MUNDOO AIRPORT AVIATION LOGISTICS HUB€¦ · passenger services where over 80% of domestic freight...

080601-01 – NAALH STRATEGY 2018 – MUNDOO AIRPORT 1

Expression of Interest

MUNDOO AIRPORT AVIATION

LOGISTICS HUB

Prepared for: Cassowary Coast Regional Council

080601-02 – MUNDOO AIRPORT AVIATION LOGISTICS HUB EOI i

DOCUMENT CONTROL

Document Title: Mundoo Airport Aviation Logistics Hub EoI

Reference: 080601-02

Release Date: 14 August 2018

Prepared by: P Hansen

Reviewed by: K Tonkin

Released by: K Tonkin

Revision History: Release

Version Description Transmitted Reviewed by Date

0.1 First Draft 26 July 2018 K. Tonkin 26 July 2018

1.0 Final for Release 14 August 2018

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information retrieval system) or otherwise disclosed to any other party whatsoever,

without the prior written consent of Aviation Projects Pty Ltd.

This report has been prepared for the benefit solely of the Client, and is not to be relied

upon by any other person or entity without the prior written consent of Aviation Projects

Pty Ltd.

© Aviation Projects Pty Ltd, 2018. All rights reserved

080601-02 – MUNDOO AIRPORT AVIATION LOGISTICS HUB EOI 1

EXPRESSION OF INTEREST

The Context

The Cassowary Coast Regional Council (CCRC) seek Expressions of Interest in developing

a mid-scale multi-modal freight transport hub based at the Mundoo Airport, nearby

industrial land and including the only phytosanitary treatment facility in northern

Queensland.

Following strategic investigation into the existing airport site and surrounding land use

opportunities and the forecast regional freight task over a 20-year planning horizon,

Council has resolved to work together with a key investor or investors to bring the airport

freight hub to a reality.

Council developed a strategy report in 2018 which examined the possibilities of variously

scaled logistics hub development options based on critical planning parameters, design

aircraft, infrastructure requirements and financial feasibility.

The strategy identified ‘Option 2’ as a feasible option for further investigation and

development investment and forms the basis for this Expression of Interest. This utilises

the existing Mundoo Airport site and considers modest upgrades to existing aviation

facilities, the addition of non-airside land for freight logistics and road upgrades.

The Background

Air freight makes up a small but important part of Australia's overall freight task and is

predominantly used to transport high-value and time-critical goods such as parcels, fresh

produce and seafood. Importantly, regional airports have become a critical part of

multimodal transport hubs particularly in strategic agribusiness regions where direct and

indirect export opportunities exist. The national air freight task is supported by existing

passenger services where over 80% of domestic freight is carried in the belly-hold of

scheduled passenger services.

Cassowary Coast Regional Council has recognised Mundoo Airport as a vital link in the

region’s economic supply chain through the proposed development of a strategically

located aviation logistics hub, taking advantage of Mundoo Airport’s proximity to

non-aviation transport modes, road, and rail. CCRC has developed an approach to

establishing a transport hub that combines the unique geographic location with the

intersection of significant State and Local Government assets to provide a unique

transport intermodal hub.

The initial investigation has identified Mundoo Airport, wholly owned by Council, as a key

element in establishing an intermodal logistics hub that provides opportunity for inbound

air freight hubbing into Far North Queensland to reduce inbound costs on freight by

distributing south to major markets through rail and road infrastructure immediately

available to the airport. Increased infrastructure investment into the Mundoo Airport will

also enable strategic outbound regional goods and agribusiness products to be exported

internationally and domestically through Australia’s major airport networks. This

development has the potential to significantly reduce costs associated with accessing

distribution modes to southern markets through reduction in flying time and on ground

time in southern major distribution capitals.

CCRC NOW SEEK A STRATEGIC INVESTMENT

PARTNER TO WORK TOGETHER TO HELP DEVELOP

AND MANAGE THE MUNDOO AVIATION LOGISTICS

HUB


The Site

Mundoo Airport is located just south of the Innisfail township and west of the Bruce

Highway and main north-south railway line. The current site is approximately 66.7 ha in

size and is on one land title (99/SPI/169226). The site is currently zoned appropriately

for airport use. The majority of the land is considered airside, with approximately 1 ha

considered to be landside, which comprises of a small gravelled car park, storage shed,

public facilities and an aero club meeting room.

