AIRPORTS: Qantas signals feud over Melbourne’s third runway.

Last Friday, Melbourne Airport finally received federal government approval to build its third runway.

The AU$3 billion project, conceived in the 1990s, is set to start operations in 2031, that is if airlines agree to pay for it via higher passenger charges.

Airlines & airports – symbiotic relationship

Now comes the harder part – negotiating with airlines. Although Airports fund capital improvements, it is Airlines that actually pay for them through passenger charges which get passed on to travellers as part of the bundle of fees that make up an airfare.

So, it’s important to embark on capital improvements with the support of airlines, in this case, predominantly Qantas and Virgin Australia.

At a conference late last week, Vanessa Hudson encouraged Melbourne Airport to build the third runway, but only when it was needed. She argued that airlines and the travelling public don’t want to pay for infrastructure ahead of demand. Neither do they want to pay for inefficient infrastructure. Ms Hudson is presumably staking her claim on being involved in the design process.

That’s all very well, but infrastructure needs to be planned and funded ahead of when demand manifests. So you can see the natural tension between airports and airlines

Not always smooth ‘sailing’

This tension between airlines and airports often bursts out into the open as we have seen over in Perth with the long-term dispute between Qantas and the Perth Airport over re-siting their international operations. A feud that appears to have recently been settled with Qantas committing to move to a new terminal. That’s on top of another long-standing dispute over airport charges, that has also been recently settled.

But not everything is dispute. Qantas has already proposed significant upgrades to the security processes at Melbourne Airport. And that is separate to the discussions on the new train station at Melbourne Airport.

2PAXfly Takeout

Arguably this is two sides of the same coin. It’s the natural jostling between two large enterprises that depend on each other but love to cost shift. Qantas depends on efficient airport experiences, while Melbourne Airport relies on Qantas to bring in a stack of its income through passenger charges to pay for what it spends on providing facilities.

The two organisations want to make sure they get the best deal possible. However, it is we the travelling public that will eventually pay for the AU$3 billion third runway. Should we have a place at that negotiating table?

Think about that the next time you buy an airline ticket that has Melbourne on its itinerary.