An “act of good faith” or a lack of “reasonable justification”? – Perth Airport, Qantas in dispute over unpaid fees

written by australianaviation.com.au | December 18, 2018
A Qantas 787 at Perth Airport. (Perth Airport)

Perth Airport has launched legal action to recover what it says are over $11 million in unpaid aeronautical charges from Qantas, saying the airline group had unilaterally decided to short pay invoices for aeronautical services from July 1.

The airport says it has been negotiating with the Qantas Group for more than 18 months on a new aeronautical services agreement to supersede a previous agreement which expired on June 30.

“All other airlines which use Perth Airport had reached agreement with Perth Airport on charges for aeronautical services, effective 1 July 2018,” Perth Airport said in a statement on Monday.

Advertisement
Advertisement

“Qantas had not, but as an act of good faith, Perth Airport began invoicing Qantas at the proposed reduced rate from 1 July 2018.”

The airport says numerous attempts to negotiate an outcome with Qantas, which serves Perth with its Qantas domestic and international, Jetstar and QantasLink/Network Aviation operations, “have failed”.

“Despite the reduced price offered, Qantas unilaterally decided to short pay these invoices by around 40 per cent,” the airport said.

“The amount outstanding (July-October) totals approximately $11.3 million, which constitutes a material amount of revenue which is not sustainable. Accordingly, to bring the issue to a head as soon as possible Perth Airport was forced to commence legal action against Qantas in the WA Supreme Court.”

PROMOTED CONTENT

Qantas, meanwhile, has described Perth Airport’s new pricing as “unjustified”.

“Without agreement or reasonable justification, Perth Airport has been sending us invoices for higher fees and charges, when these were already too high to begin with,” Qantas Domestic CEO Andrew David said in a statement on Tuesday.

“While negotiations have been taking place, we have continued to pay Perth Airport, just not at the unjustified rates they have proposed.”

David says Perth airport is “one of the most expensive domestic airports that we fly to in Australia”.

“We are willing to pay fair and reasonable charges but want to ensure that our customers are not paying more in airport charges than is absolutely necessary.”

Qantas and Perth Airport have long had a fractious relationship. Earlier this year Qantas dropped plans to operate seasonal services from Perth to Johannesburg after being unable to reach an agreement over terminal access. Negotiations with Qantas to operate its new Perth-London nonstop Boeing 787-9 flights from what is otherwise its domestic terminal precinct at the airport were also hard fought.

The airport and airline are also continuing to negotiate over the terms of relocating all of Qantas’s operations at Perth Airport to an expanded international and domestic terminal precinct. (Virgin Australia moved across the airfield to new terminal facilities adjacent to the current international terminal in November 2015, allowing Qantas to expand into the former Virgin domestic terminal.)

In mid-November Perth Airport CEO Kevin Brown said the airport was looking to “accelerate” talks with Qantas over moving into a new “integrated domestic terminal project” by 2025.

An artist's impression of Perth Airport transformation plans. (Perth Airport)
An artist’s concept of Perth’s planned integrated domestic and international terminal precinct. (Perth Airport)

“Qantas have a strong preference for a seamless transition for their passengers between domestic and international flights – and that’s what we are committed to delivering for all travellers,” Brown said on November 10.

“The current Terminals 3 and 4 are rapidly reaching their use-by date so we’ll be looking at new construction methods and new technologies to ensure an efficient and cost-effective outcome in the new integrated domestic terminal.”

The current dispute over aeronautical fees comes as the Productivity Commission is conducting a review into airport charging.

“This mindset of monopoly airports charging customers whatever they can get away with is why the Productivity Commission is reviewing airports and why a change in regulation is needed,” David asserted.

Perth Airport says its legal action is not affecting Qantas’s day-to-day operations there “and will have no impact on passengers”.

This is not the first time Qantas and an Australian airport have engaged in robust public debate – in May Qantas accused Canberra Airport of holding one of its Boeing 737-800s for “ransom” following a diversion due to weather in March 2017. Canberra Airport called that claim “absolute baloney”.

Did you know that Australian Aviation Magazine comes digitally? Subscribe to Australian Aviation’s digital magazine for just $59.95 a year! Our app is available on mobile, tablet and PC devices! Subscribe now at australianaviation.com.au.

7 Comments

  • Mark

    says:

    I think Qantas charge me too much for business class travel, can I short pay their invoice and still use the services?

  • Trevor Cox

    says:

    Stand by for the Australian Airports Association to tell us that airports are owned by Superannuation Funds, therefore have an apparent right to rip its users off

  • Murray Grant

    says:

    If Qantas have made a conscious decision not to pay agreed rates by 40% less and not pass on discounts to their loyal customers then I dare argue they are the simply profit gouging themselves. Pot and kettle.

  • Ben

    says:

    Airport says reduced fees, airline says increased fees… so someone is lying. But it’s not the first time Qantas has tried to use it’s considerable might to get its own way. Whilst yes the airports are a monopoly that need to be kept in check, the largest airline group in the country also has that privilege.

    • Desert Storm

      says:

      Hi Ben, when in living memory has the cost of something gone down without; a) a cost increase elsewhere, b) a degradation of service?

  • Pete

    says:

    Quote: “”Without agreement or reasonable justification, Perth Airport has been sending us invoices for higher fees and charges, when these were already too high to begin with,” Qantas Domestic CEO Andrew David said in a statement.”

    So, one day a flight Brisbane to Perth costs say $450 and the very next day it costs $800. No change in aircraft type, fuel cost, staff cost, airport charges and other costs associated with the flight so what is the justification for higher fares without agreement or reasonable justification Mr David?

    I know he will say Market conditions and the second day is a more popular day to travel so they charge more. Same for Perth Airport, they have a business to run, have bent over backwards to accommodate Alan Joyce’s childish tantrums about seamless connectivity and all the in the name of “but we are Qantas”. Fly Virgin, much better terminal experience both domestic and International for their customers.

  • TD

    says:

    Is there an ex Judge on the Qantas Board? Who is going to pay the interest? It’s a bit like a hospital car park as a patient or a visitor. Want to use it or do use it, pay the gold coins and discuss it later maybe.

Leave a Comment

Your email address will not be published. Required fields are marked *

Each day, our subscribers are more informed with the right information.

SIGN UP to the Australian Aviation magazine for high-quality news and features for just $99.95 per year