Cairns Aviation Route Development

BRIEFING NOTE SUMMARY
  • An international flight to Cairns is an estimated $200 million per annum export business.
  • There is unmet demand for at least four new daily flights, worth $800 million per annum in economic benefit.
  • A new route has start-up costs of around US$30 million.
  • The Attracting Tourism Fund introduced in 2018 has been highly successful in attracting investment to Queensland, however the fund is due to close on 31 December 2020.
  • To unlock supply links to the region, an ongoing State budget commitment of $50 million towards a state-wide Attracting Tourism fund is required.

 

THE ISSUE

Air connectivity is key to the economic development of the Cairns region. It opens up new visitor markets, provides opportunities for the export of agricultural produce and promotes growth in the education sector.

A daily international wide-body flight to Cairns is potentially a $200 million a year export business, with $100 million of international visitor spend, $50-$150 million of agricultural produce sales, and the potential to deliver more than 650 new jobs for the region. There are additional flow-on benefits as other trade is enabled by new air routes. These benefits are widely dispersed across businesses in the region.

Currently, more than 80% of international visitors through Cairns Airport travel on domestic flights, however the number of international visitors to Cairns is constrained by the available domestic capacity.
The lack of direct international flights means there is a large under-served demand of international travellers who have a desire to visit Cairns but who choose not to due to domestic capacity constraints, inconvenient travel itineraries and the cost of flying via intermediate ports.

 

BACKGROUND

Cairns Airport is the nation’s seventh busiest in terms of combined international and domestic passenger movements. It handles around 130,000 aircraft movements and over 5.2 million passenger movements per year. The airport is widely recognised as one of the most significant economic drivers in the Tropical North Queensland (TNQ) region and its facilities are critical pieces of economic infrastructure.

Across the airport precinct, Cairns Airport supports a skilled, permanent aviation and engineering workforce and plays a critical role in supporting national Defence and Border Force contracts, including search-and-rescue capabilities for AMSA and airborne surveillance activities. In addition, the precinct is home to the Cairns Aviation Skills Centre and CQUniversity’s Asia Pacific Aviation Hub, which together provide trade or degree-based career pathways for regional students.

Tourism is a major contributor to the TNQ regional economy. An estimated 30% of all visitors to Cairns and surrounds arrive by air, making air travel vital to the agriculture, education and resource sectors. Cairns is also a hub to provide services to remote communities.

A key constraint to growing the region’s tourism economy is limited access to direct international flights. Analysis by Tourism Research Australia for the year ended 30 June 2019 indicates international tourism visitation to TNQ reduced by 1.7% compared to the prior year. This contrasts with a 3% increase in international visitation at the national level over the same period.

To address this worrying trend for the TNQ tourism sector, in addition to tourism product development and direct investment in destination marketing there is a need to increase direct international aviation routes. Additional capacity would unlock significant international visitor growth without reducing passengers on existing flights.

To unlock this growth, Cairns Airport is targeting four new priority routes: one each from the Middle East and Southeast Asia (to serve Europe); one from China, and one from North America. Together, these four new air routes would provide $800 million per year in additional economic benefit to the Cairns economy. More international services direct to Cairns will create more capacity for domestic visitors and encourage international visitors to stay longer and spend more while in the region.

While the case for new international aviation routes into Cairns is compelling, temporary ‘start up’ funding packages are required to de-risk initial establishment for the airlines involved and secure these new routes in an extremely competitive international market.

 

NEXT STEPS

The contestable Attracting Tourism Fund introduced in 2018 by the Queensland Government has leveraged both private sector and other Government investment in key tourism infrastructure, demonstrating the success of the initiative. However, the Fund is due to close on 31 December 2020 and does not currently appear in the State budget forwards.

The establishment of an ongoing and flexible $50 million state-wide Attracting Tourism Fund is therefore needed, with a dedicated focus on regional aviation and with funds able to be used for Tourism and Events Queensland marketing or other means of support. This will encourage greater dispersal of economic benefits across the State.

Increased dispersal will encourage visitors to extend their average length of stay in Queensland, helping the State to regain lost market share in visitor nights while contributing to the establishment of new international aviation routes for Queensland, including the priority routes identified for Cairns.

 

OUR RECOMMENDATION
  • That the Queensland Government establish an ongoing and flexible $50 million state-wide Attracting Tourism Fund to contribute to the establishment of new international aviation routes for Queensland, including the priority routes identified for Cairns. This request is in addition to ongoing destination marketing support in source markets via Tourism Australia, Tourism and Events Queensland (TEQ), and Tourism Tropical North Queensland, with the Fund able to be used for TEQ marketing or other means of support.

 

PROPONENTS: Cairns Airport, Tourism Tropical North Queensland
PRIORITY: Policy
COUNCIL: All TNQ
STATE ELECTORATE: All TNQ
FEDERAL ELECTORATE: Leichhardt, Kennedy