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Airport Link in administration

Date

Bridie Jabour

Brisbane's Airport Link tunnel has gone into voluntary administration.

Brisbane's Airport Link tunnel has gone into voluntary administration. Photo: Harrison Saragossi

UPDATED

The $4.8 billion Airport Link tunnel has been placed into voluntary administration.

In an announcement to ASX, tunnel's operator BrisConnections said the company had decided to place the tunnel into administration citing low traffic levels and debts worth more than the tunnel.

The board of BrisConnections entered negotiations in November to restructure the tunnel's debt but on Monday night, the board was told lenders were not prepared to support any of the restructure proposals.

The latest traffic figures show an average of 47,802 vehicles using the 6.7 kilometre Airport Link each day, about half of the original forecasts which had daily traffic of 90,000 vehicles.

BrisConnection conceded in the ASX statement that an extensive marketing and phased-in toll regime had failed to attract enough traffic but Non-Executive Chairman Trevor Rowe was still positive about the future of the tunnel.

‘‘It’s disappointing that the board has to reach this decision,’’ he said.

‘‘The AiportlinkM7 is unquestionably a world class piece of transport infrastructure that will continue to support Brisbane’s growth into the decades ahead.’’

BrisConnections was placed into a trading halt in November and two board directors resigned after a dismal report to the ASX on Airport Link.

In the report, the company admitted for the first time the tunnel’s debt might be more than its value and a research analyst said at the time the most likely option for the Airport Link was to put it up for sale.

The tunnel had a toll free period which ended in October last year with traffic forecasts falling tens of thousands of vehicles short even when the ride was free.

The costs of building Airport Link blew out so much for construction company Leighton Holdings that it contributed to them posting a yearly loss of more than $200 million which has been turned around to a $450 million profit since it handed over the tunnel and its other high profile troubled project, the Victorian desalination plant.

Airport Link was opened in July 2012 and connects Brisbane’s northern suburbs with Brisbane’s CBD and the airport, the Clem7 and the Inner City Bypass.

The tunnel will remain open and available to users as normal.

Airport Link is the second Brisbane tunnel to financially collapse with the operator of Clem7, RiverCity Motorway Group, going into receivorship in November with $1.3 billion worth of debts.

News of Airport Link's collapse forced Brisbane Lord Mayor Graham Quirk to defend Brisbane City Council's decision to push ahead with the city’s third toll tunnel, the $1.5 billion Legacy Way tunnel.

Council's Opposition Leader Cr Milton Dick had asked whether the project would become a black hole on the council's books.

"The premise behind traffic projections undertaken for Clem7 and undertaken for Airport Link vary significantly for that of Legacy Way," Cr Quirk said.

The Lord Mayor said Clem7 consultants predicted it would open with 60,000 vehicles a day before carrying 100,000 vehicles a day within two years.

Cr Quirk said Airport Link's traffic was predicted to be "in excess of 100,000’’ vehicles.

"By contrast with Legacy Way, we are talking about 24,000 vehicles," he said.

"There's a stark contrast between what this council has proposed for Legacy Way and the types of numbers that the types of numbers that the private consortiums in very buoyant times were predicting for Airport Link and Clem7."

Cr Quirk criticised Cr Dick and Labor councillors for backing away from the two projects which were originally proposed as the North South Bypass Tunnel by their former lord mayor Jim Soorley.

Deputy Mayor Adrian Schrinner reminded Labor councillors that Federal Labor had provided $500 million to help fund Legacy Way, and it was approved by the previous Labor state government.

106 comments

  • All together now, "I told you so".

    First Clem7, now Airport Link. Legacy Way WILL go the same way. Hopefully this will be the end of private toll roads.

    Commenter
    Aussie
    Date and time
    February 19, 2013, 12:57PM
    • I see no issue here. As I understand it, this is not hurting the tax/ratepayers and the road is still there to use for those who choose to. I would be a bit concerned if the tunnel was reaching capacity already. Any of these infrastructure projects need to be "overbuilt" to ensure they are still functioning well in 20+ years time.

