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Melbourne’s Avalon goes international

In a battle of the states, Melbourne appears streets ahead of Sydney in the cities’ quests to host a second international airport.

International flights from the Philippines to Avalon airport have been approved in a deal expected to be announced today. The agreement will allow carriers from both countries to launch daily flights between Avalon and the Philippines, with at least one Filipino airline understood to have expressed interest. The Sydney Morning Herald (SMH) reports that budget carrier Cebu Pacific Air has approached the federal government, and has signed a lease order for wide-body Airbus A330-300 aircraft for use in long haul flights including to Australia.

Last October, the federal government changed Avalon’s lease conditions to allow the airport to build a new terminal to cater for international travellers and flights. The SMH reports that Avalon chief executive Justin Giddings confirmed yesterday that the airport was in talks with Cebu as well as several other international airlines, although an agreement has yet to be reached.

Avalon airport is currently owned by transport magnate Lindsay Fox, but has just one commercial airline flying into and out of the airport. Jetstar, a Qantas Airways (ASX: QAN) subsidiary, operates daily flights from Avalon to Brisbane and Sydney. Budget airline, Tiger Airways could also return to Avalon, should Virgin Australia (ASX: VAH) receive regulatory approval to take a 60% stake in the airline. Virgin plans to increase Tiger’s operations from 11 up to 35 aircraft if it is successful, with the Tiger brand mostly likely targeted at Jetstar customers.

The chances of Sydney getting a second international airport appear to be bogged down by state and federal governments unwilling to make a definitive decision. Sydney Airport Holdings (ASX: SYD) currently holds the lease to Sydney’s lone international airport, and has first right of refusal to build and operate a second one, should it eventuate.

Both Avalon and Melbourne’s Tullamarine airport are curfew free, allowing flights to land and take-off 24 hours a day, unlike Sydney, which restricts aircraft and runway usage between the hours of 11pm and 6 am, although some international aircraft with low noise emissions are allowed to land during these hours.

Foolish takeaway

Melbourne appears to hold most of the cards, and will likely see more international travellers arrive in Australia through its two international airports.

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The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, 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.  This article contains general investment advice only (under AFSL 400691). Motley Fool writer/analyst Mike King owns shares in Sydney Airport.

 

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