Cairns Aviation Route Development

BRIEFING NOTE SUMMARY
  • Cairns is one of Australia’s most aviation dependent communities, with more than three times as many passenger movements per resident (31.6) compared to a city such as Brisbane (9.7).
  • During COVID-19, Cairns lost 95% of its total air capacity for the three months ending June 2020. Globally, international airline capacity is not expected to return to pre-COVID capacity until after 2023.
  • 52% of TNQ’s 3 million visitors per annum come through the airport. Aviation capacity is currently sitting at less than 40% of pre-COVID seat capacity.
  • COVID-19 has had a disproportionate impact on the region with a forecast loss of $2.2 billion in 2020, impacting on more than 7,700 jobs in the visitor economy.
  • A Queensland Government investment of $100 million over four years is needed to boost statewide aviation capacity. In addition, TTNQ requires $10 million over four years to boost event tourism.
THE ISSUE

Tropical North Queensland (TNQ) is one of the destinations most affected by COVID-19 in Australia, with visitor spend predicted to drop $2.2 billion in 2020 and aviation seat capacity to remain at less than 70 per cent of pre-COVID levels for at least the next 2 years. This will impact on more than 7,700 jobs in the region from the visitor economy.

Over the past decade, the Queensland tourism industry has lost both domestic and international market share, with Victoria gaining the majority of the lost market. Pre-COVID whole-of-state marketing activities such as the Connecting with Asia program had started to slow the rate of these losses, however the State is likely to lose more market share post-COVID without an aviation-led approach to tourism recovery.

While international borders are currently closed, when they do re-open the re-introduction of international aviation capacity to Australia is likely to be slow. Cairns Airport must therefore seek to maximise opportunities to recover domestic airline capacity and take advantage of travel ‘bubbles’ to markets such as New Zealand, Singapore or Japan as and when they become available.

With limited international air capacity returning to Cairns in the coming 12-18 months, capturing as much domestic capacity as possible is crucial to be able to support and re-energise the tourism sector and the local economy. Cairns Airport welcomes the recent announcement by the Queensland Government of two tranches of funding, totalling $15 million to support Queensland airports in attracting intrastate and interstate capacity as restrictions ease.

To further assist the attraction of airline services to the State, the key international and domestic aviation gateways of Queensland (Cairns, Townsville, Mackay, Sunshine Coast, Brisbane and Gold Coast) have joined forces to present an opportunity to the Queensland Government to review the current approach to aviation attraction funding structures and programs. A position paper presented in March 2020 recommends a state-wide investment in a new Aviation Capacity Expansion (ACE) program of $100 million over four years.

In addition, Cairns Airport, Cairns Regional Council and Tourism Tropical North Queensland (TTNQ) have entered into a four year partnership to drive aviation seat capacity through partnerships, events and increased investment in destination marketing.

To be successful in growing TNQ’s contribution to the visitor economy of the State, and to kick-start the region’s recovery from COVID-19, Queensland Government support is now needed.

A separate investment of $10 million over four years in a TNQ event marketing program would be matched by funds from Cairns Regional Council, Cairns Airport and TTNQ to drive event and conference participation in the short term (1-2 years), and to attract new events in the medium to longer term (3-5 years).

 

BACKGROUND

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.

Cairns Airport is the nation’s seventh busiest in terms of combined international and domestic passenger movements. It has historically handled 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.

TNQ stretches from Cardwell to the Torres Strait and west to the Northern Territory border and receives nearly three million domestic and international visitors annually. This equated to an estimated $3.5 billion in annual visitor spend in the year ended March 2020. Two-thirds of the region’s visitor nights are domestic travellers, and one-third are international.

The visitor economy, made up of holiday, visiting friends and relatives, business events, major events and education visitors, contributes over 17 per cent of the regions Gross Regional Product (GRP), supporting one in five jobs directly and indirectly.

Over the past decade the funds available for tourism marketing in the State have not kept pace with the increased level of competition both in Australia and globally, and the impact of global travel restrictions from COVID-19 have seen the visitor economy come to a virtual standstill since March. As the industry emerges it is clear that the key to the recovery of the visitor economy, and the wider regional economy, is aviation-led.

In addition, there remain significant opportunities for airfreight movement from Cairns. International airlines such as Singapore Airlines, Qatar Airways and Emirates continue to operate passenger services to Australia. However, because of passenger movement restrictions the real value to these airlines is the freight they are able to carry in the cargo hold of their passenger aircraft, which TNQ producers are well positioned to supply.

 

NEXT STEPS

The Attracting Aviation Investment Fund (AAIF) and Connecting With Asia Fund (CWA) were due to expire at the end of FY20. To replace the AAIF and support both domestic and international route retention longer term, the development of an Aviation Capacity Expansion (ACE) program has been proposed by Queensland airports.

The State’s gateway airports are seeking a Queensland Government investment in the ACE program of $100 million over the next four years.

In addition, TTNQ is seeking increased base funding from the Queensland Government for TEQ to provide regions with destination marketing campaign funds. For TTNQ this would be a minimum of $12 million in marketing funds per annum. At this point in time, TTNQ has secured $8 million of base funding for the region and is therefore seeking a further $4 million per annum.

Cairns Airport and Cairns Regional Council both agreed to increase their base funding in 2020-21 with an investment of $500,000 (each), which along with TTNQ will bring the region’s marketing and events funds up to $9.5 million in 2020-21.

The region is also seeking $2.5 million per annum over the next four years from the State Government to boost aviation partnerships and events, with a view to that increase being matched by the local partners once confirmed.

OUR RECOMMENDATION
  • That previous aviation attraction (marketing) program funds be consolidated into a single Aviation Capacity Expansion (ACE) program of $100 million over four years commencing July 2020.
  • That through Tourism and Events Queensland, the Queensland Government increase TTNQ’s event support and acquisition funding by $10 million over four years to boost the region’s events portfolio with a focus on driving aviation capacity.

 

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