New Sydney airport to be built by government

The Australian city is finally going to get a second airport after the government stepped in to pledge funds after the current hub operator declined.

Sydney will get a second airport to be built by the state. Dan Himbrechts / EPA

Australia’s government said it will build a long-awaited second airport for Sydney after the operator of the city’s existing hub ruled out developing the project because of the “considerable” risks to shareholders.

Details of the plan for Western Sydney Airport will be unveiled in the budget next week, the prime minister Malcolm Turnbull said on Tuesday. The new airport will be a major catalyst for jobs and economic growth in the region and is a “vitally important project”, he said.

Sydney Airport, which operates Kingsford Smith Airport, was given first right of refusal to develop a second hub at Badgerys Creek after the government committed to the project in 2014. The chief executive Kerrie Mather said earlier today the terms offered by the government did not meet the company’s investment criteria and that the risks would “endure for many decades without commensurate returns for our investors”.

Successive governments have studied the need for a second airport in Sydney since the 1940s.

Kingsford Smith, which accounts for about 40 per cent of Australia’s international and domestic services, will run out of capacity by 2037, costing the economy A$59.5 billion (Dh165.27bn) in lost growth by 2060, according to government agency Infrastructure Australia.

Construction of the A$5bn first stage of the second airport, which includes a single 3,700-metre runway, parallel taxiway and terminal buildings, is due to begin next year. Total development costs could reach A$38bn, Infrastructure Australia says.

Sydney Airport has three months to review the terms on which the government develops the new hub itself, and can change its mind.

The new airport will inject more than A$1.9bn into the economy during construction and 60,000 jobs in the region in the long-term, Mr Turnbull said.

* Bloomberg

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