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Palisade Investment Partners to run Sunshine Coast Airport under 99-year lease

written by australianaviation.com.au | February 9, 2017
An artist's impression of a proposed new runway at Sunshine Coast Airport. (Sunshine Coast Airport)
An artist’s impression of a proposed new runway at Sunshine Coast Airport. (Sunshine Coast Airport)

Investment firm Palisade Investment Partners will pay $82 million to Sunshine Coast Council for a 99-year lease at Sunshine Coast Airport in a deal that also covers funding for the planned new runway and terminal upgrades.

Under the terms of the lease, Palisade will manage the airport and pay an annual rental fee to Sunshine Coast Council, which retains ownership of the facility located about 100km north of Brisbane.

The agreement also commits Palisade to paying the Council $290 million in 2022, which is after the proposed new runway is completed, as well as $28 million towards future terminal development, Sunshine Coast Airport said in a statement on Thursday.

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The announcement ends Sunshine Coast Council’s three-year search for a commercial partner, which generated 17 expressions of interest from at home and abroad during the tender process. Palisade was named as the preferred bidder in December.

Sunshine Coast Council Mayor Mark Jamieson said the deal ensured the new runway would be built and allow the airport to realise its “enormous growth potential” while “limiting any long term adverse impact on council’s financial position or on our ratepayers”.

“Our partnership with Palisade will also strengthen and grow the airport’s services and capabilities, contribute significantly to the economic growth of our region and at the same time, enable council to maintain an economic interest in the airport – thus ensuring ratepayers share in the airport’s performance into the future,” Jamieson said.

Sunshine Coast Airport said its annual rental fee would be equivalent to five per cent of gross revenues. The airport estimated this was worth $205 million over the term of the 99-year lease, or a little over $2 million a year.

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In addition to the $290 million from Palisade, the runway project has also received federal government funding in the form of an $181 million concessional loan.

The new 2,450m long and 45m wide runway to be built in a north-west/south-east orientation (Runway 13/31) was the centrepiece of a project that also featured two end taxiway loops, a larger apron at the terminal and a new air traffic control and aviation rescue fire fighting station.

The new runway would be capable of handling widebody aircraft such as the Airbus A330 and Boeing 787, while existing A320 and 737 services would operate without the constraints in place currently for the existing north/south 1,797m long by 30m wide runway.

The council was expected to have the contract in place to build the new runway by September, with enabling works and site surveys already underway. Construction due to be finished in December 2020.

Jamieson said the total cost of the airport expansion project was $319 million, down from previous estimates of $347 million given Palisade was taking responsibility for the future terminal development.

Currently, airlines are required to operate “non-standard narrow runway” procedures, which included a reduced tolerance to cross winds.

The airport’s sole international flight is a seasonal Air New Zealand operation to Auckland with Airbus A320s. In the 12 months to June 30 2016 the service carried 16,935 passengers, up 65 per cent from 10,228 in the prior corresponding period.

Jamieson was hopeful the new runway would spur airlines into launching nonstop international flights to Asia and the Western Pacific that would give the region’s primary producers a direct link to overseas markets.

Jetstar flight at Sunshine Coast Airport
A Jetstar flight at Sunshine Coast Airport.

“Those new routes will boost our tourism and international trade and help our export businesses, particularly those operating in the food and agri-business sectors, so they get their products and services to markets faster and more efficiently,” Jamieson said.

Palisade is also an investor in Darwin, Alice Springs and Tennant Creek airports through its holding in Airport Development Group.

Sunshine Coast Airport handled more than one million passengers in the 12 months to November 2016, the first time it had broken through the one million mark in its history.

6 Comments

  • Harrison Grohn

    says:

    congrates!

  • John Reid

    says:

    What impact will the lease and the new runway construction have on the Queensland Air Museum and other tenants on airport land adjacent to existing runway?

  • Tony

    says:

    Also pleased for this development. But…..Lots of financial information is missing here. How do Palisade make a profit? Has to be from passengers ultimately. Car parking, shops, landing fees etc. Will airlines be able to cover these charges and still compete with Brisbane? Remember Brisbane trying to charge airlines in advance for their new runway. This article could have researched beyond just quoting the Sunshine Coast press release to find more facts

  • deano

    says:

    What a deal for Palisade !!!
    Instead of buying up the airport (including the land) they just pay a lease….
    I would think that the rates alone would be more than the annual lease payments which is less than $1 million per annum and there is no mention that it is indexed to CPI

    Palisade will earn $16.06 per arriving and departing passenger or $16 million per year
    And both the charge and passenger numbers will continue to grow
    Plus
    Retail rent
    Parking
    Aircraft charges
    To say that they will earn $20 million or more per year would be conservative

    Creative accounting at it’s best

    Why our council chose to sell of such a great money earner is beyond me
    Passenger charges will only go up, thus stifling future growth

    Plain and simple
    Sunshine Coast Council need only break even on our airport to be a success as bringing holiday makers to the coast is good for everyone
    Palisade on the other hand needs to turn a profit on any investment, no problem with business making a dollar
    However, this will only see charges rise over time, which is not good for the sunny coast

    Sorry to be negative, but the truth must be allowed to be published

  • KeithMcc

    says:

    Deano,
    Sunshine CC also get 5% of gross revenue. So when these leeches, sorry leasees, start gouging all and sundry, the council will be in for their share. Whether that is enough in the short term to pay for the new runway I will leave to the accountants, but long term ratepayers should be getting a good return.

  • Ian Mackintosh

    says:

    Queensland Air Museum is at Caloundra Airport not Sunshine Coast Airport.

