The Effective Development of

Privatised Infrastructure

Presented by:

Tony Brun

Chief Strategy Officer, Perth Airport

Who is Perth Airport?

3

• Airport land owned by Commonwealth

of Australia

• 50 year (+49 year option) lease sold to

Perth Airport Pty Ltd [formerly

Westralia Airports Corporation] on 1

June 1997

• Commonwealth oversight through the

Airports Act 1996

o Master Plan every 5 years

o Major Development Plans (MDP)

the approval process for relevant

major proposals

o Australian Noise Exposure Forecast

(ANEF)

Perth AirportOwnership

Utilities Trust of Australia (Hastings)

39%

Future Fund30%

Perth Airport Property Fund (Hastings)

17%

The Infrastructure Fund4%

Australian Super5%

Commonwealth Bank Group Super

3% Sunsuper2%

85% of shareholding held on

behalf of Australian

Superannuation, pension funds

and future savings funds

4

• 2,105 hectares – one of the largest land

owners in the Perth metropolitan area

• Strategic location at the core of the Eastern

Metropolitan Region

• At the centre of the emerging Tonkin Highway

north-south freeway spine

• Principal employment centre for the eastern

half of Perth

• Good access to Port and related logistics

infrastructure

Long Term Regional Context

6

Economic Benefits

7

• Passenger numbers increase from 4.5 million to 14

million per annum

• International flights per week up from 90 to over 270

• Highest percentage in the Australian major airports of

• international aircraft movements at 25%

• low cost international carrier movement at 33.5%

• foreign airline movements at 85.3%

• Strongly international credentials growing

• with London service starting March 2018, and

• focussed on growing further with direct to

Shanghai, Tokyo & more broadly India

Key Outcomes as an International AirportGrowing the base

Privatisation

9

Perth Airport Transition to Privatisation

• Pre 1988

• Airports run by the Commonwealth

• Origins from military aviation

• Public servant culture

• Highly controlled

• Pricing environment general CPI plus

• New infrastructure funded by Commonwealth appropriation

Dep. of Civil Aviation

Federal Airport Corp

PrivatisationAnsett

CollapsePrice

Deregulation

10

Perth Airport Transition to Privatisation

• 1988 – 1996

• Airports still run by the Commonwealth

• Applied principles of commercialisation

• Still reflected origins from military aviation and public service culture

• Still highly controlled

• Pricing environment CPI plus

• New infrastructure funded by Commonwealth appropriation

• Domestic airlines control terminals via long term ground leases

• Compulsory Superannuation begins 1993

Dep. of Civil Aviation

Federal Airport Corp

PrivatisationAnsett

CollapsePrice

Deregulation

11

Perth Airport Transition to Privatisation

• 1996 – 2001

• Airports regulated by the Commonwealth

• FAC broken up and each airport sold to private group

• Price set by ACCC

• Pricing environment CPI plus

• No incentive to invest in capital

• New entities only controlled airfield, parking and international terminal

• Domestic airlines control terminals via long term ground leases

Dep. of Civil Aviation

Federal Airport Corp

PrivatisationAnsett

CollapsePrice

Deregulation

12

Perth Airport Transition to Privatisation

• 2001

• Ansett Collapses

• Administrator sells terminal lease back to airports to raise cash

• Airports finally have ability to manage full airport process chain (roads, parking,

terminals and airfield) in Perth T3 only

• Qantas retains its terminal lease til 2018

• Price set by ACCC

• Pricing environment CPI plus

• No incentive to invest in capital

Dep. of Civil Aviation

Federal Airport Corp

PrivatisationAnsett

CollapsePrice

Deregulation

13

Perth Airport Transition to Privatisation

• 2002 - Productivity Commission recommends Price Deregulation

• 2003 – Government applies Price Deregulation

• Price monitoring only for 4 major airports

• New regime o allows Airports and Airlines to negotiate pricing

o encourages infrastructure investment for first time

• Superannuation Funds reach a new level of scaleo Strong alignment with infrastructure assets

o Capital for asset investment

o Long term returns

Dep. of Civil Aviation

Federal Airport Corp

PrivatisationAnsett

CollapsePrice

Deregulation

14

• Secure and well understood

regulatory environment through the

Airports Act 1996

• Secure Airport tenure with 49 year

plus 50 year option on land

• Airlines effectively fund the cash-

flow through a passenger charge

• Airports fund capital investment

• Long term secure revenue nature is

well suited to Superannuation

funds

Perth Airport Transition to PrivatisationThe Airports Framework Today

15

• Completion of the $1 billion

transform initiative 2008-2015

undertaken without any

government support

o Terminal 2 (regional services)

o Terminal 1 Domestic (new Virgin Pier)

o International Arrivals and Departures

Upgrade Project

• Alignment between investors and

operational needs

• Effective long term strategy and

planning

20 Years LaterA success story

Airport Planning

17

Back Casting to the Future

Define ultimate airport

End of lease – 2097

Investment horizon 2070-80

475,000 aircraft movements

70 million passengers

Back Cast

Work back from ultimate

Define 20 year interviews back to today

Set Master Plan

Set land use plan and vision on 20 year horizon

18

New Domestic Terminal

International Expansion

New Multi-Storey Car Parks

T1DT1

Rail Station and walkway Operational

Arrivals Pop-out

Hotel

New Runway Project Approval 2019

Operational 2023 - 2028

Back Casting to the Future

Commercial Planning & Development

20

• The integration of Conservation

Precincts (previously referred to as

Precincts 5 and 7) into 5 new

precincts:

o Airfield Precinct

o Airport Central Precinct

o Airport North Precinct

o Airport West Precinct

o Airport South Precinct

• The timing of the New Runway

Master Planning evolution2009MP vs 2014MP

21

• 5 Precincts compared to the former 7

• Clear plan for new airfield

infrastructure

• Protection of airspace and update

Aircraft Noise Exposure Forecast

(ANEF)

• Application of Commonwealth

Environmental Offsets Policy 2012

What does it mean for

Perth Airport

22

• Airport West off the new Dunreath

Interchange

• Airport South off Horrie Miller Drive

• Airport North focused on the

Kalamunda Road spine

Commercial Master Plan

23

342 hectares

• Aviation Support facilities including

o General Aviation operators,

o maintenance hangar facilities for the

general aviation operators

• Car parking for general aviation

passengers and staff

• Limited office, retail and bulky goods

Airport West

24

325 hectares

• Takes advantage of the large flat

sites available and major road freight

access

• Presents an opportunity for aviation

related development, with direct

apron frontage available for some

sites

Airport North

25

235 hectares

• To provide for a range of aviation and

non-aviation uses, with a focus

logistics and distribution facilities

Airport South

26

Valuable LandLand Available by Precinct

227 hectares

Airport North92 hecares

Airport Central

76 hectares

Airport South

113 hectares

Airport West

15%

45% 18%

22%

Questions