Sydney Airport will reach its full capacity 20 years earlier than management has predicted, with a new report indicating it will become constrained soon after 2025.
In the report 'Sydney versus the World' Commonwealth Bank of Australia Infrastructure analysts Andre Fromyhr and Matt Crowe said airport management has less time than expected to address how it will handle volume growth.
It said shortly after 2025 Sydney Airport will require new infrastructure such as a new runway, terminal or second site in order to meet increased demand.
The report comes amidst the long running debate over a second airport for Sydney.
Federal and state governments have been debating the need for a second site since the Hawke government was warned about Sydney Airport approaching full capacity 27 years ago.
A number of sites for a second airport have been raised from Badgerys Creek and Wilton, on Sydney's outskirts, to as far afield as Canberra and Newcastle.
During the late 1980s and 1990s the then federal government spent $170 million acquiring the land at Badgerys Creek but a decision to proceed has yet to be made.
In March 2012, a joint federal and NSW government study found further inaction on increasing Sydney's airport capacity could have dire consequences and recommended proceeding with a new airport at Badgerys Creek and lifting the limit of 80 aircraft movements per hour.
The Gillard government has rejected both recommendations, but is currently investigating Wilton, south-west of Sydney, as the site for the second airport.
Federal Minister for Infrastructure and Transport Anthony Albanese said the CBA report confirms the findings of the joint study - that Sydney needs a second airport sooner rather than later.
"The government has acted on the findings of the joint study and commissioned investigations into the suitability of Wilton as the site for Sydney's second airport," he said.
"The study into Wilton will be concluded early this year."
The CBA report said while capacity constraints were currently not pressing, lengthy construction timetables meant politicians would have to make a decision on the airport soon.
It said the airport was hampered by restrictions on noise sharing rules and limits on aircraft movements per hour which the analysts did not expect to be lifted in the short term.
While Sydney Airport will be able to grow its under-utilised capacity over the next 12 years, the report found that it would still need capital and operational spending to upgrade gates to accommodate bigger aircraft, more staff and extra parking.
The analysts also benchmarked 20 global airports in terms of efficiency and found that Beijing Airport was the world's best for capacity utilisation (running at 99 per cent utilisation of capacity), closely followed by London Heathrow.
"If Sydney Airports was able to match the utilisation of Beijing, it could lift passenger volume by 61 per cent with its current infrastructure," the report said.
Sydney Airport had the best utilisation of Australian airports and was comparable to Paris CDG, it said.