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Palisade Investment Partners to run Sunshine Coast Airport under 99-year lease

written by australianaviation.com.au | February 9, 2017
An artist's impression of a proposed new runway at Sunshine Coast Airport. (Sunshine Coast Airport)
An artist’s impression of a proposed new runway at Sunshine Coast Airport. (Sunshine Coast Airport)

Investment firm Palisade Investment Partners will pay $82 million to Sunshine Coast Council for a 99-year lease at Sunshine Coast Airport in a deal that also covers funding for the planned new runway and terminal upgrades.

Under the terms of the lease, Palisade will manage the airport and pay an annual rental fee to Sunshine Coast Council, which retains ownership of the facility located about 100km north of Brisbane.

The agreement also commits Palisade to paying the Council $290 million in 2022, which is after the proposed new runway is completed, as well as $28 million towards future terminal development, Sunshine Coast Airport said in a statement on Thursday.

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The announcement ends Sunshine Coast Council’s three-year search for a commercial partner, which generated 17 expressions of interest from at home and abroad during the tender process. Palisade was named as the preferred bidder in December.

Sunshine Coast Council Mayor Mark Jamieson said the deal ensured the new runway would be built and allow the airport to realise its “enormous growth potential” while “limiting any long term adverse impact on council’s financial position or on our ratepayers”.

“Our partnership with Palisade will also strengthen and grow the airport’s services and capabilities, contribute significantly to the economic growth of our region and at the same time, enable council to maintain an economic interest in the airport – thus ensuring ratepayers share in the airport’s performance into the future,” Jamieson said.

Sunshine Coast Airport said its annual rental fee would be equivalent to five per cent of gross revenues. The airport estimated this was worth $205 million over the term of the 99-year lease, or a little over $2 million a year.

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In addition to the $290 million from Palisade, the runway project has also received federal government funding in the form of an $181 million concessional loan.

The new 2,450m long and 45m wide runway to be built in a north-west/south-east orientation (Runway 13/31) was the centrepiece of a project that also featured two end taxiway loops, a larger apron at the terminal and a new air traffic control and aviation rescue fire fighting station.

The new runway would be capable of handling widebody aircraft such as the Airbus A330 and Boeing 787, while existing A320 and 737 services would operate without the constraints in place currently for the existing north/south 1,797m long by 30m wide runway.

The council was expected to have the contract in place to build the new runway by September, with enabling works and site surveys already underway. Construction due to be finished in December 2020.

Jamieson said the total cost of the airport expansion project was $319 million, down from previous estimates of $347 million given Palisade was taking responsibility for the future terminal development.

Currently, airlines are required to operate “non-standard narrow runway” procedures, which included a reduced tolerance to cross winds.

The airport’s sole international flight is a seasonal Air New Zealand operation to Auckland with Airbus A320s. In the 12 months to June 30 2016 the service carried 16,935 passengers, up 65 per cent from 10,228 in the prior corresponding period.

Jamieson was hopeful the new runway would spur airlines into launching nonstop international flights to Asia and the Western Pacific that would give the region’s primary producers a direct link to overseas markets.

Jetstar flight at Sunshine Coast Airport
A Jetstar flight at Sunshine Coast Airport.

“Those new routes will boost our tourism and international trade and help our export businesses, particularly those operating in the food and agri-business sectors, so they get their products and services to markets faster and more efficiently,” Jamieson said.

Palisade is also an investor in Darwin, Alice Springs and Tennant Creek airports through its holding in Airport Development Group.

Sunshine Coast Airport handled more than one million passengers in the 12 months to November 2016, the first time it had broken through the one million mark in its history.

6 Comments

  • Harrison Grohn

    says:

    congrates!

  • John Reid

    says:

    What impact will the lease and the new runway construction have on the Queensland Air Museum and other tenants on airport land adjacent to existing runway?

  • Tony

    says:

    Also pleased for this development. But…..Lots of financial information is missing here. How do Palisade make a profit? Has to be from passengers ultimately. Car parking, shops, landing fees etc. Will airlines be able to cover these charges and still compete with Brisbane? Remember Brisbane trying to charge airlines in advance for their new runway. This article could have researched beyond just quoting the Sunshine Coast press release to find more facts

  • deano

    says:

    What a deal for Palisade !!!
    Instead of buying up the airport (including the land) they just pay a lease….
    I would think that the rates alone would be more than the annual lease payments which is less than $1 million per annum and there is no mention that it is indexed to CPI

    Palisade will earn $16.06 per arriving and departing passenger or $16 million per year
    And both the charge and passenger numbers will continue to grow
    Plus
    Retail rent
    Parking
    Aircraft charges
    To say that they will earn $20 million or more per year would be conservative

    Creative accounting at it’s best

    Why our council chose to sell of such a great money earner is beyond me
    Passenger charges will only go up, thus stifling future growth

    Plain and simple
    Sunshine Coast Council need only break even on our airport to be a success as bringing holiday makers to the coast is good for everyone
    Palisade on the other hand needs to turn a profit on any investment, no problem with business making a dollar
    However, this will only see charges rise over time, which is not good for the sunny coast

    Sorry to be negative, but the truth must be allowed to be published

  • KeithMcc

    says:

    Deano,
    Sunshine CC also get 5% of gross revenue. So when these leeches, sorry leasees, start gouging all and sundry, the council will be in for their share. Whether that is enough in the short term to pay for the new runway I will leave to the accountants, but long term ratepayers should be getting a good return.

  • Ian Mackintosh

    says:

    Queensland Air Museum is at Caloundra Airport not Sunshine Coast Airport.

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