      Commenter
      Tarquin
      Date and time
      February 19, 2013, 1:23PM
    • Congestion is not solved by more roads .....

      Commenter
      Ozbob
      Location
      Congestion Capital
      Date and time
      February 19, 2013, 1:29PM
    • anybody ready to challenge Ray Wilson (former CEO) over what information he had that allowed him to continue to publicly state he was confident that traffic projections would hold true?
      It's about time the Boards and executives were made accountable for repeatedly misleading the publc and the market about the true state of affairs inside these failed tollways

      Commenter
      dgnewcov
      Date and time
      February 19, 2013, 1:32PM
    • Ozbob... not sure how your logic works.... more roads might not reduce vehicle numbers but absolutely does reduce congestion. Like air into your lungs will be far less congested if there are more airways to disperse the air. 1000 cars down one road will be more congested than 1000 down 5 roads.

      So Bob, I take your point that these tunnels might not be reducing congestion by as much as hoped - but that is because people are not using them.
      Problem is that these tunnels are bypasses, designed to divert traffic from congested areas, yet we penalise people for using them.

      Commenter
      Nelson
      Location
      Brisbane
      Date and time
      February 19, 2013, 2:07PM
    • Nelson, more roads absolutely DOES NOT reduce congestion. 1000 cars down one road will be more congested than 1000 down 5 roads for a very short time, then you have 5000 cars down 5 roads and you're back at square 1. What do you do then - increase it to 10 roads? Then you'll end up with 10,000 cars down 10 roads.

      The solution to road congestion is NOT building more roads. The solution is better public transport to get cars OFF the roads.

      Commenter
      Mike
      Date and time
      February 19, 2013, 2:26PM
    • I demand a commission of inquiry into these tunnels and Newman's involvement in idemnifying the feasibility study "experts" for the tunnels, I am still trying to find out why he was named "can do" when he obviously could not, where are the glowing cost effective programs or edifices Mr Newman completed as Lord Mayor.

      $$$$down the drain due to PPP deals that the tax payer is left holding, if it was Bligh's idea it would be all over the Murdoch press. It is beginning to look like even they cannot ingore the stuff ups!!

      Commenter
      VonBB
      Location
      Clivesland
      Date and time
      February 19, 2013, 2:49PM
    • Give it 30 years and you'll be glad you have the option of the tunnel.

      Commenter
      Sue Denim
      Location
      Brisbane
      Date and time
      February 19, 2013, 4:45PM
    • VonBB, does the commision of inquiry you want include the Bligh government? Seems this story is a bout the AirportlinkM7 which was in fact the Bligh governments idea.

      Commenter
      Oscar
      Date and time
      February 19, 2013, 5:01PM
    • @ Nelson and Mike

      You are kind of both right.

      What Mike is referring to is a phenomenon known as long run price elasticity of demand. The effect, when applied to transport is that 1000 cars on one road will convert into perhaps 4000 cars on five roads. That is, when you build infrastructure, MOST (but not all) of the extra capacity will be gobbled up by trips that have been triggered by the project itself.

      So yes, building roads does reduce congestion. But the benefit compared to the cost is quite small. Unless the project is irresponsibly large, the reduction in congestion will be offset by system wide increases in traffic within a few years.

      Incidentally Mike, public transport is also subject to the price elasticity of demand. This means that most of the additional trips taken on improved public transit are not congestion busting trips, but are simply trips triggered by the improvements themselves. Two cases in point:

      Brisbane SE Busway tripled the number of bus trips on the SE Freeway corridor and now the busway is at capacity. When it opened, congestion on the SE Freeway reduced initially, but returned to it's pre busway levels within 18 months and has steadily increased ever since.

      Perth's Mandurah/Joondalup railway line was built in response to Perth's traffic congestion crisis. It was wildly successful and with packed peak services every four minutes, is at about 70% of maximum capacity. Yet gridlock on the parallel Mitchell freeway lasts twice as long in the morning today as it did just 6 years ago.

      Commenter
      hU0N
      Date and time
      February 19, 2013, 8:09PM

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