Mundoo Airport comprises one sealed and one unsealed runway, one sealed and one

unsealed taxiway, several aircraft hangars, a general aviation apron, internal roads and

navigation equipment. An avgas fuel facility is located adjacent to the apron and there are

a number of private fuel facilities associated with private hangars. Aeronautical lighting is

provided to the sealed runway, taxiway and apron.

Surrounded primarily by sugarcane and banana production, Mundoo Airport is ideally

placed to be developed into a key freight hub, exporting its’ regional produce to

Australia’s major airport network. Council own adjacent land to the north of the airport,

ideally located to be developed as a freight transfer hub, linking local road infrastructure

to industrial estates.

INVESTMENT OPPORTUNITY

The Mundoo Northern Australia Aviation Logistics Hub (NAALH) strategy has examined the

possibility of developing a multi-modal freight transport hub based at the Mundoo Airport

in order to increase the movement of goods to and from Tropical North Queensland

markets.

Through investigation of existing site and surrounding land use opportunities and the

likely regional freight demand over a 20-year planning horizon, the report has identified

infrastructure solutions, involving both on airport and regional infrastructure, and

importantly, by leveraging existing facilities and planned upgrades, provides a realistic

solution for the Cassowary Region.

Taking a staged approach to the investment opportunity, Council has resolved to prioritise

the development of Mundoo Airport and adjacent land to facilitate the immediate and

short-term freight task. Producing over 90% of Australia’s banana and mango crop, the

Cassowary Region requires an investment partner to realise the region’s export potential.

CURRENTLY 250,000 TONNES OF PRODUCT ARE TRANSPORTED THROUGH THE

INNISFAIL AREA ACROSS ALL MODES IN 2006, EXPECTED TO GROW

SIGNIFICANTLY TO ALMOST 1.9 MILLION TONNES BY 2036


ABOUT MUNDOO AIRPORT

Designed to provide functional aviation services to the local community, small industry

and recreational use, Mundoo Airport enjoys a typical variety of mixed use activities from

aircraft maintenance, agricultural spraying and even skydiving, and critically, provides

facilities useable during natural disasters and emergencies.

Runways

Mundoo Airport has two runways:

• Runway 14/32 is a sealed runway 30 m x 1 353 m with a 90 m strip width; and

• Runway 03/21 is a grass strip 30 m x 1 330 m with a 90 m strip width.

The current sealed runway at Mundoo Airport has a Pavement Classification Number

(PCN) of 9. The pavement is classified as flexible and has limited capacity for aircraft with

an ACN of 9 or below.

Taxiways and apron

Mundoo Airport is serviced by one sealed Code B taxiway connecting the sealed runway to

the apron area.

A small apron is located east of the sealed runway with a single apron flood light.

Lighting

Runway 14/32 is serviced with pilot activated Low Intensity Runway Lighting (LIRL) edge

lights and threshold lights at both runway ends.

The sealed taxiway is serviced by blue taxiway edge lights.

The Wind Direction Indicator is lit.

Navigation and approach aids

Mundoo Airport is serviced by a Non-Directional Beacon (operated by Airservices

Australia). The NDB does not appear to be included in the rationalisation project by

Airservices Australia.


THE ECONOMICS

Regional population

The population for the Cassowary Coast regional area in 2017 was 29,680, with a

median age of 43.4 years (ABS, 2018). Annual growth rates of between 0.5% and 1.0%

have been experienced every year since 2012, behind the Queensland and Australian

averages of approximately 1.5% per annum.

Regional GRP

The 2017 Gross Regional Product (GRP) of Cassowary Coast was $1.48 billion according

to the National Institute of Economic and Industry Research (NIEIR), representing an

increase of 1.1% on 2016, however 17% below the 2012 peak of $1.7 billion. The main

contributors to the region’s GRP are agriculture, particularly sugar cane farming and

banana growing, tropical fruit and vegetables, cattle grazing, timber production, fishing

and tourism.

