Aviation

“Paying nothing is no longer an option”: Perth Airport serves Qantas lease termination notices

Perth Airport has issued breach notices to Qantas for non-payment of rent on several of the airline’s current leases, believed to amount to $20 million in fees.

The dispute between Perth Airport and the Qantas Group has escalated, with the airport on Friday issuing 30-day notices to the airline, advising it would not renew its ‘holdover’ leases.

Qantas currently holds 39 leases at Perth Airport. Of these, 21 are current leases and 18 are in holdover, which had been rolling over on a short-term basis in the absence of a long-term agreement.

Perth Airport CEO Kevin Brown said action had to be taken, and that Qantas has been served breach notices for $20 million of non-payment on current leases.

“We understand Qantas needs to keep trading and that the significant profits it is generating from these lucrative FIFO [fly-in fly-out] flights are crucial to them,” he said.

“But paying nothing while using all of the airport’s services is no longer an option.”

Brown advised the airport would not touch leases that impacted freight, repatriation and FIFO flights that had been continuing throughout the COVID-19 pandemic, but called on Qantas to “do the right thing” and negotiate.

Qantas has yet to reply to Travel Weekly’s contact for comment. However, group chairman Richard Goyder warned that if the 39 “eviction notices” were not withdrawn, Qantas, QantasLink and Jetstar could cease operations through Perth Airport within a fortnight.

“Qantas has struck deals with most airports around Australia, and is in productive negotiations with the rest, following the terrible impact of the coronavirus on airlines,” Goyder told The Sydney Morning Herald.

“Perth Airport is the exception and has responded to Qantas’ request for rental abatements by issuing a series of eviction notices that would shut us down in WA. They should remove these eviction notices immediately and join us in independent arbitration so we can sort this out.

“This kind of behaviour from Perth Airport is the last thing our country needs right now.”

Qantas told SMH it had paid rent on leases for February and March. The breach notices, it said, related to non-payment for April and May.

The airline also claims the money owed on aviation fees was lower than $20 million.

Qantas recently highlighted its ongoing battle with Perth Airport during the Productivity Commission’s inquiry into the economic regulation of airports. (Credit: iStock/CraigRJD)

Qantas currently operates around 350 flights per week through Perth Airport, Brown said, made up of mostly “lucrative” FIFO flights, critical to WA’s resources sector.

He advised that Qantas has been asked to provide a list of which leases were critical to its continued operations in WA, but stressed the airport did not intend to impact the airline’s ability to operate.

“To protect the interests of Perth Airport’s shareholders – primarily Australian superannuation funds representing the retirement savings of more than 8 million Australians – we have written again to Qantas seeking a resolution,” Brown said.

“These mum and dad investors should not be used as a short-term debt facility by the Qantas Group.”

It comes as the latest in a lengthening dispute between both parties, centred around Perth Airport’s Terminal 4, which the airport took back from Qantas in 2019.

Qantas has consistently advised it would not pay the owed aviation fees until it receives payment for the terminal, which it believes amounts to $200 million.

However, Perth Airport insists the terminal is worth closer to $50 million.

In his corporate statement, Brown said the argument was moot due to the ongoing independent valuation process, to which both parties had agreed, and that no sum was officially owed.

“Since the outbreak of the coronavirus, we have been approached by around half of our airline partners and on each occasion, we have been willing to consult, listen and look for ways to assist,” Brown said.

“Perth Airport is calling on Qantas to follow this same approach and enter into genuine and meaningful discussions to resolve the issue.”

“Show some leadership”: WA premier’s plea

With jobs on the line, Western Australia Premier Mark McGowan told reporters that now – in the midst of the COVID-19 pandemic – was not the right time to have a commercial dispute.

He urged both Qantas and Perth Airport to sit down and sort out their issues.

“I call on both companies to show some leadership here,” Premier McGowan said. “I urge them to resolve these matters as soon as possible.

“It’s in the interests of this state and our economy that the two parties work through this.

“This is threatening our economic future and is completely unacceptable.”

It comes as the Chamber of Minerals and Energy WA’s director of policy and advocacy, Rob Carruthers, said he was confident that critical FIFO flights would continue despite the feud.

“We have been given every expectation that FIFO services will continue in the future,” he told SMH.

Carruthers said the chamber and its members all expected the fees and charges collected by Qantas from its resources clients to be passed on to the airport.


Featured image: iStock.com/Kristian1108

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