Australia considers bids for Sydney airport

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Australia’s Government is assessing expressions of interest for Sydney’s Kingsford Smith International Airport submitted by an undisclosed number of bidders before the 14 May deadline.

Unlike Australia’s regional airports that were sold off over the past few years, it is thought only a handful of consortia have stepped forward to bid for Sydney airport’s owner, Sydney Airports Corp (SACL), because its estimated value of A$4 billion rules out many smaller groups.

The Government does not usually reveal how many consortia express interest, their composition or exactly when suitable candidates will be asked to make binding bids when conducting tenders, says a Finance Ministry spokesman.

No precise timetable has been outlined but the Government intends to wrap the airport sale up before the year-end. The sale is unlikely to run into serious delays as the contentious issue of charges was resolved when the Australian Competition and Consumer Commission agreed to allow a hike of 97% in aeronautical charges against the 130% SACL originally proposed, and which many airlines led by Qantas Airways vigourously opposed.

The sale, managed by investment bank Salomon Smith Barney, is only open to trade parties. Foreigners can only hold a minority stake and must comply with the Foreign Acquisition and Takeovers Act 1975.

Groups owning more than 15% or having effective control of Brisbane, Melbourne or Perth airports will be limited to a 15% stake in Sydney airport. No airline can own more than 5% and all bidders will have to abide by the Airports Act 1996.

This regulation caused the Civil Aviation Authority of Singapore to withdraw as it is owned by the Singapore Government, which is a majority shareholder in Singapore Airlines through various investment vehicles.

UK-based airports operator BAA is known not to be bidding. Interested bidders are widely thought to include Copenhagen Airport, German construction group Hochtief, Hong Kong developer Chueng Kong Infrastructure Holdings and a number of Australian financial institutions.

Whoever wins the contest will have to manage the airport’s growing traffic and shortage of slots well to avoid controversy. Despite government assurances, some critics fear small domestic airlines will be forced out to Bankstown Airport, also in the Sydney basin, which is slated for expansion.