Western Sydney Airport (WSI) Discussion

[RooFlyer]

I don't think it's a fait accompli that WSI will be much cheaper. It hasn't been developed as a cheaper or lower cost airport, rather it's been developed to add capacity.

What do you think about the possibility of WSI offering “cheaper” fees and charges to encourage business, say for 3 to 5 years?

 

[evanb]

It was just an example to highlight the predatory anti-competitive market conduct in which Qantas engages on a regular basis.

The OP begs to differ

But the irony is that QF actively lobbied against the concept of the PRSS slots in the first place and have been lobbying for their removal/reform ever since, yet they persist. PRSS slots are one of the biggest impediments more competition.

 

[evanb]

What do you think about the possibility of WSI offering “cheaper” fees and charges to encourage business, say for 3 to 5 years?

WSI don't need to. SYD's capacity constraints at peak times are such that there's plenty of pent up demand from domestic airlines to start new flights, it's part of why Virgin, Qantas and Jetstar have more aircraft on order than immediate replacement needs.

But we can take the practical view. JQ and QF have committed 10 and 5 aircraft to WSI in the first year. That's incremental capacity growth that they've planned for. It's not coming across from SYD. Now is the argument that if they cut their fees they'll attract JQ and QF to move flights over from SYD? They could, but they would inevitably lose the SYD slots. Don't see them giving up those slots for a small short term cost savings?

 

[justinbrett]

The question is how big of a loss is the shareholder (Australian Government) prepared to accept and for how long.

I think it’s easier to hand out incentives and keep fees and charges at sustainable levels than make a loss and have to increase them later.

If the government ever wants to sell WSI, the books look better if they’re making a profit and incentives are given independently of the airport - like what already happens at other commercially owned airports.

 

[evanb]

The question is how big of a loss is the shareholder (Australian Government) prepared to accept and for how long.

I think it’s easier to hand out incentives and keep fees and charges at sustainable levels than make a loss and have to increase them later.

If the government ever wants to sell WSI, the books look better if they’re making a profit and incentives are given independently of the airport - like what already happens at other commercially owned airports.

Point taken, but this presumption works off a principle that some temporary cut in airport fees will generate enough incentive for airlines give up capacity in SYD and hence give up their historical reclaim to slots while loosing network connectivity.

It might work for Ryanair to shift capacity from airports with limited slot value and zero network effects, but not convinced that it'll shift Australian carriers. Just look at Haneda and Heathrow as examples, despite huge cost savings it didn't get any non-forced capacity shifting. Sydney is more of a Haneda or Heathrow than it is Frankfurt, Rome or Paris.

 

[justinbrett]

Point taken, but this presumption works off a principle that some temporary cut in airport fees will generate enough incentive for airlines give up capacity in SYD and hence give up their historical reclaim to slots while loosing network connectivity.

It might work for Ryanair to shift capacity from airports with limited slot value and zero network effects, but not convinced that it'll shift Australian carriers. Just look at Haneda and Heathrow as examples, despite huge cost savings it didn't get any non-forced capacity shifting. Sydney is more of a Haneda or Heathrow than it is Frankfurt, Rome or Paris.

I wasn’t necessarily saying it would happen, just that if it did I’d expect it to be done through separate government incentives rather than discounting fees.

As you point out it might not be needed at all. Maybe VA is hanging out for an announcement and when they realise it’s not coming they’ll commit anyway.

 

[RooFlyer]

some temporary cut in airport fees will generate enough incentive for airlines give up capacity in SYD and hence give up their historical reclaim to slots while loosing network connectivity.

I was actually thinking more about possible new services. As in: hey Qantas, if you want to start up that possibly marginal new service, Sydney to xx_ - we have a deal for you so you can give it a try.

But I guess that then comes up against the old lack of aircraft problem.

 

[Sabot]

What do you think about the possibility of WSI offering “cheaper” fees and charges to encourage business, say for 3 to 5

I was actually thinking more about possible new services. As in: hey Qantas, if you want to start up that possibly marginal new service, Sydney to xx_ - we have a deal for you so you can give it a try.

But I guess that then comes up against the old lack of aircraft problem.

And the lack of people wanting to transit into the middle of nowhere to fly out of WSI.

 

[RooFlyer]

And the lack of people wanting to transit into the middle of nowhere to fly out of WSI.

By transit, I guess you mean travel to the airport?

Covered about 10 times upthread. WSI is not in the middle of nowhere for millions of people. Population catchment almost twice that of South Australia.

