Kingscote Airport Business Case - Kangaroo Island Council - SA ...

Kangaroo Island Airport Upgrade Business Case
The alternate case model illustrates that even in the event that larger aircraft which
trigger security screening requirements aren’t immediately attracted to Kangaroo Island
airport following the upgrade, the project is still viable in the longer term and in fact
results in a smaller cumulative cash shortfall. The reason for this is largely due to the
fact that security screening costs only need to be incurred once it is confirmed larger
aircraft will be landing at Kangaroo Island airport. The ability to delay security
screening costs is subsequently a risk mitigation strategy, see section 10.1-Risks to be
dealt with during the project.
Assumptions in delay in passenger take up – Upgrade Option 3
Assumptions in modelling forecasts
Air passenger numbers increase in line with PAC estimates and in the earlier years is
assumed to be supported through increased smaller aircraft (Saab 340 for example) traffic
Airport up-grade to Option 3 specifications
Airport upgrade occurs in year 1 (2013/14)
New RPT services occur in year 4 (2016/17). Model assumes that passenger number will
be built with smaller aircraft (Saab 340 for example) in years 1-3.
Passenger levy for Adelaide RPT passengers is $8.50 in years 1-9 (2013/14 – 2021/21)
and $11.82 from year 10 (2022/23) [excluding GST]
Passenger levy for non-Adelaide RPT passengers is $11.82. [excluding GST]
Security operation costs begin in year 3 (2016/17). Year 3 costs are the provision of
training.
Source: Kangaroo Island Council
7.3 Funding requirement
Analysis suggests that a major upgrade of Kangaroo Island airport is viable and there
are distinct benefits to Australia’s tourism industry and the social and economic fabric
of Kangaroo Island.
The capital costs of upgrading the airport to option 3 specifications are in the order
$16.7 million for capital construction and approximately $1.1 million for Council related
project management and procurement costs. A conservative estimate of the
accumulated operational deficit associated with this upgrade is $3 million (base case –
early take up of non-Adelaide RPT services).
May 2013
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