Business Case for the SunShine CoaSt airport Master Plan

Business Case for the Sunshine Coast Airport n Master Plan (November 2009)
06.2 Master Plan-
Related Precinct
Analysis precinct
analysis
As part of its analysis, PwC also
conducted an analysis of the airport
precinct to determine whether surplus
revenues from other airport operations
might be available to cross-subsidise
the runway/RPT projects.
It is estimated the current terminal
(as it is expected to be configured
following an intermediate $9 million
expansion) will reach functional
capacity by approximately 2023.
This capacity constraint is primarily
driven by peak stand constraints and
associated passenger processing/
baggage handling constraints. The
Master Plan, therefore, provides for a
future expansion and relocation of the
existing terminal to meet the expected
level of passenger demand.
Additional facilities for long and shortterm
car parking are also included in
the Master Plan, located adjacent to
the proposed new terminal building.
Aviation support and other
commercial facilities are planned in
the surrounding airport precincts.
These precincts are to be offered for
lease as vacant, serviced land – it is
expected that other parties would
fund building costs.
The total capital cost of the Master
Plan precincts is approximately
$142.8 million, including:
■ ■ $18 million for the new car parking
facilities,
■ ■ $66.2 million for the new terminal
facilities, including initial terminal
development and second
stage expansion (excluding the
aeronautical allocation of terminal
costs) 8 ,
■ ■ $3 million for fire and rescue
facilities, and
■ ■ $55.6 million for the commercial
precincts.
This equates to a present value total
cost of $52.2 million. The addition of
incremental operating costs brings
the total present value cost of the
precincts to $55 million.
The precinct analysis indicates
that, for the terminal and car park
developments, expected revenue
from incremental passengers would
be insufficient to provide any surplus.
While the terminal and car park are
expected to be self-funding from a
financial perspective, a significant
level of revenue will be derived from
existing (or base case) passengers
and thus is omitted from PwC’s
incremental financial and economic
analysis.
Likewise, the commercial precinct
analysis indicated that over the model
period, no surplus would be available
to SCA, based on expected net rental
yields, although the magnitude of
this surplus (or deficiency) is small in
comparison to the funding required.
The Net Present Values (NPVs) for
each of the precincts is provided in
the following table:
Project
Car park (short term and
long term)
New terminal –
non-aeronautical
component (including
first and second stage
expansions)
Fire and rescue
Commercial precincts
Total precinct NPVs
NPV
$1.7m
$(13.7)m
$(1.5)m
$8.1m
$(5.1)m
Taking into account the funding gap
implied by the commercial analysis and
the total precinct NPVs, the overall
funding short-fall for the Master
Plan amounts to approximately
$109.4 milion in present value terms
(using SCA’s commercial WACC as the
discount rate).
The graph overleaf demonstrates
the project’s financial costs and
financial returns to SCA, including the
expected ‘gap’ to achieving internal
commerciality.The overall commercial
impact of the implementation of the
Plan is captured in the following table:
NPV
Costs
Aeronautical costs $181m
SCA operated precincts $40m
Leased precincts $36m
≈ $256m
Benefits
Incremental aeronautical $61.3m
revenues
Incremental revenues for $27.5m
SCA operated precincts
Incremental revenues for $62.6m
leased precincts
≈ $151m
Net commercial deficit $105m
The commercial deficit is likely to
be in the order of $105 million in
present value terms. This indicates
that the benefits able to be captured
by SCA are insufficient to fund the
construction and ongoing operation
of the aeronautical assets proposed in
the airport Master Plan.
8
62 per cent of total terminal capital cost –
based on the proposed division between
passenger/RPT-related functions, retail
and other commercial activities (IATA).
Note that this allocation does not affect
the overall economic assessment.
It affects only the proportion of terminal
costs allocated to aeronautical versus
non-aeronautical functions, while the total
terminal cost is included in the BCR.
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