 

[Sabot]

By transit, I guess you mean travel to the airport?

Covered about 10 times upthread. WSI is not in the middle of nowhere for millions of people. Population catchment almost twice that of South Australia.

That's correct yes.

Mate, I had to zoom out on the map 3 times to see if it was actually even in Sydney.

 

[moa999]

Think the lack of transit options will mean the majority of international flights remain at SYD until WSI grows into itself and expands.

Some international back of clock operations probably the initial exception (eg SQ to SIN and QF/JQ to AKL, maybe with time EK with a midnight departure) with perhaps a smattering of narrowbody services to NZ and Bali.

Will be interesting to see how routes develop.

 

[HS-TQE]

I wasn’t necessarily saying it would happen, just that if it did I’d expect it to be done through separate government incentives rather than discounting fees.

As you point out it might not be needed at all. Maybe VA is hanging out for an announcement and when they realise it’s not coming they’ll commit anyway.

VA under Bain has had a record of leaving markets on the table where they are not comfortable in making money, e.g deciding to no longer return to trunk NZ routes to AKL/CHC/WLG and the decision to arrange a "glorified travel agent" one way partnership with Air New Zealand to serve those routes in a limited capacity.

Also as explained, VA doesn't have the fleet to serve WSI and are not willing to give up slots at SYD to serve WSI, thus the cuts will have to come out of other services out of BNE or MEL.

This isn't the Borghetti era where VA enters in response to QF (and crash and burn e.g the A330s on Transcons and the capacity war). Bain pretty much runs their own race and numbers on routes.

If they feel that cutting services elsewhere to serve WSI isn't worth the risk for VA, they will stay out of WSI initially until they get the extra aircraft to do so.

 

[justinbrett]

VA under Bain has had a record of leaving markets on the table where they are not comfortable in making money, e.g deciding to no longer return to trunk NZ routes to AKL/CHC/WLG and the decision to arrange a "glorified travel agent" one way partnership with Air New Zealand to serve those routes in a limited capacity.

Also as explained, VA doesn't have the fleet to serve WSI and are not willing to give up slots at SYD to serve WSI, thus the cuts will have to come out of other services out of BNE or MEL.

This isn't the Borghetti era where VA enters in response to QF (and crash and burn e.g the A330s on Transcons and the capacity war). Bain pretty much runs their own race and numbers on routes.

If they feel that cutting services elsewhere to serve WSI isn't worth the risk for VA, they will stay out of WSI initially until they get the extra aircraft to do so.

But they were completely happy flying a 737 to Japan

WSI-BNE/MEL is not high risk. It’s a sure thing, just a matter of frequency. Operating them once or even twice a day is a reasonable investment and could be done with a single aircraft.

The problem is some rusted on VA flyer out of SYD who lives in the west, switches over to QF/JQ because they don’t have the option of flying VA. VA’s market share is in the low 30s. You don’t improve that by sitting out major routes.

 

[HS-TQE]

But they were completely happy flying a 737 to Japan

When VA's HND operations was partially funded by Queensland Taxpayers through currently being phased out AAIF subsidy scheme., of course Bain were going to take the taxpayer cash.

WIthout the AAIF subsidy scheme by the Queensland Governmemt, Bain would've let the HND slot authroties lapse back to the IASC.

WSI-BNE/MEL is not high risk. It’s a sure thing, just a matter of frequency. Operating them once or even twice a day is a reasonable investment and could be done with a single aircraft.

The problem is some rusted on VA flyer out of SYD who lives in the west, switches over to QF/JQ because they don’t have the option of flying VA. VA’s market share is in the low 30s. You don’t improve that by sitting out major routes.

The question is which service(s) to cut out of BNE or MEL to fit in a twice daily WSI rotation, and the times will always not be ideal either.

If a midday BNE-TSV or a MEL-MCY makes more than a forecasted late morning/midday BNE/MEL-WSI for example, VA will not move the aircraft to WSI unless if the NSW Government throws enough taxpayer funded aviation fund subsidy money at VA in the same way the Qld Government did for VA's HND operations

 

[justinbrett]

VA will not move the aircraft to WSI unless if the NSW Government throws enough taxpayer funded aviation fund subsidy money at VA in the same way the Qld Government did for VA's HND operations

Like I said, my theory is they’re playing hardball to entice subsidies, but will end up serving it anyway regardless.

VA’s load factors aren’t at the stage where no route can be tweaked to accomodate growth.