Around 60% of total businesses within the area are within the Agriculture, Fishing and

Forestry sector, with the remaining 40% led by Construction, Property and Business

Services. The region produces over 10% of the total value of crops in Queensland on an

annual basis (Cassowary Coast Regional Council Economic Development Plan, 2016).

The focus on agriculture is consistent with the wider Northern Australia region, which

accounts for the majority of Australia’s 30 million tonnes of sugarcane produced each

year and more than 90% of Australia’s mango and banana production.

Regional Produce

Agricultural products are a key driver of regional GRP, and any resulting export potential.

The total value of agricultural production in 2008/09 was $592 million, encompassing a

total land area of 268 000 ha (Bananas $388 million, Sugar $157 million, Fishing $13

million, Cattle $103 million).

250,000 tonnes of produce are transported through the Innisfail area annually, expected

to grow significantly to almost 1.9 million tonnes by 2036. Currently most local

horticultural produce is road freighted to Brisbane to be treated in Queensland’s only

phytosanitary facility, then road freighted back to North Queensland (1 800 km each way)

or exported from Brisbane.

LOCAL BANANA PRODUCTION ACCOUNTS FOR $388 MILLION OF THE REGIONAL

GRP OF $1.48 BILLION


How have we moved products in the past?

Road

The Far North Queensland road network is essential for the movement of both people and

freight. Reliability can be impacted by the climate with road closures or restrictions

occurring during wet season. The quality of roads can also be significantly affected by

intensive heavy vehicle use, and many roads are unsealed and single lane (Infrastructure

Australia, 2015).

Regionally, the Bruce, Hann and Palmerston Highways are the primary bulk freight road

routes moving goods both north, west and south and accounts for the majority of road

freight into and out of the region.

Rail

Rail is the main transport mode for moving bulk minerals and coal and also supports the

movement of agricultural products such as grains and livestock. As with roads, far North

Queensland’s rail networks are hampered by weather related events and capacity

limitations (Infrastructure Australia, 2008).

How will we move products in the future?

Road

Significant new road network funding commitments have been made in recent years,

including $8.5 billion in Federal and State funding over 10 years for the Bruce Highway,

and Far North Queensland priority projects including the Barkly, Flinders and Hann

Highways.

The 2015 White Paper specifically called for the following freight/infrastructure

considerations to assist the economic development of Northern Australia:

• resilient export related infrastructure with sufficient capacity;

• good connections with southern Australia; and

• links between the growing urban economies of Darwin, Cairns, Townsville and

Mackay and their hinterlands.

Rail

Rail will continue to play a vital role in the region’s prosperity, moving bulk freight to and

from southern centres.

The 2015/16 Federal Budget established a new $5 billion Northern Australia

Infrastructure Facility. The Government's stated ambition is to seek to partner with the

private sector and northern jurisdictions to provide concessional loans to finance

infrastructure projects in the north. Concessional loans could be provided to a range of

projects — such as airports, ports, rail, roads, energy, water and communications

infrastructure.

Air

Air transport is used for diverse purposes including medical emergencies, cattle

mustering and passenger and freight movement during the wet season. However, air

travel within some areas of Far North Queensland and the wider northern Australia is

difficult due to a lack of demand to support commercially viable services. Most aviation

infrastructure is directed at connecting communities with large southern population. Less

than 0.001% of all domestic freight is moved by air. A small volume of freight is currently

moved by air from the Cairns and Townsville airports.

CURRENTLY ALMOST ALL LOCAL HORTICULTURAL PRODUCE IS ROAD FREIGHTED

TO BRISBANE FOR PROCESSING


ECONOMIC MODELLING

Economic and financial modelling was used to forecast revenues and potential operating

profits based on a 20-year planning horizon utilising Mundoo Airport as a Code 3B

capable freight hub. Freight volumes are based on a 70% loading factor of both inbound

and outbound regional produce.

