INFRASTRUCTURE TO FORGE OUR FUTURE CAIRNS TNQ REGIONAL PRIORITIES 2022-23
CAIRNS AIRPORT – REBUILDING AVIATION COUNCIL: ALL TNQ STATE ELECTORATE: ALL TNQ FEDERAL ELECTORATES: KENNEDY, LEICHHARDT
BRIEFING NOTE SUMMARY • COVID-19 has had a disproportionate impact on the Far North Queensland region with an estimated loss of $2.2B of visitor spending in 2021, impacting more than 7,700 jobs in the visitor economy. • Investing in the rebuilding of aviation will deliver a strong ROI resulting from increased tax revenue, while playing a critical role supporting job creation in the tourism and accommodation industries. • Cairns Airport has committed to upgrading the International Terminal to support the rebuilding of direct international aviation. This follows completion of the Domestic Terminal upgrade in 2020. • Government support to meet the costs of Federally Mandated security upgrades will avoid cost prohibitive increases to the International Passenger Service Charge and International Passenger Security Charge during the aviation rebuild period. • Targeted route development, with a strong focus on Japan and Europe is required to replace Chinese visitors who were previously the most valuable international customer segment for Tourism in the region. • New aircraft technology provides the opportunity for direct flights from Cairns to Europe, which would be a game changer for Cairns’ tourism and international trade. Cairns is the only airport in Queensland that can reach Europe with direct flights.
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THE ISSUE
When international travel ceased in March 2020, it removed a structurally important component of the $3.3B tourism industry in Far North Queensland (FNQ). International visitors not only account for 7.4% of the region’s economy, but they also smooth the annual demand cycle because they travel when domestic demand is low, which allows operators to retain a year-round work force. The current absence of international tourists has operators juggling resourcing to service stop-start domestic demand and missing out on the opportunity to serve their premium customers. FNQ’s high value airfreight export industries are also dependent on international connectivity and currently rely heavily on the Federal Government’s IFAM program. Whilst this program has been a lifeline, private sector businesses are relying on the resumption of international connectivity to provide freight capacity beyond July when the IFAM program concludes. Cairns Airport is working to achieve a strong, fast international recovery for the benefit of the region’s tourism industry and exporters. This international aviation rebuild will be achieved from a standing start as the Cairns International terminal has been closed to commercial traffic for two years due to ongoing travel restrictions. The aviation rebuild will also take place in a changed and challenging operating environment where geopolitical developments, rapidly evolving customer needs and high degrees of operational risk dictate that international
connectivity be built back differently. Key issues for consideration during the international aviation rebuild include: Maintaining a stable cost base for airline partners Cash constrained airlines are highly sensitive to increased costs of doing business with airports in the current environment. Mandated security upgrades will cost Cairns Airport $10M, significantly increasing the International Passenger Service Charge and International Passenger Security Charge levied to airlines, particularly as costs would be shared across a reduced number of passengers during the aviation rebuild. Establishing new point-to-point routes for the covid-cautious traveller Route development has also been impacted as passengers now prefer to avoid hubs and fly point-to-point. Thankfully, Cairns has a long history of direct connectivity to Japan upon which to rebuild, and modern long-range wide-body aircraft (A350 and B767) are creating opportunities for long-haul point-to-point routes, including the possibility of direct flights into central-western Europe. Airlines rely on direct financial support to offset the increased risk and cost associated with new routes, especially long-haul pointto-point routes which are a departure from the pre-covid playbook. In a cash constrained environment, all stakeholders have weak balance sheets and must work together to support the re-establishment of international routes.
