The long-running legal dispute between Qantas and Perth Airport over fees has finally been resolved – with both sides claiming victory.
On Friday, the West Australian Supreme Court ordered the Flying Kangaroo to pay more than $9 million in aeronautical fees covering a short period following the expiration of the pair’s previous agreement in mid-2018.
The sum was around $16 million less than the airport had hoped for but above what Qantas wanted to pay.
Welcoming the decision, Qantas Group CFO Vanessa Hudson said the airline “obviously” couldn’t agree to what it said was a 40 per cent price increase imposed by Perth Airport to sign a new deal in 2018.
“After some frustrating negotiations, the airport took us to court for underpayment instead of accepting our suggestion of an independent arbiter,” said Hudson.
“The decision is positive because it upholds the building block model that is the established basis for setting prices. But it also sets a return on investment that we think is far too high for a low-risk monopoly infrastructure asset.
“Excessive returns for monopolies usually result in over-investment to chase returns, which customers ultimately end up paying for.
“We’ve seen this story play out before when electricity networks in NSW and Queensland over-invested and prices for consumers almost doubled in 10 years before regulators stepped in.
“Perth Airport ultimately wants Qantas to move to their proposed new terminal but the price to use that facility would not be commercially viable for Qantas if the return on investment in this judgment was applied.
“This decision only applies to the five-and-a half-month period in 2018 and given how much has changed since then you simply can’t apply this rate to the subsequent multi-year period that we now need to come to an agreement on with Perth Airport.
“Given the Court’s conclusions about Perth Airport having monopoly power, this whole process shows the real issue here is that the light-touch approach to airport regulation isn’t working. 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.”
Perth, however, said the decision by Justice Rene Le Miere recognised the “the fairness of the open and transparent, consultative manner” in which it negotiated prices with airlines.
“The fact we were able to secure new agreements with 25 of the 26 airlines operating at Perth Airport is evidence the process was fair and reasonable,” said Perth’s CEO, Kevin Brown.
The ruling came days after Qantas confirmed that its iconic Kangaroo Route connecting Australia directly with London will continue to fly via Darwin, as opposed to Perth, until “at least June 2022”.
Qantas said the decision was made in light of ongoing uncertainty both over the reopening of the Western Australian border and testing requirements in Singapore.
The airline will continue to perform daily flights from both Sydney and Melbourne via Darwin on its 787 Dreamliner fleet, after extending its arrangement with the Northern Territory government.
Initially, the arrangement in Darwin was expected to wrap up in April, and WA’s domestic and international borders were planned to reopen on 5 February.
However, WA Premier Mark McGowan delayed the move indefinitely due to the Omicron outbreak. A new reopening date has been set for 3 March.