Sydney Airport: On the comeback trail
CEO, Geoff Culbert, talks to Joe Bates about Sydney Airport’s recovery from the global pandemic and ongoing efforts to enhance the Australian hub’s facilities and services.
At October’s ACI Africa/World Annual General Assembly, Conference & Exhibition in Marrakech, you described what a difference a year had made in terms of SYD’s recovery from COVID. Six months on, are things looking even better for you?
Yes, absolutely. Australians have rushed back to travel, both domestically and internationally. After two years of being cooped up at home, people are keen to explore the country and see the world again.
Domestically, passenger traffic was 82.9% recovered in February, compared to pre-COVID levels. However, our international passenger numbers are lagging and were only 76.3% recovered in February compared to February 2019. The challenge is the lack of capacity, which is translating to high airfares. We need to get more international capacity, so airfares come down. Australia is a long way from the rest of the world, and it is expensive to get here, so that handbrake needs to be released.
Australia also needs a sustained recovery in aviation capacity to support the recovery of key export markets including high-value agriculture, business travel, and international students.
Why was the recent launch of Vietjet flights to SYD so significant?
It was significant because it marked a major milestone for Sydney Airport. For the first time in our proud 103-year history, we have 50 airlines flying through Sydney Airport. This is an incredible achievement when you consider air travel was almost non-existent through COVID.
We now have four airlines flying to Vietnam and, in total, have onboarded six new airlines over the last 12 months, and existing airlines have returned and are continuing to increase capacity, providing great opportunities and choice for the travelling public.
Attracting airline networks to rebuild capacity to Sydney is key to supporting the recovery of international tourism, business travel, student travel and the broader New South Wales economy.
The Vietnam market has experienced a strong surge in capacity and demand, with passenger volumes 14% above pre-COVID levels in March 2023.
We’re thrilled to welcome Vietjet to Sydney Airport, as the airline will be providing a further low-cost option to this sought-after and popular destination. As Australia marks the 50th anniversary of diplomatic relations with Vietnam it’s fitting that our 50th airline is a Vietnamese carrier.
Is it possible to say what lessons you and SYD have learnt from events of the last few years?
Before COVID hit we knew that aviation was an ecosystem, and all the parts needed to work together seamlessly for the whole system to work, but COVID really reinforced that.
We have 800 different businesses operating at SYD. Pre-COVID they employed 30,000 people, and during COVID 15,000 jobs were lost.
When all the state-wide travel restrictions eased and the international border re-opened in early 2022, Australians were desperate to travel again, and we were inundated with passengers. However, filling all the crucial jobs across the airport to cater for this surge in air travel was a huge challenge, especially as Australia was facing its tightest labour market in almost half a century, and this led to operational challenges in the first half of last year across the entire airport ecosystem.
Do you think the pandemic will have a lasting impact on not only the way we travel but also the popularity of certain destinations due to the perceived ‘hassle factor’ of travelling?
The travel patterns of our passengers are beginning to move back to what they looked like pre-COVID. Once we see the last of the international restrictions removed, we expect the visitors from all the previously popular destinations, especially China, to return in force.
SYD has been busy revamping its retail and F&B facilities and offerings for a number of years. Can you tell our readers more about the most recent developments and the reasons behind the transformation?
In February, we officially unveiled SYD X, the redeveloped T1 International Terminal luxury shopping precinct. We have 20 of the world’s most desirable brands all under one roof, including Louis Vuitton’s first retail travel store in the Southern Hemisphere.
The Luxury brands at SYD X include Bottega Veneta, Burberry, Bvlgari, These Dior, Gucci, Hermès, Prada, Rolex, Tiffany & Co and Valentino, and they will be joined by Cartier and Versace mid-2023.
As part of the project the ceiling height was more than doubled from four metres to nearly 10 metres and the precinct footprint was increased to 2,700sqm. We have created a unique luxury shopping destination for international travellers, which we think is one of the best in the world.
Sydney Airport now also boasts Australia’s first hotel inside an airport, with Aerotel opening in the T1 International terminal in August last year. It offers unparalleled convenience as it’s just a minute’s walk from the arrivals gate and 100 metres from international check-in.
