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.
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.
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.
“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.
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