Precinct Growth on Traffic and Infrastructure
The impacts of growth at Sydney Airport in conjunction with the broader growth of the precinct and metropolitan Sydney has been discussed and assessed in SACLs Ground Transport Plan. The plan identified infrastructure constraints associated with the main forms of transportation to the airport.
Road Capacity Constraints to Growth

According to SACLs Ground Transport Plan, the road networks surrounding the airport will be over capacity by 2024 in their current form. Traffic demand during the morning peak for northbound traffic, which mainly consists of trips towards the CBD, will be particularly over capacity with resultant congestion. The capacity and congestion under current infrastructure conditions will mean that passengers and employees experience difficulties in conveniently accessing the airport. In order to cater for the increasing traffic that is not associated with airport growth, improvements in road capacity will also be necessary on the major approach roads around the airport. The roads that SACL has determined will need capacity improvements are: General Holmes Drive; the M5 East; Southern Cross Drive; Qantas Drive; and

7-14
Section 7
the Princes Highway.
Planning Analysis
Rail Constraints to Growth

Data from CityRail shows that in the morning peak hour 8 trains run on the Airport rail line towards the city and carry 6,500 passengers at an average of 92.5 per cent capacity. Over the complete morning peak period, 26 trains run towards the city on the Airport rail line at 70% capacity. Patronage on the rail line is forecast to grow due to growth in population in the East Hills region, where the Airport rail train services originate. This means it will be difficult for the additional needs of the airport and passengers to be met on the rail line, as these passengers will compete for access with travellers using the service for their day to day transport needs, particularly to and from the CBD. Capacity on the Airport line is ultimately constrained by the number of trains that can run through the city circle loop. The city circle loop is already operating at or beyond capacity. Therefore the ability to increase train services to meet the needs of airport passengers is limited. SACL has forecast that the number of passengers wanting to use the morning peak rail service to access the airport or depart the airport by 2024 will be 1,500, but the number of available seats is currently only 500.
Bus Constraints to Growth

Road congestion will affect the ability to use bus services to meet the transport needs of the airport and surrounding areas. Currently there are limited bus services accessing areas at or near the airport and they are not necessarily servicing the right passenger origins, which SACL suggest would be employees located to the south of the airport and passengers to the north in the CBD.
7.3.4
Comparisons between Airport and Airport Precinct Traffic and Infrastructure Impacts
As has been mentioned during this section, while the demand on capacity of infrastructure around the airport is impacted by activities at the airport, it is impacted more so by the broader growth of the Sydney metropolitan region. The Sydney metropolitan population is expected to increase to 5.6 million over the next 10 years. Much of the residential growth associated with this population growth is planned to be in the South West and North West regions of Sydney. The growth and development of the South West region of Sydney will potentially have implications for infrastructure around the airport region particularly the roads surrounding the airport. The M5 and M5 East are likely to provide the main route to the CBD for people working within or visiting the city. Within the vicinity of Sydney Airport there is the North Arncliffe redevelopment which is planned to house 8,000 people. As part of the Metropolitan Strategy, Green Square has been highlighted as a residential growth area. Green Square is located between the CBD and Sydney Airport. It is forecast that by 2021 there will be 33,000 additional residents and more than 28,000 workers within the zone. These increased residential populations will place greater demands on the infrastructure around the airport, probably to a greater degree than the airport itself. There are also other commercial/industrial operations that will increase impacts on the traffic and infrastructure requirements of the area around the airport, including the Port Botany container terminal. Port Botany currently handles 1.5 million freight containers (TEUs) per annum with this forecast to increase to 3 million by 202022. Each of these freight containers requires movement away from the port. There are two methods to move containers from Port Botany, rail or road. Currently the majority of
22
Sydney Ports Corporation

7-15
Section 7
Planning Analysis
containers are moved by road. Although it is the Government and port operators view that rail use will increase over time, the increase in freight moved through the port will have an increasingly significant impact on the number of truck movements into and out of the region
Table 7-3
Forecast Airport Population Accessing Sydney Airport

