Sydney Kingsford Smith Airport
- CAPA Analysis
- Schedule Analysis
- Route Maps
- Print Summary
- IATA Code
- ICAO Code
- 2530m x 45m
3962m x 45m
2438m x 45m
- Airlines currently operating to this airport with scheduled services
- Air Canada
Air New Zealand
Australian Air Express
China Eastern Airlines
China Southern Airlines
Delta Air Lines
Tasman Cargo Airlines
Virgin Atlantic Airways
- Airlines currently operating to this airport via codeshare
- Aegean Airlines
Air Tahiti Nui
CSA Czech Airlines
KLM Royal Dutch Airlines
Middle East Airlines
South African Airways
Formally known as Kingsford Smith Airport, Sydney Airport serves Australia's largest city, Sydney. Hosting domestic, regional and international passenger and cargo services for over 35 airlines, the airport is a major hub for airlines including Qantas, Virgin Australia, Jetstar, QantasLink and Rex. The airport is operated by Sydney Airport Corporation.
Location of Sydney Kingsford Smith Airport, Australia
Sydney Airport share price
Ground Handlers servicing Sydney Kingsford Smith Airport
1,768 total articles
133 total articles
Australia is the world's seventh-largest domestic market and arguably has been one of the plushest with the most handsome yields. Recently large additions of capacity from Qantas and Virgin Australia have shredded profitability by hundreds of millions of dollars. There is much debate about the Qantas Group's 65% market share "line in the sand" that sees them add capacity to match Virgin. Overlooked in this debate is where the capacity is being added and why it is so difficult to absorb it.
This report looks at the growth in the domestic market over the past two years, when this battle has been at its most intense. The fastest growing market has been the segment within Western Australia, with nearly 40% growth. This capacity is tied to mining work, which has recently softened. This market typically has very limited (if any) leisure focus, so it is difficult to stimulate demand with reduced fares and profits. There has also been rapid capacity expansion on east-west coast routes, markets which are also challenging to stimulate.
The issue for Qantas and Virgin now is not only to address the capacity situation at large, but also their strategy for Western Australia, where one-third of all Australian airline capacity goes to or from.
One of the world's great de facto duopoly markets came to an end five just over years ago on 27-Feb-2009 when Virgin Australia (as it is today) commenced long-haul operations and entered the Sydney-Los Angeles market, ending the Qantas-United Airlines stranglehold on the routes. A short while later Delta Air Lines also entered Los Angeles-Sydney, subsequently partnering with Virgin, while Qantas strengthened its partnership with oneworld partner American Airlines. There was over 50% growth in Australia to mainland US non-stop passengers between 2006 and 2012. Australian carriers benefitted most, but from a tourism standpoint there has been far greater growth in outbound Australian travel to the US than inbound US visitors to Australia as the US economy faltered.
The liberalisation anniversary celebrations were muted as the date exactly coincided with Qantas' half-annual results, exposing a very large loss and substantial planned staff cutbacks. A day after the anniversary, Virgin also reported a loss. While there was considerable volatility after Virgin and Delta entered the trans-Pacific market at the depth of the GFC, the market largely settled down over the past three years until United recently announced overdue changes. United will replace 747-400 services (known more for inexpensive fares than quality) with 777-200s while de-coupling Melbourne from Sydney as Australia's second largest city receives non-stop service with 787-9s. United's overall Australian capacity remains flat with less than 1% growth, but will rise to 6% growth in 2015 with an extra weekly service. In comparison, Qantas has grown capacity and market share.
An under-performing – and ultimately unprofitable – international network has been part of Qantas’ fabric in modern history. The old thinking was that the international network ensured loyalty (and corporate attractiveness) in the domestic market, which was not just handsomely profitable but enough to subsidise international: in FY2012 it recorded a domestic profit over AUD600 million while international recorded an AUD450 million loss.
A series of factors, likely irreversible, changed the willingness to support a largely loss-making network and Qantas has conducted two restructures of its Asian and European network in as many years. But Qantas’ Asian network is still under-performing. Load factors to Singapore have dropped nearly 10ppt since Qantas discontinued Singapore-Europe services. Although the change is less than a year old, Qantas faces structural challenges owing to limited feed and competition. Its partnership with Emirates may be diluting revenue, while a sinking Australian dollar has variable impacts. Meanwhile Bangkok and Hong Kong, de-hubbed in 2012, also show challenges.
Qantas has spoken of better integrating Asia-based Jetstar units with Qantas to act as feed but this, unsurprisingly, has yet to occur. The challenges in Asia are far out-paced by serious, and potentially de-stabilising, factors at home. Qantas has too many crises to address, and its Asian network has not been granted sufficient airspace yet. But time is running out.
A rapid 17% increase of capacity in the Southeast Asia-Australia market has created over-capacity, pressuring down fares. This poses a unique challenge to market leaders Qantas and Singapore Airlines, which must contend with their mainline operation and their low-cost subsidiaries, Jetstar and Scoot.
Full-service carriers with lower fares narrow the gap with LCCs, eroding the value of differentiating factors in such dual-brand strategies. Lower full-service fares can also force down LCC fares. Load factors are weakening at SIA and Qantas especially, while Scoot is carrying fewer Australian passengers than in its first year and has reduced its schedules. Qantas’ re-timing of Asian flights sees it overlap more with Jetstar, which has also reduced flights.
There is almost always an element of overlap in dual-brand strategies, but more recently at SIA-Scoot and Qantas-Jetstar it seems gains at one brand are coming at the sharp expense of the other. Adjustment is needed. Qantas, facing an unprofitable domestic market, is most pressured to make changes.
And then there was one: Virgin Atlantic's withdrawal leaves BA as only European airline in Australia
It is no mere coincidence that, just as Virgin Atlantic announced an end to its Hong Kong-Sydney services, thereby withdrawing from the Australian market, an ad from Australia's largest travel agency proclaims: "There are hundreds of prices and ways to get to the UK and Ireland from Australia."
The Australia-Europe market has undergone profound change, each step adding more competition. Gulf carriers occupy a powerful presence, there are new and expanded entrants like China Southern and Garuda Indonesia, Qantas partners with Emirates while British Airways and Cathay Pacific, as well as Air New Zealand and Cathay, have become friends. The result of these partnerships and new carriers is to offer more options, opening up multiple destinations in what is a fragmented market. London-Sydney is the largest market between Europe and Australia, but accounts for only around a tenth of passengers in that market.
In this second part of our global airport privatisation wrap for 2013, along with CAPA's 2014 outlook, we review activity in Africa, the Middle East, Russia/West Asia, India, China and the rest of Asia. Part One of this report reviewed the situation in Europe, North America and Latin America.
The information presented here is drawn from CAPA's unique Global Airport Investors Database, which is just one component of the new CAPA Airports Data Suite.
2013 was a year when the number of deals at best remained stable, but the number of participants in investment continued to grow, despite some ‘retirements’.