adelaide Airport
Access Capital Advsisers purchased Adelaide Airport on behalf of a client in 1998, who subsequently sold it in late 2010. With an exceptional IRR since inception and a shareholding for Access Capital Advisers' client of nearly 30%, Adelaide Airport Limited (AAL) has been an outstanding investment for our client.
Adelaide Airport is Australia’s fifth largest airport by total passengers and represents the primary air traffic gateway to the state of South Australia. In FY2008 more than 6.7 million passengers passed through the Airport, representing growth of 7.5% on FY2007. In FY2009 the Airport maintained passenger growth despite difficult market conditions, with almost 6.9 million passengers, growth of 2.3% on FY2008. Since privatisation in 1998 Adelaide Airport recorded total passenger growth of 74%.
Adelaide Airport is located six kilometres west of Adelaide’s central business district and occupies around 785 hectares. Its major assets include two runways in a cross configuration, an integrated domestic and international passenger terminal, air freight facilities leased to major freight companies, aircraft maintenance facilities, associated hangers and other aircraft related facilities, car parking facilities, and business parks.
Parafield Airport, also owned by Adelaide Airport, is located in Adelaide’s northern suburbs, is Adelaide’s secondary airport, primarily used for general aviation, pilot training and maintenance services.
Financial and Operational Performance
|
FY2006 |
FY 2007 |
FY 2008 |
FY 2009 |
Total Passengers (m) |
5.8 |
6.3 |
6.7 |
6.9 |
Growth |
|
8.0% |
7.5% |
2.3% |
Revenue (A$m) |
100.5 |
127.3 |
141.2 |
146.2 |
Growth |
|
25.5% |
11.0% |
3.5% |
EBITDA (A$m) |
64.3 |
81.6 |
89.8 |
91.0 |
Source: Adelaide Airport Annual Reports
Adelaide Airport services eight domestic and regional airlines and in FY2009 recorded domestic passengers of 6.4 million, flying to 10 domestic and 12 regional locations. The airport services six international airlines flying direct to five international destinations and in FY2009 had total international passengers of 0.5 million.
Key Investment Highlights
Governance and regulatory regime
AAL operates under a shadow regulatory regime, with commercial charging negotiations between airports and airlines, against the backdrop of a regulatory monitoring regime. AAL develops prices under an accepted building block approach to determining maximum allowable revenues, as implied by well understood regulatory principles. This approach calculates maximum allowable revenue based on forecasts of the costs of the relevant services computed as the sum of the returns on capital, operating and maintenance expenditure.
Market position
Adelaide Airport benefits from its status as the primary domestic and international airport in South Australia. Its dominant market position is supported through a stable domestic passenger profile, increasing low-cost carrier services, a growing catchment area population, and its close proximity to Adelaide’s central business district.
Experienced management team
AAL management has been proactive in supporting growth and development at the Airport and has overseen a 74% rise in passenger numbers since privatisation. Management’s focus on quality and service has seen Adelaide Airport recognised by the Australian Competition & Consumer Commission as the equal best airport in Australia, and consistently rates as the Best in Australasia as measured in the Airport Service Quality benchmarking conducted by Airports Council International.