2005/06 2015/16
47.8 146,611
2023/24
68.3 209,344
Passengers (millions) Weekday Average Daily Traffic
29.1 89,209
Source: URS Analysis & SACL Ground Transport Plan
7.3.5
Requirements for Infrastructure
In 2006-07 there were approximately 31 million passengers arriving and departing from Sydney Airport. SACL forecasts that in 2023 /24 there will 68.3 million passengers. If the distribution of origins and destinations of these passengers remains unaltered, and if the ratio of employees and meeters and greeters also remains unaltered, then in 2023/24 about 46,000 people would travel on a typical weekday to and from the airport from the southern and south western areas of Sydney. In addition about 92,000 would travel to and from the airport on a typical weekday from Inner Sydney, Eastern Suburbs and Lower Northern Sydney. As transport links to the airport improve as suggested in the Metropolitan Strategy then employees might develop a more dispersed pattern of residence. However, it is unlikely that the concentration of passengers and meeters and greeters to the north of the airport will change to any significant extent. Travel to and from the airport is dominated by car travel. About 75 per cent of employees either drive a car to work or are dropped off at the airport. About 19 per cent use bus or train with the remainder using a variety of road based travel modes. Passengers tend to travel to and from the airport by taxi/hire car (37 per cent) with a further 32 per cent either driving a car or being dropped off or picked up. Almost two thirds (65 per cent) of meeters and greeters drive a car to the airport with a further 18 per cent using a taxi or being dropped off. If the mode split remains the same, in 2023/24 there will be an estimated 210,000 passenger trips to the airport with a mode split as shown in the following table.
Table 7-4
Estimated Ground Transport Split 2023/24

Mode
Car Train Bus Dropped off/picked up Minibus Taxi/hire car Rental car Other Total
Note
Passengers
60,000 20,000 6,000 32,000 19,000 59,000 12,000 1,000 210,000
Figures may not add to total due to rounding
On a typical weekday in 2023/24 there will be about 150,000 passenger trips by car to the airport These trips would be by car and either park at the airport, dropped off/picked up or by taxi/hire car. The SACL Ground Travel Plan envisages a 5 per cent mode transfer to rail. While this would help, there would still

7-16
Section 7
Planning Analysis
be an overwhelming use of cars for travel to and from the airport. Buses are the least used transport mode for accessing the airport. Given the forecasts of economic growth associated with development of Sydney Airport and the airport precinct, it will be necessary for infrastructure development in roads, public transportation and possibly in the service networks such as electricity, water and sewerage. Without investment there is the possibility or probability of congestion or reductions in service quality which will impact on the ability of the airport precinct to function properly. Without investment in this infrastructure the forecast level of growth for the Sydney Airport precinct will not be achieved and the NSW economy could suffer as a result. SACL in its Ground Transport Plan have provided some suggested infrastructure improvements to the transport network which may assist in meeting capacity constraints. These include: high occupancy vehicle lanes - provision of priority lanes for buses and vehicles with more than 3 passengers on the main roads approaching the airport; realign and augment existing bus services review existing bus services and change routes to meet travel profiles of employees and passenger segments; reposition or reduce kerbside drop offs and pick ups kerbside drop offs and pick ups account for 25 per cent of traffic around the airport. By repositioning or reducing, this option may encourage more public transport use and hence reduce congestion around the airport; and flexible ticketing arrangements on Airport Rail link provide cheaper, more flexible ticketing for airport employees to encourage rail use.