Work also recently finished on the transformation of our T1 International Terminal forecourt. The team has created a beautiful and functional green space where people can gather, celebrate, and reconnect after getting off a long-haul flight or being reunited with friends and family.
The new SYD sign on the grass near the main terminal exit been a huge hit, with tourists flocking to it to get their first selfie in Sydney.
Does retail/F&B income provide your biggest source of non-aeronautical related revenue and how important is this income to ensuring the future growth and development of Sydney Airport?
Enhancing the customer experience remains a central focus for Sydney Airport, and having a wide selection of retailers and food and beverage options is one of the key elements.
While retail is one of our important sources of revenue, our property, hotel, and ground transport portfolios are also crucial.
Expanding the current terminals, building a new satellite pier, and enhancing the airfield are key elements of your 20-year development plan (Master Plan 2039) unveiled in 2019. Is this still the case?
We intend to keep building the infrastructure and capacity to cater for every passenger and airline that wants to fly to SYD.
While COVID temporarily delayed the roll out of some projects, we have recently completed a number of important projects, including a major runway resurfacing project, the complete refurbishment of the Terminal 1 forecourt and a new luxury shopping precinct in T1.
The good news is that aviation activity at Sydney Airport is continuing to recover strongly and we have just adopted a renewed, five-year capital works pipeline that runs to more than A$2 billion.
Next year, our capital expenditure budget will be nearly 60% bigger than it was in 2019, and we will be investing more than a A$1.3 million a day in projects to further improve the customer experience, accommodate growth and enhance capacity.
You plan to redevelop the P1 domestic car park, but with autonomous vehicles coming that could potentially drive away after dropping their occupants off at the airport, is this perhaps an unnecessary expense?
As a business, we are always looking to the future and the redevelopment of the 54-year-old P1 carpark is no exception. We expect that there will still be demand for car parking, but we’re excited by the opportunity to bring other ideas to life. We will definitely take into account future trends and emerging technologies.
Master Plan 2039 also includes SYD’s Five-Year Ground Transport Plan and 20-year Ground Transport Strategy to enhance surface access and connectivity to SYD. What will these projects involve and why are they so important?
Like all major city airports around the world, we recognised that traffic is a real pain point for people and that’s why we are investing so much in alleviating congestion. Recent road upgrades and traffic management strategies have already improved journey times, but there is more work to be done.
Key projects we’ve completed to reduce congestion include building new and wider roads entering and exiting both our international and domestic terminal precincts.
However, the real game changer will be the new A$2.6 billion Sydney Gateway Road. Anyone who has travelled to the airport recently will know its construction is well underway. This new toll-free connection will significantly cut travels times from Western Sydney to the airport.
The sustainable development of SYD is said to be embedded into the master plan. Can you give some examples of how and, perhaps, tell us more about the airport’s commitment to reducing its carbon footprint?
Sydney Airport has a strong track record on incorporating sustainability into its operations and in recent years entered into a power purchase agreement for renewable energy and developed market-leading financial instruments like sustainability-linked bonds and loans.
We have also implemented several energy efficient projects including a large solar PV array on one of our car parks and electrification of our bus fleet. We have also invested significantly in a recycled water treatment plant and reticulation network.
We have clear targets of being carbon neutral by 2025 and reaching net zero by 2030, and we are working closely with the industry on sustainable aviation fuel initiatives. Like everyone in the industry, we know how critical this is.
How important is cargo to the success of the airport and what are you doing to potentially grow this side of the business going forward?
In 2022, all-cargo flights made up 7% of the total aircraft movements at the airport, down significantly from 18% in 2021 when there were still major travel restrictions.
What many people don’t realise is that 80% of air freight is carried in the belly of commercial aircraft, so we see the growth of freight indexed to passenger growth.
Do you think that the pandemic will make it even more difficult for SYD and the world’s airports to recruit and hold on to good staff?
We’ve been delighted to see many workers who left aviation during the pandemic come back now that we’re flying again. Once you have jet fuel in the blood, it’s hard to stay away.