Cairns Aviation Route Development

BRIEFING NOTE SUMMARY
  • An international flight to Cairns is a $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.
  • The region exports 4112 tonnes annually by air, with the market constrained by a lack of air freight capacity.
  • A new route has start-up costs of around US$30 million.
  • To unlock supply links to the region, Cairns Airport is seeking to assemble four $25 million airline support packages.

 

THE ISSUE

Cairns is the equal fourth largest international visitor market in Australia, but lacks sufficient international airline capacity. Of the 900,000 international visitors to Cairns each year, three-quarters arrive and/or depart on domestic flights, typically having to ‘back track’ via a southern capital before flying north.

The lack of direct international flights results in there being a large under-served demand of international travellers who have a desire to visit Cairns but choose not to due to inconvenient travel itineraries and the resulting cost of flying via intermediate ports.

Other Australian airports, notably Melbourne, have successfully moved to a new growth trajectory by actively securing new direct international services.

Stimulating international services to the extent that under-served demand was met would see Cairns’ market share of international passengers increase from its current low of 1.7% to 5%, in line with the market share it held for 15 years from 1990-1991 to 2005-2006, and provide $800 million per year additional economic benefit to the Tropical North Queensland (TNQ) economy.

Cairns Airport aims to address the current market distortion of international visitors accessing Cairns via domestic flights and to secure international services in line with demand. New aviation routes directly benefit tourism along with opportunities such as international education, growth in regional exports and the region’s aviation industry infrastructure and services.

 

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 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 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.

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

A daily international wide-body flight to Cairns is a $200 million a year export business comprising $100 million of international visitor spend in TNQ, $50-150 million of agricultural produce sales, and more than 650 new jobs for the region.

There are significant flow-on benefits as other trade is enabled by new air routes, particularly when wide-bodied aircraft service the route. The region currently exports 4112 tonnes annually by air, but while agriculture is the second largest industry in TNQ, the market is constrained by a lack of air freight capacity with produce largely exported through southern distribution hubs.

Analysis by specialist aviation consultants Aviado Partners shows there is current unmet demand for an additional 750,000 international visitors per year to Cairns Airport that would be unlocked by additional capacity, without reducing passengers on existing domestic and international flights. This is equivalent to four daily flights: one each from the Middle East and Southeast Asia to serve Europe, one from Shanghai and one from North America.

Together these would provide $800 million per year additional economic benefit to the TNQ economy. These benefits are widely dispersed across tourism, agriculture, education and other businesses in the region.

 

NEXT STEPS

Southern Australian international gateways have grown rapidly from an increase in trade and travel over the past 10 years, driven primarily by the rise of the middle class in Asia. There is an opportunity for Cairns to capture its fair share of this growth, but conversely a risk that the potential economic benefits across many sectors will not be realised if new air connectivity is not forthcoming.

Establishing a new long-haul route is a significant investment for an airline, requiring around US$30 million in start-up costs and the commitment of one or two aircraft worth $100-200 million each to the route. Airlines increasingly look to communities, private enterprise and governments to offset the risk and share the economic benefit by contributing to the start-up costs.

Cairns Airport is seeking to assemble four $25 million airline support packages to support the start-up of these four key routes.

 

OUR RECOMMENDATION
  • That the Queensland Government invest in four $25 million airline support packages to drive $800 million in economic growth for TNQ. This request is in addition to ongoing destination marketing support in source markets via Tourism Australia, Tourism and Events Queensland, and Tourism Tropical North Queensland.

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