7-17
Section 8
8 Conclusions
Summary
Sydney Airport is widely recognised as the gateway to Australia and as a major contributor to the Sydney, NSW and Australian economies. Sydney Airport is Australias busiest airport annually servicing 31 million passengers and 634,000 tonnes of freight and with around 650 businesses directly working within the Airport. SACL has undertaken an economic impact study that measures the contribution of the Airport and related business to the NSW state economy. Economic impact is measured in terms of contribution to four key economic indicators: output; employment; value added (i.e. GDP); and household incomes.
Why do Airports Conduct Economic Impact Studies

Aviation and airports have become increasingly important to the way an economy operates and performs, in terms of business and tourism on a global scale. More and more people are travelling either domestically or internationally as the cost and opportunity to travel are improved. Although there is little debate about the ability of an airport to generate economic activity and growth, measuring that contribution can be difficult. This is because an airports contribution to economic activity is actually the amalgam of the contribution of hundreds of diverse organisations. Sydney Airport, in this sense, is akin to a business park as many organisations actually carry out commercial or government activity in and around the airport. It is a facility that a wide range of people can and do use to generate economic activity. The difficulty in measuring the economic impact of an airport therefore is in identifying the myriad of organisations carrying on activity at an airport and then calculating, in some standardised way, the activity of those firms.
Types of Airport Economic Impacts

Although economic impact analysis practices differ around the world, for the purposes of this study, the economic impact of Sydney Airport is defined as that activity associated with servicing the flow of passengers and freight. The study was not intended to measure the economic impact or the value of the flow itself. That is, no attempt has been made to include the economic impact of the expenditure of tourists and visitors to Sydney passing through the airport or the value of goods transported by air. In addition, in measuring the economic impact of Sydney Airport, no attempt has been made to limit the analysis to those activities that take place within the airport boundary. Over the years in which Sydney Airport has been operating, much economic activity has leaked over the fence into neighbouring areas. In broad terms, economic impacts for airports can fall into three categories: Direct impact activity, employment and income that is wholly or largely related to airport operations or usage of the services provided by the airport, either on site or in the surrounding area; Indirect or flow-on impact activity, employment and income generated in the economy of the study area by the spending of incomes generated by the direct impacts; and Catalytic impact - employment and income generated in the economy of the study area by the wider role of the airport in attracting economic activities, such as inward investment and inbound tourism.
To estimate the economic impact of Sydney Airport an input output methodology has been chosen as the appropriate method for calculating flow on impacts of the Airport. This approach is consistent with those recommended by the ACI (Airports Council International) for airport economic impact assessments.

8-1
Section 8
Summary
These methods were developed so that the transactions among industries could be studied, referred to as inter-industry transactions as well as transactions where industries sell their goods and services to final users (e.g. consumers, exports, government and capital formation). The calculation of these transactional impact involves working backwards from the sale to final users to examine the various contributions to the creation of that final product. This works through the supply (or value) chain for that product or service and identifies all of the trades that take place between contributing businesses. The key economic results of the study indicate that Sydney Airport is a major employment generator and wealth creator in the NSW economy. The economic headline results of the study are summarised below:
Employment (NSW)
Employing 206,133 people representing 6% of the Sydney labour force (total jobs - full time and part time); Employing 120,162 full time equivalent (FTE) people; and Average wage levels of 18% above the NSW average with a medium to high skill level.
Activity Indicators (NSW)

Contributing $16.5 billion to NSW Gross State Product; Generating $30.4 billion of output; and Providing $7.4 billion of household income.
The economic impact measured in this study does not calculate the impact associated with tourism and business activities that are generated by individuals who have passed through the airport. That is, a tourist who comes to Sydney or NSW will spend on hotels, taxis/transport and entertainment activities all of which generate significant economic benefits to the city or the state. Although the airport is not directly responsible for that expenditure it does play a role in facilitating the process and is therefore a significant contributor to the economic development of a city. A recent study by IATA called Aviation Economic Benefits undertook an investigation into the economic benefits of investment in the aviation industry. This study found that the growth of an airport is linked to the growth of an economy and that the growth of an airport also facilitates and contributes to the growth of an economy. The study found that having greater global connectivity, via an airport and aviation industries, can boost the productivity within an economy by providing better access to markets, enhancing links between businesses and providing greater access to resources and international capital markets. An efficient functioning airport can result in: reduced transactions costs; linking markets and increasing competition within an economy; facilitation of tourism; market integration and scale impacts; and market agglomeration and specialization.
The economic importance of Sydney Airport is expected to grow over the next 10 years with the expected increase in air travel and the use of airfreight. Growth at Sydney Airport is driven by its use and the demand for Airport facilities is driven by the demand for air travel, be it for passengers or freight. Therefore to develop a picture of growth at the Airport, an analysis of its derived demand from users must be constructed.

