By Will Lee
Qantas, Perth Airport Resolve Fees Dispute in Court
Qantas and Perth, Australia’s Airport aeronautical fee saga have come to an end. The Supreme Court of Western Australia has ordered Qantas to pay aeronautical fees. Perth Airport initially sued Qantas for outstanding bills of sixteen million Australian dollars ($11.49 million), but the flag carrier believed that it pays through the nose for the services.
Perth Airport — the gateway to Western Australia — charged Qantas 39 million Australian dollars for the aeronautical fee over a six-month period in 2018. Qantas believed the airport has monopoly power and thus only paid 22.89 million Australian dollars.
Qantas demanded the Weighted Average Cost of Capital (WACC) for the airport to calculate returns on investment for Perth Airport should be between 6.3 percent to 7.3 percent, but the judge has ruled that the WACC should be 9.6 percent.
Also, the judge has revealed that Perth Airport should charge Qantas for the period in dispute, including fees per passenger for domestic and international airfield services, for international passenger services and for domestic passenger services. Both Qantas and Perth Airport have welcomed the decision from the judge.
“Three years in court to determine five months of pricing shows why the industry needs an expert umpire to resolve stalemates quickly when they occur,” Vanessa Hudson, CFO of the airline, said.
However, the flag carrier said the 9.6 percent of WACC is still higher than “comparable rates used by airports overseas and well above most rates set by regulators for other Australian monopolies.” Kelvin Brown, CEO of Perth Airport, welcomed the decision and looks forward to working with Qantas. Meanwhile, Brown has unveiled more details.
“We began that consultation process with a WACC of 9.7%. Qantas has countered with a significantly lower figure, almost half of what Perth Airport proposed and short-paid Perth Airport on that basis, Brown said.
However, Qantas has decided that its Kangaroo Route will be rerouted via Darwin, Australia — in the Northern Territory — instead of Perth, Australia until June. The decision came before the Supreme Court’s rule. Despite the country’s international border having reopened, the state of Western Australia remains closed until March 3 due to the omicron variant. According to the airline, Qantas currently operates daily flights from Melbourne, Australia and Sydney to London’s Heathrow Airport on its Boeing 787 Dreamliner.
In addition, after nearly two years of closing its border, Australia has welcomed international travelers. International travelers who have been fully vaccinated can avoid quarantine, but unvaccinated travelers need to take a 14-day quarantine.
“The thousands of international tourists arriving this week and many more over the coming months will help kickstart the tourism industry which has done it tough for the past couple of years.” Alan Joyce, CEO of Qantas said.