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Perth Airport calls on Qantas Group to act on unpaid aviation and lease fees

08 May, 2020

Statement by Perth Airport CEO Kevin Brown

Perth Airport continues to seek urgent talks with the Qantas Group as their continued non-payment of aviation and property rent and lease fees threatens critical FIFO flights in Western Australia.

Perth Airport has requested that Qantas indicate within two days (from 7 May) whether it wishes to engage constructively and openly on the non-payment issue.

As Qantas has unilaterally given itself a 100% rent waiver, with no negotiation, on all 39 leases at Perth Airport in breach of their contractual obligations, Perth Airport has had no option but to serve breach and termination notices (with up to 30 days’ notice).

We have asked Qantas to identify which of the 39 property leases are essential for the continued operations of FIFO flights in WA as we have no intention to impact these flights.

If Qantas does wish to engage, Perth Airport’s commercial team is ready to work quickly to resolve the issue.

Perth Airport has reached out to Qantas on several occasions (see below) seeking their engagement and we remain concerned at Qantas’s reluctance to consult and negotiate.

The Qantas Group has flown more than 10,000 flights into and out of Perth Airport since 1 February 2020.

Perth Airport has not received payment for these flights.

This situation is neither fair nor sustainable.

Qantas continues to operate around 350 flights a week through Perth Airport.

Qantas demands that Perth Airport provides the full range of terminal and airfield services so that it can generate cash flow and profit from these FIFO flights.

Qantas is profiting from these flights, accepting money from passengers and FIFO companies for the airport’s charges, but is refusing to pass this money on.

These payments are critical to Perth Airport’s ability to continue to operate to service FIFO flights, freight services and repatriation flights.

We think Western Australia – which is so heavily reliant on FIFO flights in this time of crisis – deserves better.

Our commitment to the people of Western Australia remains – we will work with our airline partners to ensure there is no impact on vital FIFO flights, freight services and repatriation flights.

We hope that Qantas will also want to do the right thing by Team Australia and Western Australia.

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.

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

Qantas currently holds 39 leases across the airport estate, including many for premises they are not currently using. One lease is for a warehouse which has been vacant for some time.

Of these, 21 are current leases and 18 are in holdover (despite repeated attempts over many years by Perth Airport to secure long-term agreements.)

Perth Airport has given Qantas the required 30 days’ notice that all hold-over leases will not be renewed. For current leases, Qantas has been sent notices that they are in breach for non-payment.

We have invited Qantas to identify which of the leases is considered essential to allow them to operate the flights to support the FIFO/mining sector, they are generating significant income from.

We understand Qantas needs to keep trading and that the significant profits it is generating from these lucrative FIFO flights are crucial to them.

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

We remain available to quickly negotiate a mutually agreed short term licence agreement to allow for the continued use of the relevant premises.

We have also provided a commitment that for any lease that is not required and not renewed, we will willingly enter negotiations to secure a new agreement with Qantas when conditions return to normal.

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.

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

Further information:

For the record, Qantas did not seek discussions prior to delivering Perth Airport an ultimatum.

In an April 7 phone call, Qantas dictated its terms to Perth Airport stating that it was granting itself an indefinite 100% waiver of all payments on its 39 leases at the airport, backdated to February 1.

Qantas also stated it would not pass on the airport charges it had already collected from passengers and FIFO companies in February and March.

No consultation, no negotiation. It was a take it or leave it directive from Qantas.

Perth Airport followed up this phone call with an email (April 15) which detailed what Qantas had unilaterally demanded. Qantas did not challenge our record of the call.

In a letter to Perth Airport dated 27 April, Qantas restated its demands in the guise of a request for support, and falsely linked its payment of outstanding aviation charges to the Terminal 4 valuation issue. There is no outstanding specific debt owing for T4. An independent valuer has recently been appointed to determine the fair market value of T4. This process, agreed to by Qantas, is expected to be finalised in late 2020 at which point Perth Airport may be required to make a payment to Qantas.

On 1 May, Perth Airport wrote to Qantas urging it to “follow the same path taken by every other airline and approach Perth Airport for an open and cooperative discussion of the issues you are facing,” assuring them we would “always do our best to accommodate any reasonable request”.

On 7 May, Perth Airport phoned and emailed the Qantas commercial team seeking to engage on the lease non-payment issue. Qantas did not respond.

On 8 May, Perth Airport again called Qantas in an attempt to secure discussions.

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Corporate Affairs, Perth Airport
P: +61 8 9478 8877 (24 hour Media Line)
E: [email protected]