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A Qantas Airbus A330 approaches Sydney Airport with the city skyline in the background (Photo: Hisham Qadri | AirlineGeeks)

Sydney Airport Bullish Despite Pandemic-Driven Deep Losses

Since the beginning of the COVID-19 pandemic emergency, Australia has been among the countries imposing the most restrictive limitations to international travel, with borders still remaining essentially shut down almost a year and a half since the start of the pandemic and no relaxation in sight until at least the second half of 2022.

Demand for international travel has almost evaporated, and this has caused all companies connected with air transport to post very significant losses that are expected to continue for the foreseeable future. Last Friday, Sydney Airport Holding Pty Ltd, the holding company controlling 100% of Kingsford Smith Airport in Sydney, the largest in Australia, reported a A$97.4 million ($69.5 million) loss for the first half of the year ending on June 30, almost double the loss reported for the first six months of 2020.

Sydney airport’s passenger traffic has seen a 91% drop compared to last year’s levels, which were only partially affected by the pandemic, Reuters reports. Most international carriers that used to serve Sydney airport have suspended their services; aviation website Simpleflying reports that over 20 carriers have now terminated their flights to Sydney, including some historical airlines that had been present for many years like British Airways and American Airlines.

The total number of movements at the airport has seen a lower decrease only thanks to freighter flights that continue to serve Australia’s biggest city to maintain supply chains in the country. Carriers performing freight-only flights include Air Canada, Air China, Hainan Airlines and Hong Kong Airlines.

Despite the prolonged negative period and the bleak outlook in the short term, Sydney Airport CEO Geoff Culbert appears bullish about the airport’s potential in the long run, saying, “The impact of COVID has been severe, but it will pass. The underlying fundamentals of the business haven’t changed. Sydney has always been an important and profitable route in [the airlines’] networks and we are confident that when international borders do open up […] we expect to see good support from international airlines coming back to this market.”

In the meantime, Sydney Airport Holding has rejected a A$22.8 billion ($16.3 billion) buyout offer from a consortium of infrastructure investors including Australian investors IFM Investors and QSuper and U.S. company Global Infrastructure Partners. The board unanimously rejected the offer, which represented an improvement on an initial offer, because it believed the price did not reflect the present value of the assets on sale.

New Luxury Stores to Open In 2022

Furthermore, the company announced an ulterior development to their retail business at the airport, revealing the arrival of 12 new global luxury brands at the airport for the second half of 2022. These brands will include Yves Saint Laurent, Dior, Moncler, Loewe, Celine, Bottega Veneta, Prada and Balenciaga. The airport will also see the opening of the first Louis Vuitton travel retails store in the southern hemisphere, which will also be the largest retail store in Sydney Airport’s International Terminal 1.

Sydney Airport CEO Geoff Culbert said, “We are excited to welcome Louis Vuitton to Sydney Airport – a truly iconic brand that will anchor our luxury retail precinct for many years to come. Alongside Louis Vuitton, we will welcome a further 11 luxury brands for the first time in 2022, all on long-term deals. The commitment of these brands demonstrates faith in the future of international travel and confidence that Sydney Airport will remain at the heart of Australia’s international aviation network.”

In addition, existing tenants such as Gucci and Tiffany&Co will expand their presence at the airport by relocating to larger spaces in the terminal.

Author

  • Vanni fell in love with commercial aviation during his undergraduate studies in Statistics at the University of Bologna, when he prepared his thesis on the effects of deregulation on the U.S. and European aviation markets. Then he pursued his passion further by obtaining a Master’s Degree in Air Transport Management at Cranfield University in the U.K. followed by holding several management positions at various start-up carriers in Europe (Jet2, SkyEurope, Silverjet). After moving to Canada, he was Business Development Manager for IATA for nine years before turning to his other passion: sports writing.

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