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This $2.6b project could be a game changer for Sydney Airport Holdings Pty Ltd (ASX:SYD)

Sydney Airport Holdings Pty Ltd (ASX: SYD) hailed the approval of the $2.6 billion Sydney Gateway government initiative as a “game changer” that could ease congestion around the airport and increase passenger volumes over time.

Sydney Gateway is an initiative to build a freeway from the West Connex motorway controlled by Transurban Group (ASX: TCL) through to both domestic and international terminals at the Sydney airport. The initiative is also expected to widen the Qantas Airways Limited (ASX: QAN) drive to three lanes in each direction.

Sydney airport CEO Geoff Culbert said, “Sydney Gateway is a game changer for reducing congestion around the airport. Widening Qantas Drive to three lanes in each direction will substantially improve the experience for people travelling to, from and past the airport. It is exciting to think that soon you will be able to drive from Parramatta to the airport and back without passing through a single traffic light”.

Passenger growth has been taking off

I think the initiative will have some long-term benefits for Sydney Airport which has experienced steady growth in the number of both domestic and international travellers.

The company’s latest traffic performance update for July shows that the 2018 year to date total number of passengers was up 3.2% with international passenger growth particularly strong at 5.2%.

In the short term however, the initiative will have a limited impact on Sydney airport and could even increase congestion due to the road works. That was reflected in Sydney Airport’s share price which did not really react to the news and was down slightly by 0.14% at the time of writing.

While Sydney Airport has a strong moat, its share price is unlikely to go gangbusters any time soon. If you are looking for a game changer for your portfolio that could really fly away then you will want to read this buy alert.

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Motley Fool contributor Kevin Gandiya has no position in any of the stocks mentioned.

You can find Kevin on Twitter @KevinGandiya.

The Motley Fool Australia owns shares of and has recommended Sydney Airport Holdings Limited and Transurban Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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