The Australian government said it will develop a second airport for Sydney after the operator of the existing airport passed up its right to build the new airport.

Sydney Airport Holdings, the operator of Sydney’s Kingsford Smith airport, has the right of first refusal to build the new airport at Badgerys Creek, west of the city, but said it “has not accepted the offer in the Notice of Intention (NOI) to develop and operate the Western Sydney Airport (WSA).”

“The risks associated with the development and operation of WSA are considerable and endure for many decades without commensurate returns for our investors,” Sydney Airport Managing Director Kerrie Mather said in a statement.

The Australian government said it will now develop the new airport, with details to be announced in next week’s federal budget.

Sydney Airport has three months to review the terms set out by the government for its development of the new airport. If those terms are more favourable, Sydney Airport would have the option to develop and operate WSA on the new terms.

The site for the proposed Western Sydney Airport is 45 km (28 miles) west of the city’s central business district. The 24 hour airport, if it is built, would be the culmination of decades-long debate about the need and location for a second international airport for Sydney.

The first phase of development is due for completion around 2025, the government has previously announced.

(Airwise)