* $2.4 bln plan part of PM Abbott push for investment, jobs
* Sydney airport firm has right to develop second facility
* Passenger demand growth warrants extra capacity -economist
(Adds comments from Sydney Airport, analysts)
By Maggie Lu Yueyang
SYDNEY, April 15 Australia has approved a $2.4
billion project to build a long-awaited second airport for
Sydney, likely boosting near-term investment and jobs in a bet
that the city's air travel demand will grow enough to justify a
surge in terminal capacity.
Prime Minister Tony Abbott announced the plan on Tuesday,
saying he expects work at the Badgerys Creek site in Western
Sydney, 60 kilometres from the city centre, to begin in 2016.
The A$2.5 billion ($2.4 billion) project will be funded mostly
by the private sector, he said, with first flights expected in
A second airport for Sydney was first proposed over 50 years
ago, but became mired in political debate before Abbott promised
to build one in last year's victorious election campaign. He was
voted in on a ticket pledging he would be an "infrastructure
prime minister", targeting infrastructure projects to revive
economic growth that sagged as Australia's mining investment
boom faded since 2012.
"It is essentially going to be an infrastructure package for
Western Sydney, a long overdue infrastructure package for
Western Sydney, that does also involve an airport," Abbott told
reporters in Canberra.
While the project is designed to bring a straightforward
injection of investment and jobs to the area in the near term,
implementing it and making efficient use of the extra capacity
it brings in the longer term may be more complex.
Sydney's current sole airport is Kingsford Smith, operated
by Sydney Airport Holdings Ltd in the Mascot suburb, 10
kilometres southeast of the city centre. Under rules governing
its privatisation in 2002, Sydney Airport has the right of first
refusal to develop and operate a second airport in the city.
"Basically it's the first right to develop and operate a
second airport, but it's something that would be subject to
lengthy discussions," Sydney Airport's spokeswoman Laura Stevens
Talks between the government and the airport operator may be
complicated by the fact that Sydney Airport already has an
existing 20-year plan to upgrade Kingsford Smith. That plan was
devised to meet forecast demand of 74 million passengers in
2033, nearly double 2013's 38 million passengers.
The time frame for consultations will be "a minimum of a
year and a maximum of two years", Infrastructure Minister Warren
Truss told reporters in Canberra. "If they (Sydney Airport)
choose not to do so, then that opportunity will be offered to
others," he said.
As airlines like the country's flagship carrier, Qantas
Airways Ltd, welcomed the move to increase capacity,
analysts said Sydney Airport would either have to adapt its
existing expansion plans or face the consequences of being shut
out of a major development that could be suited for low-cost
carriers keen to grow.
"I don't see how they could avoid that (working with the
government)," said Michael McCarthy, chief market strategist at
CMC Markets. "They (Sydney Airport) operate under government
auspices anyway, and taking an antagonistic or competitive
approach, I think would ultimately work against them."
The site at Badgerys Creek may lack the appeal of Kingswood
Smith's greater proximity to central Sydney, but McCarthy said
the new airport could be developed to be a hub for budget
airlines appealing to customers who prize good deals over
convenience of access.
The likelihood of a less restrictive curfew on flights in
and out of Badgerys Creek would be a further positive for
airlines willing to operate in less convenient hours. "On the
issue of noise, I don't believe this is going to be anything
like the problem at Badgerys that it has been at Mascot," Prime
Minister Abbott said.
Michael Heffernan, an economist at brokerage firm Lonsec,
said a second airport was just what Sydney needs.
"The reason we're getting two airports is because it's
basically needed, so I don't think there's any necessarily
adverse impact given the fact that we've got 10 years to go and
population increases." According to the latest statistics
available, Sydney's population stood at 4.7 million in June
2012, nearly a third higher than 2006's 3.6 million.
Shares in Sydney Airport fell nearly 1.0 percent, against a
0.6 percent rise in the broader market.
($1 = 1.0635 Australian Dollars)
(Additional reporting by Thuy Ong; Editing by Clarence
Fernandez and Kenneth Maxwell)