8-2
Section 8
Summary
The study also looked at how the growth of Sydney Airport would impact on the NSW economy. To construct a growth profile for the Sydney Airport impact on the NSW economy over the next 10 years, three indicators of growth were produced, including: passenger levels; freight volumes; and capital development.
When the forecasts for these indicators were input into the economic impact modelling, a growth profile was provided for Sydney Airports economic impact on the NSW economy over the next 10 years, in terms of, gross state product and employment. In 2006/07 the GSP contribution of Sydney Airport is estimated to be $18.0 billion with a forecast GSP contribution of $27.2 billion by 2015/16.
Figure 8-1
Forecast GSP Outcomes of Growth
30.0 26.0 24.0 23.0 25.0 21.0 19.0 20.0 18.0 19.8 22.0 25.0
27.2
$'b
15.0
10.0
5.0
2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16
The estimated number of jobs directly and indirectly associated with Sydney Airport is 225,103 in 2006/07 and could rise as high as 338,771 by 2015/16.

8-3
Section 8
Figure 8-2
400,000
Summary
Forecast Employment Outcomes of Growth
350,000 311,643 300,000 261,693 250,000 247,387 286,719 274,264 237,413 298,915
338,771 324,921
Employees
225,103
200,000
150,000
100,000
50,000
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
The capital expenditure impact on employment between 2006/07 and 2010/11 is shown in the figure below. Based on the analysis undertaken for the 2005/06 economic impact calculations, for each $1 million spent on capital expenditure there were 22.4 employees required as part of undertaking the work and the subsequent indirect flow on impacts on the broader economy Combining the passenger and capital expenditure impacts on the economic impact of Sydney Airport shows a growth in annual value added or GSP impact from $18.4 billion to $22.3 billion over the forecast period and a growth in employment of 230,253 to 279,414. The outputs of passenger growth and capital expenditure on economic impact are detailed in the table below. Because of limitations in forecast capital expenditure, the combined information can only be provided out to 2010/11.

8-4
Section 8
Year 2006/07
Summary
2007/08 2008/09 2009/10 2010/11
Value Added ($m) GSP - Total Employment Employment - Total 230,253 242,563 252,537 266,843 279,414 18,386 19,372 20,172 21,319 22,327
The growth of Sydney Airport is linked to the growth of the Sydney and NSW economies. The airport and the economy are linked, each driving the other. The Sydney and NSW economies, as indicated by GSP, are forecast to grow over the next 10 years by 3.2 per cent per annum (in CAGR terms). The airport has a role to play in facilitating this growth allowing business and tourism levels to grow. In conjunction with this, Sydney Airport is part of this growth in GSP and employment as shown by the forecast growth in the economic impact of the airport in the preceding section.

