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Expanding Airport Capacity in Large Urban Areas

image of Expanding Airport Capacity in Large Urban Areas

Expanding airport capacity in large metropolitan areas is difficult. Community agreements on noise constrain growth at existing airports. Land prices can be prohibitive for relocating airports. Most new sites require extensive investment in surface transport links to city centres. In multi-airport regions, options for expansion at the airports are to an extent interdependent, complicating assessment of whether to build new runways.

Many major airports are hubs for network carriers at the same time as serving a large local market. The complementarity between these functions may be a prerequisite for viable network operations, suggesting that distributing services over multiple airports instead of expanding the main hub would be costly. Hub airports and their network carriers often compete with hubs in neighbouring regions. The strategies of network carriers and potential new entrants to this part of the market need to be taken into account in assessing future demand for airport capacity. The requirements of low cost and other point-to-point carriers are equally important, but different.

This report reviews international experience in reconciling planning and environmental constraints with demand for airport capacity and the potential benefits in terms of productivity and growth from developing international airline services. Experience is compared in London, New York, Tokyo, Osaka, Sydney and in Germany’s main airports with particular attention to the dynamics of airline markets and implications for airport planning in multi-airport cities.

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Air capacity for Sydney

International Transport Forum

Sydney has one major airport, and it faces growing air transport demand – the airport is now becoming subject to excess demand, and this will be a major problem in the future. Investment in additional capacity will be required, and several options for a second airport are being considered. Unlike airports in Europe and North America, hub issues are not very important. In the short to medium term, additional demand can be handled using a number of options, such as more use of secondary airports and greater use of existing capacity at Sydney. One issue which will be present is how excess demand will be rationed ? by prices, slots or congestion? Australia’s light-handed regulation may mean that prices may be used. Another issue is whether the stakeholders will have a strong incentive to invest when it is economic to do so if airlines and the airport both gain from a situation of inadequate capacity, they may have little incentive to invest. A recently completed Joint Study by the Federal and State Governments explored the questions of whether and when a new airport should be built. It did this using both Cost Benefit Analysis and Computable General Equilibrium modelling (a technique which has distinct advantages for evaluating investments such as airports) however this study treated the two techniques as quite separate, and did not take advantage of the potential complementarities from combining the two.

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