14/09/2017 - 15:05

Playing catch-up not a winning strategy

14/09/2017 - 15:05

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OPINION: As technology increasingly cuts out the middleman, the WA government’s investment in facilities at Perth Airport may have short-lived benefits.

Playing catch-up not a winning strategy
Travellers heading to London may not need to stop over in Perth if a non-stop service is introduced from Sydney and Melbourne. Photo: Attila Csaszar

The motoring public loves bypasses because they are a quicker way to their destination. It’s a different story for those in a bypassed town because diverted traffic means less business.

The best example of a town being bypassed in Western Australia is Greenbushes – once a thriving community on the road to Manjimup and the timber industry of the South West, but now a sleepy backwater best known for its lithium mine.

But it seems a bypass of a different kind may soon befall Perth, and somewhat surprisingly entertainment leader Netflix.

 

Perth’s potential problem surfaced in Sydney last month, about the same time US-based Netflix discovered that it also had a bypass issue.

In the case of Perth, the issue is a plan by Qantas to source ultra-long haul aircraft to fly directly from Sydney and Melbourne to London and New York.

As good as that news is for Qantas and travellers in eastern Australia who want to get to their destination as quickly as possible, it is bad news for the WA government, which has committed to investing $14 million in facilities at Perth Airport to handle the start next year of non-stop flights to London.

The plan, which has been criticised here before, is based on a belief that travellers from eastern Australia will fly to Perth (rather than Singapore) to connect to a flight making the long hop to London.

To help cater for the new service, additions are being made to Perth Airport to handle passengers joining the non-stop London service, an investment that could quickly become redundant if Sydney and Melbourne get their non-stop London flights.

In other words, the new Perth Airport facility might have a surprisingly short life of about four years, if Boeing or Airbus can deliver the planes Qantas is seeking that will allow flights to bypass Perth.

Netflix is in a remarkably similar situation as it considers how to handle a bypass problem thrown up by one of the world’s top entertainment companies, Disney.

Until recently, there has been a mutually beneficial three-way demarcation between the producers of film and television shows, the distribution company, and the network.

Netflix has been a major disrupter of that historic arrangement, bypassing the networks and cable operators to create a broadcast service of its own.

Disney is now taking the next step in dissolving that structure by planning to go directly to consumers with its own internet-based broadcast business, which will potentially bypass Netflix.

Technology is changing that arrangement just as fuel-efficient aircraft are changing the way people travel. In effect, the middleman is being cut out in the aviation industry, just as it is in the entertainment industry.

What’s different today is the speed at which change is happening and the way a technology that was new just a few years ago is being superseded by the next generation of technologies.

At Perth Airport, where an investment is being made to help travellers from the east prepare for their non-stop flight to London, there is also a system in place to handle double-decker Airbus A380 aircraft, a giant of the sky that is itself becoming redundant almost exactly 10 years after its first commercial flight with Singapore Airlines in October 2007.

The lesson in this game of technology leapfrog, where a breakthrough system might only have a useful life of five to 10 years, is to recognise the problem in making long-term financial commitments to a business that could disappear as quickly as it arrived.

And that realisation leads investors back to Greenbushes, a bypassed town that owes much of its history to a tin mine, which became a tantalum mine and which is now a lithium mine – for as long as lithium remains a leader in the battery metals revolution.

Some investors will see in the Greenbushes story, along with the Disney and Perth Airport issues, a potential future problem for companies betting heavily on lithium in the belief that it will remain a preferred battery metal.

Those true believers’ comfortable view ignores the fact that other metals are knocking on lithium’s door.

Among them is zinc, which appeals to battery developers as it avoids some of the problems of lithium (such as its flammability).

Unlikely as it might seem at the start of a lithium boom, the metal could become a bypass victim almost as quickly as Perth’s brief record as one end of the world’s longest air route, or Netflix’s role as a network nemesis.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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