Australia: Sydney Airport says new airport terms unviable, sows doubt on involvement

Building a new A$5b (US$3.86b) airport in Sydney is not economically feasible without government aid, the operator of the existing airport in the Australian city said on Thursday, raising doubts about its likely participation in the project. "On the present terms, it is a deeply uneconomic investment proposition," Kerrie Mather, chief executive of Sydney Airport Holdings Ltd, said at an earnings briefing, referring to the airport proposed to be built in the western outskirts of Australia's largest city. "It would be decades before you see reasonable cashflows on a very significant outlay. Perhaps it does make sense for the government to be playing a role in that," Mather said. Sydney Airport has first right of refusal to build the airport, which the Australian government hopes will boost inbound air passenger numbers to Sydney by about a quarter, or 10m people per year, from current levels within five to 10 years of opening. It has until May 8 to take up its development rights. If Sydney Airport declines, the government can build the airport itself or offer the development to other groups, such as pension funds and infrastructure funds. But that would mean losing its monopoly status in Australia's most populous city when the new airport opens in a decade. Being a monopoly has helped it charge the highest landing fees in Australia and generate large sums of cash, endearing it to investors.<br/>