8-5
Section 9
9 References
References
ACI Europe / York Consulting, Creating Employment and Prosperity in Europe: An Economic Impact Study Kit. ACI Europe/ York Consulting (2002), Creating Employment and Prosperity in Europe: A study of the Social and Economic Impact of Airports. Aircraft and Aerospace (2001), August edition Arthur Andersen and CREA (1999), Economic Impact Study of the Sydney 2000 Olympic Games, Arthur Andersen, Sydney Australian Bureau of Statistics, Australian National Accounts, Catalogue Number 5220.0 Australian Bureau of Statistics, Labour Force Australia, Catalogue Number 6203.0 Australian Bureau of Statistics, Average Weekly Earnings, Catalogue Number 6302.0 Australian Bureau of Statistics, Manufacturing Industry Australia, Catalogue 8221.0 Australian Bureau of Statistics, Australian National Accounts Tourism Satellite Account 1997/1998 Australian Bureau of Statistics, Australian National Accounts Tourism Satellite Account 2000/01 Australian Bureau of Statistics, Australian Input Output Tables 1996/97, Catalogue 5209.0 Australian Bureau of Statistics, International Merchandise Trade, Catalogue 5422.0 Australian Bureau of Statistics, NSW Regional Statistics, Catalogue 1362.1 Australian Customs Service (2000), Annual Report Booz Allen and Hamilton (1999), Airport as Engines of Economic Development, Booz Allen Hamilton Business Victoria Department of State Development (1997), A Guide for International Airfreight Users Bureau of Tourism Research, International Tourism Expenditure by International Visitors in Regional Australia, Occasional Paper No. 32 Centre for Economic Development Research and Assistance (1997), Final Report Economic Impact Study for the Las Cruces International Airport, New Mexico Centre for Regional Analysis (1998), The Benefits of Being a Hub Airport, George Mason University, Virginia Department of Industry, Tourism and Resources, Tourism Division (2002), A Monthly Fact Sheet on the Economic Impact of Tourism and the Latest Visitor Arrival Trends, Department of Industry, Tourism and Resources, Canberra Department of Immigration and Multicultural Affairs (2006), Annual Report Department of Transport and Regional Services (2006), AVSTATS - various unpublished data Economic Research Associates Pty Ltd (1996), The Economic Significance of Perth International Airport, Western Australia IATA (2007), Aviation Economic Benefits IBISWorld Pty Ltd, Scheduled Domestic Air Transport in Australia, Report I6402 IBISWorld Pty Ltd, Scheduled International Air Transport in Australia, Report I6401 IBISWorld Pty Ltd, Services to Air Transport, Report I6630 IBISWorld Pty Ltd, Non Scheduled Air and Space Transport, Report I6403

9-1
Section 9
Internet site, www.airports.org
References
Internet site, www.sydneyairport.com.au
Internet site, www.skyscrapers.com Internet site, www.oanda.com Internet site, www.airservices.gov.au Kinhill Engineers (1990), Third Runway Proposal Draft Environmental Impact Statement Sydney (Kingsford Smith) Airport Economic Impacts Working Paper, Kinhill Engineers, Sydney NSW Department State and Regional Development (2006), Recent Finance Sector Wins for Sydney, Department of State and Regional Development, Internal Report, Sydney NSW Department State and Regional Development (2006), Recent ICT Sector Wins for Sydney, Department of State and Regional Development, Internal Report, Sydney NSW Department State and Regional Development (2006), Recent Business Wins for Sydney, Department of State and Regional Development, Internal Report, Sydney NSW Department of Transport (2006), Passenger Statistics NSW Regulated Air Routes, Internal Report Saha International (2007), Integrated Infrastructure Planning A New Way Forward Southern Cross Airports Corporation Holding Limited, 2006 Annual Report Sydney Airport Corporation Limited, 2003/04 Preliminary Draft Master Plan Sydney Airport Corporation Limited, 2006 Airport Ground Travel Plan Tourism Australia (2006) International Visitors in Australia Travers Morgan Pty Ltd and The National Institute of Economic and Industry Research and British Airports International (1987), Economic Benefits of Melbourne Airport Final Report, Department of Industry, Technology and Resources and Department of Aviation, Victoria University of North Carolina (2006) Aerotropolis The Rising Airport City URS (2003), Airport Retail Study 2003 Edition, URS, Sydney World Travel and Tourism Council (2005), Tourism Satellite Accounting Research, World Travel and Tourism Council, London.