Volumes

Volume Year 1

(tonnes)

Year 10

(tonnes)

Year 20

(tonnes)

Outbound 6,088 8,733 11,736

Inbound 1,117 1,602 2,153

Total volume 7,204 10,335 13,889

7.2 7.8

8.4 8.7 8.9 9.2 9.5 9.7 10.0 10.3 10.6 11.0 11.3 11.6 12.0 12.3 12.7 13.1 13.5 13.9

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

YEAR

Volume (tonnes '000)


Revenue

Revenue consists of the following sources:

• Landing fees – based on MTOW (maximum take-off weight);

• Freight revenue – estimated at $1.90/tonne (FY19 prices). Note: this small revenue stream is earnt by the freight operator; and

• Property rental revenue – an allowance for freight and warehousing facilities of $50k (FY19) has been included.

0.36 0.40 0.44 0.46 0.49 0.52 0.55 0.58 0.61 0.65

0.68 0.72

0.76 0.81

0.85 0.90

0.96 1.01

1.07 1.13

-

0.20

0.40

0.60

0.80

1.00

1.20

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

YEAR

Revenue ($m)


Operating Profit

0.15 0.17

0.21 0.23 0.24 0.27 0.29 0.31 0.33 0.36 0.39

0.42 0.45

0.49 0.52

0.56 0.60

0.65 0.69

0.74

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

YEAR

Operating Profit excl depreciation ($m)

(0.69) (0.71)(0.68) (0.66) (0.64) (0.62) (0.60) (0.57) (0.55) (0.52) (0.54) (0.51)

(0.48)(0.45)

(0.41)(0.37)

(0.33)(0.29)

(0.24)(0.19)

(0.80)

(0.70)

(0.60)

(0.50)

(0.40)

(0.30)

(0.20)

(0.10)

-

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

YEAR

Operating Profit incl depreciation ($m)


Operating Profit has been estimated using the following inputs and assumptions:

• Labour: additional headcount of one Operations Manager and one

Administrative position, labour rates escalated at 3.25% per annum;

• Maintenance cost allowances of $45k per annum (FY19 prices), escalated at

2.75% per annum; and

• Other (general) cost allowance of $10k per annum (FY19 prices), escalated at

2.75% per annum.

Assumptions

The economic modelling does not include the following:

• Aeronautical pricing has not been agreed with any aircraft operators or airlines;

• Operational costs, including staffing and maintenance, are approximate and

require further analysis and discussions with Council and others;

• Capex/infrastructure requirements and their costings throughout the report are

based on high level current estimates, require further testing and build up

based on Council decisions and future work stages commence;

• Funding assumptions have been generalised, and the levels of government

funding and any external funding have not been investigated in any detail;

• Income tax expense (owner or operator) has not been considered; and

• No passenger (RPT or non RPT) services have been modelled.

Financial Summary

Year 1 ($’m) Year 10 ($’m) Year 20 ($’m)

Revenue 0.36 0.65 1.13

Less Operating Costs 0.21 0.28 0.39

Operating Profit excl depreciation 0.15 0.36 0.74

Less Depreciation 0.83 0.88 0.93

Operating Profit incl depreciation (0.69) (0.52) (0.19)

Less: Interest expense 0.51 0.55 0.43

Net Profit (1.20) (1.07) (0.62)

Capital expenditure 22.00 23.00 24.00

Cashflow (Cumulative)

Cashflows from operating activities 0.136 2.53 8.01

Cashflows from investing activities (22.00) (23.00) (24.00)

Cumulative increase/(decrease) in

cashflow

(21.87) (20.47) (15.99)


FUTURE INFRASTRUCTURE

Design aircraft

The strategy report presented a number of development options for incremental

infrastructure investment derived from determinant demand modelling of inward and

outward freight volumes. Design aircraft are derived from the various models in order to

develop airport capacity over the planning horizon, using payload capacities and other

aircraft performance characteristics. Aircraft codes determine airport design parameters

including pavement strength expressed as Pavement Classification Number (PCN),

operating field length, runway and runway strip width, taxiway physical characteristics,

Maximum Take-off Weight (MTOW) and navigational requirements. Other elements in

determining the design aircraft are also considered including operating range, access to

origin and destination airports and an assumed 65% payload factor.

Aircraft suitable for viable freight operations at Mundoo airport are Code 1B to Code 3B

aircraft.

Required runway capacity

Two design aircraft have been identified which capitalise on the current runway

characteristics and suitable for known freight volumes. A number of suitable aircraft

variants may also be investigated within these aircraft codes.

