Business leaders fight to save Perth-London flight and create jobs
EXCLUSIVE: Geoffrey Thomas and Steve Creedy - The West Australian on November 27, 2016, 11:55 pm
A group of powerful business leaders has urged the State Government to intervene in the dispute surrounding Qantas non-stop flights to London to prevent WA from losing a critical economic opportunity and thousands of much-needed jobs.
Wesfarmers Limited chief executive Richard Goyder, Macquarie Group WA chairman Mark Barnaba and Hawaiian property group chief executive Russell Gibbs are worried the State will be denied a once-in-a-lifetime chance to develop Perth into a regional tourism and business hub unless the Government intervenes to end a stand-off between the airline and Perth Airport.
Sir Rod Eddington, former chief executive of Cathay Pacific Airways and British Airways, urged the airport and the Government to seize the moment with the non-stop services because they were a huge boost to traffic.
“Non-stops are a substantial boost to tourism and Perth can be developed into a major gateway to Australia,” Sir Rod said.
Qantas plans to launch the service using new, long-range Boeing 787 planes and has flagged it could add other non-stop services from Perth to European cities such as Paris, Frankfurt and Rome.
The potential economic benefit to WA and Australia if the first daily flight to London evolves into four non-stop flights a day to Europe is put as high as $650 million a year and as many as 7000 jobs.
But the windfall could be lost because of Perth Airport’s reluctance to allow Qantas to operate the international flight from its domestic precinct at a cost of $25 million.
Using the domestic terminal would allow Qantas to link the non-stop flight to its domestic network and significantly boost the chances of success.
Airport authorities want Qantas to operate from the T1 international terminal.
Qantas has agreed to move its domestic operations to T1 but believes this is unlikely to happen for seven years. It says that even the airport’s own master plan indicates it will not happen before 2023.
The airline has warned it could use the new planes elsewhere if the Perth-London option becomes unviable.
The airport’s position has angered business leaders.
Mr Goyder said he was “horrified” by the prospect of missing out on the non-stop hub opportunity.
“It is incredible that this may not happen over seemingly minor issues,” he said.
“We don’t have the fine detail of the negotiations but this has to be a no-brainer.”
Mr Goyder said business executives in the Eastern States could not understand why there was any debate about Qantas’ requirements.
“It is quite simply a phenomenal opportunity,’’ he said.
“I hope that the Federal and State governments can intervene to resolve this issue immediately.”
Mr Gibbs said the Qantas service was a game changer for the State and a golden opportunity which should not be lost.
He urged the State’s leadership to resolve the impasse. “This is not only about focusing attention on tourism but this service can make Perth a business hub and we already have much of the infrastructure in place,” he said.
“Developing WA as a hub for tourism and business is the next big opportunity for WA. These new services will give WA accessibility and awareness and the loss of this opportunity would be a tragedy.”
Mr Barnaba said the investment in modifying the existing Qantas terminal would be quickly paid back.
“Surely the Government and the airport understand the extraordinary nature of this opportunity for the State of WA,” he said. “The payback period is literally months.
“Singapore and Dubai have developed their tourism sectors in no small part because of their hub airports.”
Qantas chief executive Alan Joyce said last week the new flights were an “amazing opportunity” for WA.
“No part of Australia has ever had a non-stop link to Europe, so the idea that it could be up and running in just over a year has people on both sides of the world excited,’’ he said.
“Over time, we’d look at other direct routes like Perth to Paris or to Frankfurt, each delivering a boost to WA,’’ he said.
WA the loser if airport turns off light on non-stop flight
COMMENT: Geoffrey Thomas Aviation Editor - The West Australian on November 28, 2016, 6:27 am
US astronaut John Glenn shone a light on Perth in 1962 when he called it the city of lights.
But Perth Airport is set to kill an aviation floodlight that would shine on our State by rejecting Qantas’ proposal for a western hub to operate non-stops flights to Europe.
Perth Airport’s apparent not-negotiable solution of operating the service from its T1 international terminal instead of Qantas’ domestic terminals, T3/T4, destroys the seamless hub operation the airline needs by forcing connecting passengers into buses to transfer to T1.
The airport’s claims that it could handle the proposed western hub expansion built around Qantas’ 236-seat Boeing 787 were not supported by the reality of the day-to-day operations of T1.
There are times of the day when there are no international flights at T1, but Perth Airport traffic is all about peaks and troughs as schedules fit into global traffic patterns. If Qantas was talking about one flight a day with only Perth traffic, then the T1 option would work.
But the airline’s plans are far greater, with expectations of up to four flights a day, to London, Paris, Frankfurt and possibly Rome. A seamless transfer of passengers at the domestic terminal is critical.
Taking passengers across the airport by bus is not an option.
This service is all about high-speed connections.
Buses are used in Sydney but it is an inefficient transfer of passengers, who change flight routes to avoid such hassles.
There is debate about the value to WA of the non-stop flights but it is hard to quantify.
However, using government and Deloitte Access Economics figures, based on the assumption that 50 per cent of the traffic on the 787 services is inbound, the value to WA and Australia is $560 million-$650 million a year when all four services are operating.
The passengers who will use this service will be high-yield tourists and business executives. Some of the inbound passengers will go on to another city but they will still be exposed to Perth and even Australian travellers may spend a short break in Perth on their way to or from Europe. This is common in Dubai and Singapore.
And this is not a service that will just take passengers away from other airlines. It is a traffic generator. Non-stop flights increase passenger traffic by up to a factor of three, according to a recent presentation.
It is supported by Emirates, which may lose some traffic, because the airline’s president, Sir Tim Clark, knows better than anyone the value of seamless, non-stop connections.
Tourists in Europe, when selecting an overseas holiday destination, look first and foremost for a non-stop destination such as Rio de Janeiro, Cape Town or Los Angeles.
Suddenly Perth and WA would be on their travel radar. That Perth Airport doesn’t appear to understand the needs and desire of its biggest customer nor global traffic patterns is of concern.
It took a dressing down from former premier Alan Carpenter in 2008 before the airport hurriedly came up with plans for new terminals one month later.
Perth missed out on the Emirates A380 for almost two years because the airport was late delivering a compatible gate.
Early last year it blamed Virgin Australia for delays in the T1 domestic pier, saying the airline had changed specifications of equipment. The reality was starkly different.
Airlines, unlike airports, face intense competition and their average net profit is about 2 per cent. Qantas has only just started paying dividends after a seven-year drought and needs to invest in more planes.
After a couple of good years, airlines are facing tough times and are reducing fares to near-record lows to keep planes filled.
Airports almost never reduce their charges to help.
Australian airports, which are monopolies, have a responsibility not only to their shareholders but also to the wider community.
Being a monopoly brings enormous economic benefits.
Perth Airport’s shareholders have plenty to look forward to, with global air traffic forecast to double over the next 15 years.
But Perth has to be on the global map to fully benefit and the clock is ticking with WA about to lose out in the next few days unless Perth Airport changes its stance.