Date Posted: 14/05/2019
Following on from the Qantas Groups third quarter trading update, released earlier this month. Australia’s national airline carrier, synonymous with the flying kangaroo, Qantas, announced update that they have recently reached an agreement with Melbourne Airport for the sale if the airlines domestic terminal (Terminal 1).
Along with the sale of Terminal 1 the airline has also secured an exclusive ten year access agreement for the terminal until 2029.
The airline sold Terminal 1 and singed the ten year agreement for $355 million, of which $276 million will be paid directly to Qantas Airways this financial year (18-19 period) with the remaining $79 million being accrued at a future point in time.
With Qantas’ new multi-million dollar make over to the lounge precinct at Melbourne Airport unveiled late last year its still business as usual, with the agreement allowing exclusive access to the terminal including the lounge for their domestic services.
All other aeronautical and retail assets will be transferred over to Melbourne Airport.
Selling terminals is nothing new for Qantas with the airline in 2014 giving up its lease at Brisbane Airport for $112 million, which at that time there was still four years remaining on the contract.
In 2015 Sydney Airport gained control of the retail operations of Terminal 3, buying the terminal off the airline for $535 million.
Interesting enough looking back on the announcement that was made in 2015, it mentioned that there were plans at that point in time for both international and domestic flights to be co-located in the terminal. Sydney Airport Chief Executive Kerrie Mather said it would not occur prior to 2020 but it’s possible that it could happen just prior to 2025.
“The integration of terminals is a key plank in our long term master plan. Acquiring Terminal 3 allows us to be able to achieve that”-Ms. Mather, Sydney Airport CEO.
In all three circumstances when Qantas has sold terminals at Brisbane Airport, Sydney Airport and most recently Melbourne Airport they have all come with assurances and exclusive access to use the terminal beyond the time of sale.
In Brisbane the flying kangaroo still retains exclusive use and operational control beyond 2018 from when the original contract was set to expire.
Sydney Airport assures Qantas that they will have priority access to 12 out of 17 gates, 75% of the check in area and majority use of the baggage claim area.
With all these clever negotiations when each one of these terminals are sold Qantas arranges the sale terms of its key terminals alleviating the concern that each operating airport could turn the respective terminal into a larger multi-carrier and multi-purpose facility.