Motley Fool Australia

Virgin wants more flights for Sydney Airport

Airlines are aching to squeeze more out of Sydney Airport‘s (ASX: SYD) allotted flights. According to the Sydney Morning Herald, Virgin Australia (ASX: VAH) CEO John Borghetti wants regulators to ease up on flight caps that currently keep the airport below capacity.

Due primarily to noise concerns, the Sydney airport is currently allowed a maximum of 80 flights per hour. That number drops to just 24 for “shoulder periods” (5 am-6 am and 11 pm-1 2am), and an outright ban on commercial flights between midnight and 5 am.

Borghetti has proposed raising the cap another five planes to 85 flights per hour, as well as assessing the possibility of different regulations governing shoulder period and night-time flights. According to the CEO, current policies are especially limiting for budget and international carriers who rely on off-peak flights to keep costs low and tarmacs uncluttered.

A Qantas (ASX: QAN) spokesman told the Sydney Morning Herald that his airline isn’t optimistic about caps and curfews changing anytime in the near future. However, he did not that Qantas sees “considerable potential” for improved efficiency at Sydney Airport.

Foolish takeaway

There’s nothing a company likes less than limiting regulation. Airlines are infamous for their robust rules, and this hourly flight cap seems to be a relic from the past. Noise concerns are of little concern during working hours, and tough economic times for airlines have made improved efficiencies more important than ever. The move has political support from NSW premier Barry O’Farrell, and the “threat” of a second airport might put more Sydneysiders on the side of more flights.

For long-term investors, the most important item to note is Virgin’s active engagement with regulators to make the most of its operations. Regardless of whether the cap is edged up, Borghetti wins points for pushing policymakers. At the same time, the company that makes the most with what it has is the one that wins out in the end. A flight cap can’t serve as a crutch, and airlines need to maximize value no matter how many planes they put in the air.

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Motley Fool contributor Justin Loiseau has no position in any stocks mentioned in this article. You can follow him on Twitter @TMFJLo.

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