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New airport back on the agenda

The airline industry has demanded a second airport for Sydney within 10 years, according to the Australian Financial Review (AFR).

Several airlines, investors and industry consultants have rejected the views by the NSW government and Sydney Airport Holdings (ASX: SYD) that Kingsford Smith airport can service Sydney until 2045. Major industry players, including representatives of Qantas Airways Limited (ASX: QAN) and Virgin Australia Holdings (ASX: VAH), met with federal Department of Transport and Infrastructure officials on November 22, and the AFR has obtained a copy of the minutes of that meeting.

Related: Melbourne trumps Sydney in airport stakes

The interested parties also favour building the second airport at Badgerys Creek, where a site was purchased 25 years ago by the Hawke government, but abandoned by the Labor government in 2009. Fear of upsetting western Sydney voters has made Badgerys Creek politically difficult, but neither federal party or the current NSW government favour that site.

Federal Labor favours Wilton, 80kms south-west of Sydney, but that has been rejected by industry participants as the ‘least preferable option’ for a second airport because it’s too far from population centres and would be unable to generate sufficient demand. NSW premier, Barry O’Farrell has suggested Canberra, with a high-speed train linking it to Sydney, but that wasn’t even discussed as a viable option.

Moves by the owners of Sydney Airport to improve efficiency would not be enough say the participants and that it was close to capacity now. An inquiry into a second Sydney airport in April said it was urgently needed and that from 2015, existing roads around the airport and its entrance would be beyond Sydney Airport’s capacity. Earlier this year, the federal government blamed capacity constraints at Sydney airport as the reason for selecting Brisbane to host the 2014 G20 Summit.

A monopoly is a wonderful thing – no wonder the Future Fund has a proposal on the table to acquire Australian Infrastructure Fund’s (ASX: AIX) assets, including Perth, Melbourne and the Gold Coast airports, amongst others.

The Foolish bottom line

Will someone please step-up and make a decision? State and federal governments have been arguing over a proposed site for the second airport for many years. Without another airport, the NSW economy faces costs of near $30 billion by 2060, according to the April inquiry. It also faces tourists choosing to fly into Melbourne as their first choice destination, with Avalon set to become that city’s second international airport. That could mean a large slice of tourism dollars flowing to other states.

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Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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