9-2
Section 10
10 Limitations
Limitations
URS Australia Pty Ltd (URS) has prepared this report in accordance with the usual care and thoroughness of the consulting profession for the use of Sydney Airport Corporation Limited and only those third parties who have been authorised in writing by URS to rely on the report. It is based on generally accepted practices and standards at the time it was prepared. No other warranty, expressed or implied, is made as to the professional advice included in this report. It is prepared in accordance with the scope of work and for the purpose outlined in the proposal dated 5th June 2006. The methodology adopted and sources of information used by URS are outlined in this report. URS has made no independent verification of this information beyond the agreed scope of works and URS assumes no responsibility for any inaccuracies or omissions. No indications were found during our investigations that information contained in this report as provided to URS was false. This report was prepared between the 17th October 2006 and August 2007 and is based on the conditions encountered and information reviewed at the time of preparation. URS disclaims responsibility for any changes that may have occurred after this time. This report should be read in full. No responsibility is accepted for use of any part of this report in any other context or for any other purpose or by third parties. This report does not purport to give legal advice. Legal advice can only be given by qualified legal practitioners.

10-1
Appendix A
A. Sydney Economic Impact Study Invitation Letter & Survey
Sydney Economic Impact Study Invitation Letter & Survey
Appendix B
B. Sector Classification
Sector Classification
107 IO Sectors
Sheep for meat and wool Grains inc. cereals, oilseeds, legumes Beef cattle
Sector Aggregation
Broadacre Agriculture
Dairy Cattle Pigs Other Agriculture
Dairy cattle Pigs Poultry for meat and eggs Other agriculture, inc. nurseries, vegetables, fruit, cotton, tobacco, sugar cane, herbs, hay, goats, horses, deer, beekeeping, pet breeding.
Services to agriculture Forestry & Fishing Mining
Cotton ginning, shearing and wool classing, aerial ag services, contract harvesting, seed grading, land clearing; hunting Forestry and logging Commercial fishing and aquaculture Coal; oil and gas Iron ores Non-ferrous metal ores Other mining inc. construction materials Services to mining inc. exploration
Food Mfg
Meat and meat products Dairy products Fruit and vegetable products Oils and fats Flour and cereal foods Bakery products Confectionery Other food products inc sugar, seafood, animal/bird feed, spices, herbs, savoury snacks, tea, honey - blended etc. Soft drinks, cordials, syrups Beer and malt Wine and spirits Tobacco products
Textile Mfg
Textile fibres, yarns and woven fabrics Textile products inc. blinds, awnings, curtains, sails, tents, carpets, rugs, ropes, nets, string, cord, bags, sacks etc. Knitting mill products Clothing Footwear Leather and leather products
Wood Mfg
Sawmill products inc sawn timber, woodchips, dressed timber Plywood, veneer, fabricated boards Other wood products inc. structural components - windows, doors, trusses, frames, containers, pallets, cases, log preservation.
Appendix B
Sector Aggregation
Printing/Publishing
107 IO Sectors
Pulp, paper and paper-board Paper bags and products Printing; services to printing Publishing; recorded media etc
Chemical Mfg
Petroleum and coal products Basic chemicals inc. fertilisers, industrial gas/chemicals, synthetic resins, dyes, acid, salt, urea, fluoride, chlorine etc. Paints Pharmaceuticals etc inc. drugs, medicines, medicinal preparations Soap and detergents Cosmetics and toiletries Other chemical products inc. explosives, ink, glue, polish, cleaners Rubber products Plastic products
Mineral Mfg
Glass and glass products Ceramic products Cement, lime and concrete slurry Plaster; other concrete products Non-metallic mineral. products nec inc. abrasives, chalk, stone products, insulation materials, ag/hydrated/quick lime,
Metal Mfg
Iron and steel rolling, galvanising, casting, forging, pipes and tubes Basic non-ferrous metals inc alumina, aluminium, copper, silver, lead, zinc, gold, bronze, nickel, tin smelting, refining, rolling, drawing, extruding, casting, forging Structural metal products inc girders, reo-mesh, architectual products, doors, gates, windows etc Sheet metal products inc. containers, guttering, downpipes, tanks Fabricated metal products inc. tools, general hardware, springs, wire, nails, nuts, bolts, screws, rivets, metal coating, non-ferrous pipe fittings, miscellaneous metal products
