Australia’s new major airport brings the chance for cheaper tickets, more flights

The new Western Sydney International Airport should put downward pressure on airfares and pave the way for a more competitive airline market, Treasurer Jim Chalmers says as economists argue it will deliver a long-term boost to the region.

Ahead of the first domestic flight from the $6 billion hub on Sunday, Chalmers said there was interest across the globe in the Nancy-Bird Walton Airport and the economic opportunities it offered international visitors as well as the domestic market.

The opening of the new airport, which will also start international flights from Monday, marks the first time an Australian capital city will have two competing airports, joining other major centres such as London, New York and Paris offering choices to airlines and passengers.

While the new airport – the construction of which has been funded by the federal government – is expected to take pressure off Kingsford Smith, over time proponents expect it to lift competition that will flow through to consumers.

Chalmers told this masthead that ultimately the competitive boost provided by the new airport would benefit the entire economy.

“[It] certainly means more competition in terms of giving the good people of Sydney another option, and obviously freight options and all the rest of it as well. So it can only be a good thing for competition and for the economy more broadly,” he said.

“When it comes to the particular elements around ticket prices and freight charges and all the rest of it, we’ll see how that plays out. But in aggregate, in principle, it’s a very good development for competition.

“But more than that, a good development for that really important part of our national economy.”

Chalmers, who has been in South-East Asia over the past week for a series of major international conferences, said the airport had been brought up by some of his fellow treasurers.

“Some of my colleagues and counterparts in other parts of Asia raised it with me in the course of the last couple of weeks. It’s a really big deal. It’s a really great thing for the economy of western Sydney, which is massive and growing in very welcome ways, and it will make a difference to the national economy as well.”

Andrew Barker, the infrastructure program director for the Grattan Institute, said the chance of lower ticket prices and more flights would depend on how comparable the services offered out of the new airport were to those at Kingsford Smith.

He said the major economic benefits would come from increasing the connections of western Sydney to the rest of the country and global markets.

“Internationally there is increasing evidence that air connectivity growth stimulates productivity, research and development, foreign direct investment and trade specialisation,” he said.

“One specific example is improving the supply chain for airfreight, where the lack of a curfew and links to intermodal facilities in western Sydney has the potential to boost activity. Key industries locally also stand to benefit from reduced travel times to the airport.”

New airports around the world have proven to be major economic drivers.

Kevin Stanley, director of commercial property for the Commonwealth Bank, recently noted there was an estimated 5.5 million square metres of new industrial property floor space contained in 205 projects across the area around the airport.

That proposed development, estimated to take between a decade and 12 years to fully develop, was worth about $24 billion. About two-thirds of the space is in Badgerys Creek and Kemps Creek.

On top of this private investment there is an estimated $22 billion in transport and infrastructure to support the airport.

Stanley said major airports can be important business activity centres as businesses sought to be close to freight, logistics, transport and passenger connections.

“Airports are significant demand drivers of business, many of which locate in adjacent or surrounding areas,” he said.

There are already some tentative signs the new airport will put pressure on the national aviation market.

Analysis by travel eSIM company Holafly suggests that, even before the first flight out of the airport, airlines are offering lower prices. It found the cheapest fare for a Sydney-Brisbane Jetstar flight on November 3 was $116 compared with $138 from Kingsford Smith.

However, Jetstar at this stage flies to Brisbane only three times a week.

While the Sydney-Brisbane route may be cheaper, other domestic flights from the Western Sydney Airport to Melbourne and the Gold Coast were at this stage slightly more expensive than going through Kingsford Smith.

Holafly’s Harry Deacon said that, in the longer term, the new airport should put downward pressure on prices.

“Two airports competing should be good news for Sydney fares in the long run. But for now, WSI only has a handful of flights, so whether it’s cheaper really comes down to the day you travel,” he said.

Deacon noted public transport costs to Sydney Airport were cheaper than to western Sydney, especially travel from either site into the central business district.

But western Sydney was offering much cheaper car parking than Kingsford Smith.

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