• Cessna Caravan (Code

1B) requires a pavement

strength of PCN 4 with a field

length of 669 m and has a range

of 1785 km. The potential

payload is up to 1520 kg;

• Metroliner 23 (Code

3B) requires a pavement

strength of PCN 9 with a field

length of 1341 m and has a

range of 988 km. The potential

payload is up to 2268 kg;

Development of a Code 2B or 3B

runway requires minimal infrastructure development. Subject to a technical pavement

review and further site investigations, this option can be contained within the existing

airport title boundaries.

THE METROLINNER III CAN CARRY OVER 2 TONNES OF LOCAL PRODUCE WITH A

RANGE OF ALMOST 1,000 KM


INTERMODAL CAPACITY

Connectivity

Mundoo Airport easily links by local road to Goondi Industrial Estate. Existing developed

and undeveloped road reserves north of Mundoo Airport provide an opportunity to create

road freight linkages between the airport and the proposed new Bruce Highway by-pass

road (linking the Bruce and Palmerston Highways), with the potential of on-freighting via

rail.

Road - Air Infrastructure Links

Road infrastructure is central to the future development of intermodal freight capacity for

the success of the Mundoo Aviation Logistics Hub. Connecting the Goondi Industrial

Estate directly to Mundoo Airport and the Bruce Highway is critical to providing the region

with a viable produce processing facility and maximising the freight opportunities.

The available land and connection possibilities at Goondi Industrial Estate, allow for

well-defined transport connections between existing airport infrastructure, current road

reserves, future transport corridors and the potential to develop a phytosanitary and cool

store facility. Such a development would be the only processing capability of its type in

Northern Queensland and has the potential to attract additional freight tasks from beyond

the immediate region.

The region can cater for existing and forecast freight volumes through an integrated

transport plan capitalising on both inbound and outbound regional produce and other

value-added manufacturing, existing infrastructure and a modest investment in

connecting air, road and rail modalities, as well as facilitating the development of existing

available Industrial land.

In addition to the airside facilities, the development of a freight transfer terminal on the

landside, connecting to redeveloped local roads will facilitate critical linkages to existing

transfer, processing or industrial facilities within Innisfail.


STRATEGIC ADVANTAGE OF MUNDOO

Mundoo Airport in its location within the Innisfail urban area is well placed to capitalise on

the strengths of the region and activate its role in regional aviation logistics. Creating a

simplified multi-modal approach to regional freight logistics, linking air, road and existing

industrial assets, an investment in a phytosanitary treatment facility has the potential to

leverage the regions key strengths. The strategic roles played by nearby Cairns and

Townsville will naturally complement short and long-term freight logistics development at

Mundoo Airport.

Notwithstanding regional competitiveness and existing advanced infrastructure present

at larger urban centres, Mundoo Airport plays an important regional role and has the

potential to better define its strategic function within the broader regional context.

Moderate investment at Mundoo Airport will facilitate two key areas which should be

explored further and be highlighted as regional priorities; strengthening primary

pavements (runway, taxi way and apron) to increase the Pavement Classification Number

(PCN) to up to PCN 19; and improve road access to the airport to facilitate air to road

freight capability.

Improved linkages to and from Mundoo Airport with key road network infrastructure,

particularly the Bruce and Palmerston Highways will unlock potential to attract the

required investment for small-scale, short haul air freight operator. These key road

networks take advantage of the already established infrastructure in the Goondi

Industrial Estate located at the junction of the two Highways. The Goondi Industrial Estate

has the added advantage of available, appropriately zoned land adjacent to the North-

South Rail Reserves serviced by existing wide road reserves.

The proposed future bypass corridor removes a section of the Bruce Highway from the

built-up urban areas of South Innisfail and relocates the corridor further to the south and

west of the existing rail line and the Goondi Industrial Estate. Further road connections

between the Mundoo Airport and the proposed bypass at the ‘Goondi Bend’ will provide a

direct air/road/rail connection and access to the established industrial estate.


MUNDOO AIRPORT INFRASTRUCTURE PLAN

MUNDOO AIRPORT AVIATION LOGISTICS HUB€¦ · passenger services where over 80% of domestic freight...

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