TelstraSuper expects its partly owned airports’ revenue to exceed pre-pandemic levels over the next few years, acting as a valuable sector in its infrastructure asset class.
The super fund has part ownership of airports across Australia, including Melbourne, Sydney, Perth, Hobart, and Northern Queensland.
Across the globe, TelstraSuper also partly owns overseas airports such as Gatwick in London, England, Brussels Airport in Belgium and Billy Bishop airport in Toronto, Canada.
The sector is generally attractive for long-term investors due to its delivery of stable and resilient cash flows and they typically operate as a monopoly in their geographical area.
“Airport revenues also tend to be linked to inflation, which means they can increase their prices in line with inflation. This is important in times like these when prices are rising,” the fund wrote.
TelstraSuper holds its investment in such airports in its infrastructure asset class, which all diversified investment options have exposure to.
According to its July investment guide, the fund holds a 7 per cent weighting in infrastructure for its growth, balanced, moderate, and conservative options.
In addition to the income they generate from fees charged to airlines for landing and take-off, modern airports also create significant revenue from rent charged to shops and restaurants.
TelstraSuper added: “They also generate revenue from parking and other transport-related services. This means their revenue has become more diversified and has significant growth potential.”
The revenue of the airports that the fund invests in has nearly reached pre-pandemic levels. TelstraSuper expects these pre-pandemic levels to be exceeded over the next few years.
Melbourne Airport recently committed to achieve net-zero scope 1 and 2 emissions by 2025, with Sydney Airport committing to the same by 2030. These scopes cover emissions from sources that an organisation directly or indirectly owns.
Over the last 12 months to 31 August 2023, TelstraSuper’s growth option recorded returns of 9.8 per cent, alongside returns of 8.1 per cent for its balanced option.