 

[moa999]

WSI-BNE/MEL is not high risk. It’s a sure thing, just a matter of frequency.

Agree. But arguably we are better starting with less airlines and a decent frequency, rather than multiple airlines only flying once or twice a day.

I'm sure VA will open at WSI within the first 5yrs and get all the publicity associated to themselves.

 

[elanshin]

When VA's HND operations was partially funded by Queensland Taxpayers through currently being phased out AAIF subsidy scheme., of course Bain were going to take the taxpayer cash.

WIthout the AAIF subsidy scheme by the Queensland Governmemt, Bain would've let the HND slot authroties lapse back to the IASC.


The question is which service(s) to cut out of BNE or MEL to fit in a twice daily WSI rotation, and the times will always not be ideal either.

If a midday BNE-TSV or a MEL-MCY makes more than a forecasted late morning/midday BNE/MEL-WSI for example, VA will not move the aircraft to WSI unless if the NSW Government throws enough taxpayer funded aviation fund subsidy money at VA in the same way the Qld Government did for VA's HND operations

I'm sure they can jig their network so that the plane ends up at MEL/BNE overnight as the last flight of the day so they don't need to overnight at WSI until a more established network / base is set up. Just treat it as an outport during the day even if it's like a flight like MEL - WSI - MEL randomly in the day to see what the response is like.

QF Group can probably spare a plane or two network wise to set up overnighting at WSI. If they can overnight at AVV right now, I'm sure they can make overnighting at WSI work out.

As for internationals, I honestly believe many are interested and talking behind closed doors, but noone is going to commit yet as theres no need to. But the timing of the airport is very convenient for many airlines in the process of expanding. Indigo for example in a few years time with their 787s coming online? WSI surely would be a target.

ZG (Zipair) as they get more refurbished 787's from their parent company JL? Australia is surely on their radar with how well JQ does and they can definitely make a splash into the low cost market. More Bali flights from WSI from the Indonesian side? Totally possible.

It's just that theres no immediate need and they'd rather the airport get going first. JQ expansion to South Asia? I wouldn't be surprise to see them use WSI. I also wouldnt be surprised if in the medium run shifts things to WSI and gives the SYD slots to QFi.

 

[HS-TQE]

Agree. But arguably we are better starting with less airlines and a decent frequency, rather than multiple airlines only flying once or twice a day.

I'm sure VA will open at WSI within the first 5yrs and get all the publicity associated to themselves.

Agree with that.

As I've said earlier, not really sure if a token twice-daily service from BNE at leisure timings (even fitting in a token single daily BNE-WSI-MEL-WSI-BNE rotation) would yield greater returns for VA than their current schedules out of BNE/MEL. Cutting a few services to fit in a twice-daily service from BNE "for the sake of serving WSI" on day 1 isn't really a guarantee of profit on the VA side.

As I've always said VA will serve WSI "eventually", but the possibility of VA not being at WSI on Day 1 is still reasonably high.

 

[justinbrett]

Agree with that.

As I've said earlier, not really sure if a token twice-daily service from BNE at leisure timings (even fitting in a token single daily BNE-WSI-MEL-WSI-BNE rotation) would yield greater returns for VA than their current schedules out of BNE/MEL. Cutting a few services to fit in a twice-daily service from BNE "for the sake of serving WSI" on day 1 isn't really a guarantee of profit on the VA side.

As I've always said VA will serve WSI "eventually", but the possibility of VA not being at WSI on Day 1 is still reasonably high.

You seem to have a very rosy view of VA’s performance that every single route is performing so well that not a single frequency could be reduced ro accomodate a handful of capital city routes with guaranteed demand.

I think it’s pretty obvious the reluctance has been more principled due to costs (rather than concerns about demand) and likely a tactic to attract government subsidies. Starting with a small frequency isn’t for the sake of it, it’s the smart thing to do in a brand new airport while you bed in to the new base and employ ground staff, not to mention slowly growing your customer base (again, why you don’t want to give your rivals a head start).

They may not be there on day 1, but if they’re not there by around Apr 27 when the metro opens, they’ve been left behind.

 

[moa999]

And another reason not to be there at the start.

WSI Metro now looking like December 2027 opening.. and the state government's known for some time.

What Sydney Metro actually knew about delays to new airport rail line

Confidential documents reveal the government agency’s target date for completion of the 23-kilometre line to Western Sydney Airport.

www.smh.com.au