The slowdown in investment in mining and the sharp fall in commodity prices have begun to impact the biggest first impression when arriving in Perth.
Perth Airport, which at the high of the mining boom was filled with the hi-vis shirts of mine workers coming and going from their remote workplaces, has reported its first fall in quarterly passengers since June 2002.
The drop was a result of fewer domestic passengers, which is about two-thirds of total traffic.
Perth is also seeing slowing growth in home prices and the state government is cutting salaries and public servant numbers as iron ore royalties disappear.
The city’s airport, the fastest growing in Australia in 2011 and 2012, is at a tipping point as miners strip back their costs, trying to meet falling returns from iron ore.
The number of passengers who travelled through the airport fell 1% from 2014 levels, according to March quarter statistics.
Here are the numbers:
Fitch ratings analyst Spencer Ng says the decline is an inflection point for Perth Airport and indicates the end of high growth.
“In addition to slower mining activity affecting domestic passenger volume, the airlines cut capacity on unprofitable routes, particularly those serving remote mining hubs in the state, and reduced airfare discounts to increase yield on a per-passenger basis,” Ng says.
“Although these changes have also led to moderating domestic passenger traffic in other Australian airports, Perth has been more adversely affected given its greater exposure to mining-related activities in the state’s resource-dominated economy.”
As capital spending in mining slows, the rate of growth in passenger numbers has also slipped, as this chart shows:
With more than 80% of Perth Airport’s revenue linked to passenger volumes, the decline will flow directly into revenue.
And Perth Airport is currently taking on more debt to complete its expansion program this year. This will increase outstanding debt to $1.7 billion from $1.3 billion.
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