Sydney Airport Share Price Increases Alongside International Traffic

Sydney Airport [ASX:SYD] shares increased shortly after opening this morning, following the company’s announcement detailing traffic performance for the month of June.

Shares of Sydney Airport are currently trading at $7.20, up 8 cents from yesterday.

Formally known as Macquarie Airports, the company owns and operates Sydney Airport, providing both aviation and leasing & advertising opportunities.

Why did Sydney Airport’s share price rise?

The rise in share price was due to strong international traffic growth for June 2018, which was up 5% from the previous year.

The top five fastest growing inbound passengers came from Taiwan, Vietnam, India, Indonesia and USA, all receiving double digit growth in visitation in comparison to June 2017.

Sydney Airport CEO Geoff Culbert said that the increase in international passengers was a result of additional seat capacity from airlines.

Virgin Australia commenced daily Sydney to Hong Kong operations as of 2 July. The route is being serviced by Virgin’s new A330, providing 200,000 annual seats. Virgin Australia CEO John Borghetti commented on the new route saying,

The new Sydney-Hong Kong service will link two global destinations and will allow Virgin Australia to further access the fastest growing and most valuable Australian inbound market, China, with our alliance partner Hong Kong Airlines.

In addition, Qantas announced that it intends to increase its presence in the Sydney to Asia Pacific region, providing additional capacity to Singapore, Jakarta and Noumea effective as of December 2018. The changes are expected to provide 116,000 annual seats.

What does the liberal air services between India and Australia mean?

On top of strong international traffic growth for June, Sydney Airport also revealed the new liberalised air services agreement between India and Australia. Meaning that there is no restriction on the number of flights, destinations, seats or prices between the two countries.

This new “open skies” agreement is fantastic news given our extensive advocacy for liberalisation and significant demand for direct air travel between the two countries.

This move makes Australia one of only a few countries worldwide to hold an Open Skies agreement with India and means that over 40% of the world’s population is now within unconstrained bilateral air service range from Sydney’, said Mr Culbert.

Dannielle Rawlings

For Money Morning

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