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Airport remains optimistic for new project which could add 4,500 jobs to struggling economy

The national response to COVID-19 has been a double-barrelled disappointment for Newcastle Airport but Chief Executive Peter Cock remains optimistic the Australian Government will back a project which could add almost 4,500 jobs to the region’s economy.

Dr Cock had hoped the government would directly back in the recent budget a proposal to work with Defence and upgrade the airport’s runway to Code E, enabling Newcastle to cater for widebody aircraft from markets such as Asia.

Defence, which has an RAAF base at Williamtown, owns the runway and plans to spend $115 million on required maintenance as part of a once-in-20-year project due to start in June-2021. The airport estimates additional upgrades to take it to Code E would cost an extra $65 million.

This is far less than the estimated $150 million it would take to do a stand-alone upgrade which Defence would be unlikely to consider after it completes its resurfacing works.

There would also eventually be a need for $54-million terminal expansion, but this could be done at any time possibly jointly-funded by the NSW Government and the airport.

On the face of it, the project looks like a lay down misère in terms of the Federal Government’s economic aspirations.

The airport estimates it would create 4,410 full-time jobs and ultimately add $12.7 billion to the region’s economy through a combination of extra visitors and freight.

Strong local support is reflected in a survey showing the project is backed by 85 per cent of residents with more than nine in 10 agreeing the project would stimulate jobs and the local economy.

And with a federal election possibly looming before the end of next year, almost 40 per cent of respondents also indicated it could be a vote changer and it was strongly backed by peak local bodies.

The problem is the airport needs approval by the first quarter of next year and before Defence starts work in June.

Although disappointed there was no direct budget allocation for the project, Dr Cock remains cautiously optimistic that the government understands the importance of the project and that it can be supported through other funding mechanisms.

It is part of a wider optimism that the aviation industry and tourism in the region will return, initially through domestic travel.

South-east Queensland is the airport’s biggest market with Victoria coming in second – but both depend on border restrictions being eased.

The airport boss believes the demand is there, noting Newcastle had returned to about 40 per cent of pre-COVID loads before the second lockdowns hit and Dr Cock is hopeful this could return to 50 to 80 per cent within six to 12 months.

Meanwhile, he will be working hard and engaging with other regional leaders to put together a compelling case as to why the project should top the list of those to be funded.

“Upgrading this runway will provide the confidence and hope at a time that it is most needed. More importantly, it will deliver very tangible benefits,’’ he says

“From local tourism operators and hospitality owners to agricultural producers and freight and logistics providers, this project will drive significant jobs and huge economic return well into the future.”

The second disappointment for the airport, which is jointly-owned by councils in Port Stephens and Newcastle, has been a decision to continue to exclude it from the JobKeeper program.

The coronavirus pandemic has slashed the number of flights to the airport by 99 per cent and cut revenues by about 95 per cent.

The airport was recently granted approval by the Industrial Relations Commission to stand down staff and is now reluctantly moving to do so.

“When borders first closed and air travel stopped, we kept all our permanent staff on,” Dr Cock says.

“In some cases, we deployed them to other tasks, including painting our terminal and gardening our grounds. This work wasn’t essential, but it kept our teams employed and gave us a proactive mindset. We were determined to control the things we could during the crisis.”

Eventually, however, with borders remaining closed and aircraft grounded, it got to point where the airport could go no further and it is now standing down staff.

At the same time, it appealed the Australian Tax Office refusal to allow it access to JobKeeper.

“Whilst our shareholders are councils, our structure sees us run as a financially independent organisation. We return substantial dividends to our shareholders, instead of the other way around,’’ Dr Cock says.

“We think JobKeeper was designed precisely for businesses such as ours that employs a significant number of workers and who’s income has been severely impacted by the pandemic.

“Unfortunately, we’ve been arguing with the tax office ever since and are yet to receive any clarity.”

Dr Cock believes the Federal Government should have invested in maintaining the skilled workforce needed to keep airports open and operational by allowing them — even those which are council-owned — access JobKeeper.

“I think we’ll lose valuable people from an industry which has been decimated,’’ he says.

“We will then be faced with a significant period of rebuilding where we’ll have to replace or upskill aviation staff. All this, at a time when the industry is going to need good people to dig itself out of the hole we find ourselves in’’ he says.

Australian Airports Association chief executive James Goodwin says all Australian airports have been good corporate citizens during the pandemic yet they have not received any direct financial support from the Federal Government.

“Runways and terminals are being kept open to allow repatriation flights, to maintain freight movements and to get medical professionals and essential workers to where they’re needed but this is all coming at a cost with Australian airports collectively losing around $320 million a month,” Mr Goodwin said. 

“It doesn’t matter if there is one flight coming in or 100, the fixed costs of operating an airport remains largely the same.

“With such huge drops in passenger numbers and flights, many council-owned airports are almost hitting rock bottom and not having access to JobKeeper makes it even more difficult.”

By Steve Creedy

About Steve Creedy

An award-winning journalist, Steve began covering aviation in the United States in the early nineties before returning to Australia later that decade and editing The Australian’s aviation section for 17 years. He is editor of Airline Ratings and has co-authored books on industry initiatives aimed at reducing greenhouse emissions.
Steve has joined the AAA to write interesting and informative editorial on the aviation industry.

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