Qantas sells its domestic terminal at Melbourne Airport for $355 million

written by australianaviation.com.au | May 9, 2019
An aerial shot of Tullamarine. (Melbourne Airport)
An aerial shot of Tullamarine. (Melbourne Airport)

Qantas has announced the sale of its domestic terminal, also known as Terminal 1, at Melbourne Airport for $355 million.

Under the terms of the deal, Melbourne Airport will pay Qantas $276 million in cash upon settlement, with a further $79 million “to be accrued in future periods”, Qantas said in a statement on Thursday.

Further, Qantas has also signed a 10-year agreement that includes exclusive access to Terminal 1, including its premium passenger lounges, for domestic services. Melbourne Airport gets the aeronautical and retail assets and will manage the property. The agreement starts on July 1 2019.

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“Options to operate some international flights from Terminal 1 outside of peak domestic times will be assessed,” the Qantas statement said.

Melbourne Airport said in a statement the use of the Terminal 1 for international operations would optimise the use of available available capacity that existed at some times of the day across the airport precinct.

Meanwhile, the transition to the new Terminal 1 operational licence would be phased in over a period of time to minimise disruption to passengers.

“This is a very important step for us,” Melbourne Airport chief executive Lyell Strambi said in a statement issued by the airport.

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“It will support the ongoing commercial success of our largest customer here in Melbourne, while creating more capacity and greater choice for passengers.”

Melbourne Airport said it would establish a new retail offering at Terminal 1.

Qantas group chief executive Alan Joyce said: “It’s great that Melbourne Airport was prepared to take a commercially rational approach to make this deal possible.”

“Unfortunately, the current system doesn’t have an independent arbitrator for airports that aren’t commercially rational, which creates a stalemate around these critical pieces of infrastructure. That’s why we’re continuing to argue for regulatory change.”

Qantas’s sale of Terminal 1 at Tullamarine is the airline group’s third such deal in recent years.

In August 2015, Sydney Airport paid Qantas $535 million to buy back the airline’s lease over Terminal 3 at Mascot four years before the 30-year lease was due to expire.

The deal included Qantas retaining priority usage to Terminal 3 through to 30 June 2025.

And in February 2014, Brisbane Airport paid Qantas $112 million to purchase the lease over the northern end of the domestic terminal. The 31-year lease was due to expire at the end of calendar 2018.

The transaction also covered Qantas’s “use of the runway system at Brisbane Airport, including current infrastructure and the new parallel runway” under construction, the airline group said at the time.

Qantas departures at Brisbane Airport. (Patrick Murray)
Qantas departures at Brisbane Airport. (Patrick Murray)

Qantas still held the lease on the maintenance facilities at its Mascot jetbase.

A file image of Qantas Boeing 737-800 VH-XZB at the airline's Mascot jetbase in 2013. (Jetstar/Wikimedia Commons)
A file image of Qantas Boeing 737-800 VH-XZB at the airline’s Mascot jetbase in 2013. (Jetstar/Wikimedia Commons)

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5 Comments

  • Adrian P

    says:

    If terminal is to be used for international traffic then baggage reclaim will have to be airside.
    From a security perspective baggage reclaim airside for domestic and international passengers is world best practice.

    • Andrew

      says:

      I think once they transition Qantas over to T3 and T4, then T1 and T2 becomes international terminals. I like their long term planning. Pity the airport rail link has to go through the suburban rail network.

  • Patrickk

    says:

    They can have baggage reclaim at the current international together with customs with an interconnection between the two and sliding doors to move from domestic to international much like Canberra. The cost is a two level inter connector with escalators to 2-3 gates; so it would take a year or more to build.

  • Alex

    says:

    Qantas to maintain its profit has over the years sold assets.. frequent flyer business. Catering. Terminals and yet postponed investment in new fleet.. in the future qantas has to spend money on new fleet otherwise someone else will use more efficient aircraft and be able to undercut qantas fares.. qantas has not grown in years..

    • australianaviation.com.au

      says:

      Hi Alex,
      Thanks for your comment. Note that Qantas has not sold its frequent flyer business.
      Cheers.

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