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Melbourne trumps Sydney – again

Melbourne Airport is getting a new domestic airport terminal capable of handling up to 10 million passengers a year.

The Federal government and Melbourne Airport say that more than 3,000 jobs will be created during construction of the new terminal. The international terminal is also being upgraded, and the Airport has announced plans for a third runway – with the existing two runways reaching capacity sometime between 2018 and 2022.

The additional runway will give Melbourne Airport the highest capacity in Australia, able to support 380,000 flights a year, or up to 88 movements each hour. Sydney Airport – owned and operated by Sydney Airport (ASX: SYD), currently supports around 281,000 flights each year, with capacity capped at 80 movements an hour.

Melbourne Airport is planning a $1 billion two year program, as it expects to see passenger numbers double to 60 million over the next twenty years. Melbourne Airport CEO, Mr. Chris Woodruff, said that Melbourne Airport and its associated operations were a major source of employment in Victoria.

“Victoria is growing and over the next 20 years we expect to double our passengers to 60 million. We’ve commenced the largest transformation of Melbourne Airport yet to make sure we’re ready to welcome passengers to our great state as we aim to become Australia’s premier airport.”

“Our operations currently support more than 57,000 jobs, either directly or indirectly, with this number expected to rise to 95,000 by 2033. Over the next two years alone, our $1 billion investment will create up to 3,000 additional construction and ongoing employment opportunities,” said Mr Woodruff.

Of course Melbourne also has to compete with Avalon Airport, with Qantas Airways (ASX: QAN) subsidiary Jetstar regularly flying domestic routes into and out of Avalon, while Filipino airline Cebu Pacific Air has expressed interest in using the airport for international flights. Virgin Australia (ASX: VAH) 60% owned budget airline Tiger Air could also make a return to Avalon in the near future.

Foolish takeaway

It remains to be seen whether a second airport will be built in Sydney. With arguments going on over the location of a second airport for the past twenty years, and little chance of extending Sydney Airport, it looks like Melbourne and Victoria are racing ahead of Sydney.

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Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned.

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