Mach/Equip Mfg
Motor vehicles and parts etc Ships and boats Railway equipment Aircraft Scientific etc equipment inc photographic, optical, medical, surgical Electronic equipment inc. computer, telecommunication, radio, TV Household appliances Other electrical equipment inc. cable, wire, batteries, lights, signs, fuses, electric motors, generators, welding equip. etc Agricultural, mining, construction machinery inc lifting/handling Other machinery and equipment inc. food processing, machine tool/part, pumps/compressors, commercial heating/cooling equip.
Appendix B
Sector Aggregation
Other Mfg
107 IO Sectors
Prefabricated buildings Sheet metal, wooden and upholstered furniture, mattresses, pillows, cushions (not rubber) Other manufacturing inc jewellery, toy, sporting goods, brushes, miscellaneous goods
Utilities
Electricity generation, distribution and supply Gas distribution and town gas mfg/dist. Via mains Water supply, sewerage and drainage services
Resident. Building Other Construction Wholesale Trade Retail Trade Mechanical Repairs Other Repairs Accommodation Restaurants
Residential building Non-residential building, Non-building construction inc. road/bridge, earthmoving, irrigation, mitigation Resale of new or used goods to business or institutional users. Resale of new or used goods to final consumers for personal or household consumption eg main-street establishments Mechanical repairs Other repairs in. household equipment repairs etc Accommodation inc. hotels, motels, guest houses, youth hostels, student residences, camping grounds, caravan parks; cafes & restaurants; hospitality clubs, pubs, taverns and bars Road freight and passenger transport Rail; pipeline; other inc. cable car, chair lift etc International, coastal, inland water transport inc sea freight, cruise operation, boat charter, ferry. Scheduled domestic and international air transport and non-scheduled air & space transport. Services to road, water and air transport; travel agency, freight forwarding, customs agency; storage Postal, courier, telecommunications Reserve Bank; development, savings and trading banks Building societies, credit unions, money market dealers, deposit taking financiers etc Financial asset investors Insurance and services Services to finance and investment inc. brokers Residential Property Operators Commercial property operators and developers, real estate agents, non-financial asset investors, machinery and equipment hiring and leasing
Road Transport Rail Transport Water Transport Air Transport Transport Services Communication Banking Non-bank Finance Investment & Insurance Ownership of dwellings Property Services
Technical, Computer Services Scientific research, architectural, surveying, consultant engineering, other technical services, data processing, information storage and retrieval, computer maintenance and consultancy services. Legal/Account/Mgt/Mkt'g Other business services Public Administration Legal, accounting, advertising, commercial art and display, market research, business administration and management services Employment placement, contract staff, secretarial, pest control, cleaning, packing, etc. Federal, state, local government administration; justice Defence
Appendix B
Sector Aggregation
Education Health Community Care Services Entertainment/ Media Cultural Sport, Gambling Personal Services
107 IO Sectors
Education Hospitals, nursing homes, medical and health services; veterinary services Childcare, accommodation for the aged, residential care services, non-residential care services eg meals on wheels, counselling. Motion picture, film and video, radio and television Libraries, museums, parks and gardens, arts Sport, gambling and other recreation services Personal and household goods hiring; laundries, drycleaners; photographic studios and processing, funeral directors etc, gardening, hairdressing etc; private households employing staff Religious organisations; Interest groups - business and professional associations; Public order and safety
Other Services

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FINAL REPORT The Economic Impact of Growth at Sydney Airport

