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 However, group chairman Richard Goyder warned that if the 39 “eviction notices” were not withdrawn, Qantas, QantasLink and Jetstar could cease operations through Perth Airport within a fortnight.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

SEE WHAT PEOPLE ARE SAYING

Leave a Reply

Wholesalers

Wholesaler Wrap: Travelmarvel opens bookings for Canada and Alaska, Explore’s refund promise + MORE

Looking for a way to get your working week off to a flyer? The latest Wholesaler Wrap is here to provide that kickstart you’re after.

Share

CommentComments

Destinations

Man dies after falling down cliff during bushwalk in Queensland

by Huntley Mitchell

A 32-year-old man has tragically died after falling down a cliff while bushwalking in Queensland’s Scenic Rim region.

Share

CommentComments

Technology

TMS Talent diversifies with new acquisition

The global recruitment firm has gone and stuck its finger in another pie with the announcement of a new acquisition.

Share

CommentComments

Aviation

Here’s what it’s like flying domestically during COVID-19

by Ali Coulton

Ease your clients’ worries by knowing exactly what they can expect when flying domestically during the COIVD-19 pandemic.

Share

CommentComments

Destinations

Destination Wrap: New industry toolkits for NSW, Abu Dhabi’s Specialist Program success + MORE

It’s been a big last few days of destination-related news. Get up to scratch here with your favourite source.

Share

CommentComments

Aviation

Cap on international arrivals introduced to ease pressure on hotel quarantine systems

by Christian Fleetwood

Australia is set to see a lot less aviation activity from overseas, as National Cabinet tries to ease the quarantine burden being carried by hotels.

Share

CommentComments

Tourism

Global travel association ceases operations

Travel Weekly doesn’t enjoy being the bearer of bad news like this, so we’ll forgive you if you decide to skip over this story.

Share

CommentComments

Destinations

Why now is the perfect time to become an Amazing Thailand Specialist

by Sponsored by Tourism Authority of Thailand

While Aussie travellers can’t take a holiday to Thailand just yet, that doesn’t mean travel agents should put off educating themselves about the popular Asian destination.

Share

CommentComments

Aviation

Virgin christens Brisbane Airport’s second runway as borders reopen

Virgin Australia had first dibs on Brisbane Airport’s new runway over the weekend, kicking off a special celebration of Queensland’s aviation history.

Share

CommentComments

Cruise

Ponant’s Monique Ponfoort to lead Aurora Expeditions

A novelty-sized leaving card for Monique Ponfoort has started doing the rounds at Ponant HQ off the back of this announcement.

Share

CommentComments

Aviation

Virgin drops more than half a million Queensland airfares from $85

While its sale to Bain Capital is not yet set in stone, Virgin is still taking it to Qantas with a huge sale.

Share

CommentComments

Travel Agents

Agent Wrap: New AFTA chief mingles, Tripadvisor trials customer-to-agent service + MORE

It’s finally Friday! Or, as we call it in the Travel Weekly office, Agent Wrap day. We also like to call it Wineday.

Share

CommentComments