Sydney Airport Corporation Limited

THE ECONOMIC IMPACT OF GROWTH AT SYDNEY AIRPORT

Project Manager: Todd Ritchie Principal URS Australia Pty Ltd

Project Director: Don Miles Principal

Prepared for Sydney Airport Corporation Limited

THE ECONOMIC IMPACT OF GROWTH AT SYDNEY AIRPORT

Executive Summary ............................................................................................ES-1

Introduction ................................................................................................... 1-1

About Sydney Airport & SACL..................................................................... 2-1

Sydney As A World City ............................................................................... 3-1

THE ECONOMIC IMPACT OF GROWTH AT SYDNEY AIRPORT

3.6 3.7 3.8 3.9 3.10

Sydney Airport Direct Economic Impacts................................................... 4-1

Summary Direct Economic Impacts .......................................................................... 4-1

Indirect & Total Economic Impacts of Sydney Airport .............................. 5-1

THE ECONOMIC IMPACT OF GROWTH AT SYDNEY AIRPORT

Growth At Sydney Airport ............................................................................ 6-1

Planning Analysis ......................................................................................... 7-1

THE ECONOMIC IMPACT OF GROWTH AT SYDNEY AIRPORT

THE ECONOMIC IMPACT OF GROWTH AT SYDNEY AIRPORT

Tables, Figures & Appendices

THE ECONOMIC IMPACT OF GROWTH AT SYDNEY AIRPORT

Tables, Figures & Appendices

THE ECONOMIC IMPACT OF GROWTH AT SYDNEY AIRPORT

Tables, Figures & Appendices

THE ECONOMIC IMPACT OF GROWTH AT SYDNEY AIRPORT

around $16.5 billion in contribution to NSW GSP

around $7.4 billion in contribution to household incomes

Prepared for Sydney Airport Corporation Limited, 09th January 2008

THE ECONOMIC IMPACT OF GROWTH AT SYDNEY AIRPORT

Section 2 About Sydney Airport and SACL

Section 3 Sydney as a World City

Prepared for Sydney Airport Corporation Limited, 09th January 2008

THE ECONOMIC IMPACT OF GROWTH AT SYDNEY AIRPORT

Section 4 Sydney Airport Direct Economic Impacts

Prepared for Sydney Airport Corporation Limited, 09th January 2008

THE ECONOMIC IMPACT OF GROWTH AT SYDNEY AIRPORT

Section 5 Indirect and Total Impacts of Sydney Airport

Activity Indicators (NSW)

Prepared for Sydney Airport Corporation Limited, 09th January 2008

THE ECONOMIC IMPACT OF GROWTH AT SYDNEY AIRPORT

Section 6 Growth at Sydney Airport

Section 7 Planning Analysis

Prepared for Sydney Airport Corporation Limited, 09th January 2008

THE ECONOMIC IMPACT OF GROWTH AT SYDNEY AIRPORT

Prepared for Sydney Airport Corporation Limited, 09th January 2008

THE ECONOMIC IMPACT OF GROWTH AT SYDNEY AIRPORT

Methodology and Approach

Prepared for Sydney Airport Corporation Limited, 09th January 2008

THE ECONOMIC IMPACT OF GROWTH AT SYDNEY AIRPORT

Brief Workstream Descriptions

What is an Economic Impact Study?

Prepared for Sydney Airport Corporation Limited, 09th January 2008

THE ECONOMIC IMPACT OF GROWTH AT SYDNEY AIRPORT

Why do Airports Conduct Economic Impact Studies?

Prepared for Sydney Airport Corporation Limited, 09th January 2008

THE ECONOMIC IMPACT OF GROWTH AT SYDNEY AIRPORT

Types of Airport Economic Impacts

Airport Business Activities

Prepared for Sydney Airport Corporation Limited, 09th January 2008

THE ECONOMIC IMPACT OF GROWTH AT SYDNEY AIRPORT

Indirect or Flow-on Impacts

Economic Impacts Identified in the Study