Virgin sues over terminal

[Wirraway]

AAP

Virgin sues over terminal
August 26, 2002

BUDGET airline Virgin Blue had started legal action against Sydney Airport Corp Ltd over access to the former Ansett terminal, the company has said.

The airline said it was asking the Commercial Division of the NSW Supreme Court to uphold an agreement it says the company reached with SACL last April over access and long-term use of gates at the former terminal.

"The documents lodged in court today detail around 150 points of agreement between Virgin Blue and SACL," Virgin Blue said.

"In its action, Virgin Blue alleges that SACL entered into a legally binding agreement during meetings in April with senior SACL executives.

"Virgin Blue also alleges that, as a result of SACL assuring Virgin Blue that there was a legally binding agreement, neither Virgin Blue nor Patrick Corporation bid to acquire the Ansett Terminal from the Ansett administrators."

The airline was also considering taking action under national competition laws to gain "fair access" to Sydney Airport.

Among the options being considered were to have terminal access and other services at Sydney Airport declared under Part IIIA of the Trade Practices Act.

"This section of the Act provides a right of access to monopoly services that are nationally significant and important to the promotion of competition," the airline said.

"Declaration of Sydney Airport under the Trade Practices Act would give the ACCC the power to arbitrate in disputes over access, price and other terms of access for airport users."

Virgin Blue chief executive Brett Godfrey said he was confident the airline had a very strong case in the NSW Supreme Court and was seeking an urgent meeting.

"Virgin Blue and Patrick made a series of significant commercial decisions as a result of the agreement with SACL and we will be asking the court to uphold and enforce the arrangements," Mr Godfrey said in a statement.

"We are confident we have a very strong case and, given the importance of this matter, we will be seeking an urgent hearing."

On the possible Sydney Airport competition action, Mr Godfrey said: "We believe it may be necessary to have Sydney Airport brought back under regulation by the ACCC to stop the exorbitant price hikes which are being demanded by SACL."

The legal action comes just days after Virgin Blue rejected an invitation to return to the negotiating table over access to the former Ansett domestic terminal in Sydney.

SACL made the invitation after it struck a deal with Qantas Airways Ltd in the stand-off over access to the terminal.

The dominant Australian airline will use six of the 18 gates on a common-user basis, and expected to move into the terminal in September - a year after Ansett's first collapse.

Last week Qantas chief executive officer Geoff Dixon turned up the heat in the long-running negotiations, declaring Qantas would spend $100 million extending its existing facility.

Earlier this month, Virgin said it would rather spend $15 million upgrading its existing facilities than pay "exorbitant rents" at the former Ansett site.

AAP

[elektra]

And before a few readers of the above post get a rush of blood to their heads and start on about how Virgin is complaining way too much....remember the Hilmer Report and the CHOGM agreement on access to essential infrastructure? There's no more restricted piece of essential infrastructure in Oz than KSA and there was a window of opportunity for the development of a high quality common user terminal that would have given Virgin (and any other newcomer) decent, affordable access. And this government, like the Keating and Hawke governments before it, blew it big time. To support Qantas.

If there's any complaint about Virgin's screaming it is that they should yell louder. Then we might maybe get government action on a new Sydney airport, getting rid of the KSA curfew for Stage 4 compliant a/c and a guarantee that Essendon will stay. For starters. That sort of action to underpin competition is what we pay taxes for. Southwest had to fight, kisk, scratch and gouge to get access to gate in the US years back. Virgin shouldn't have to fight the same battles again.

[shakespeare]

Here, here electra!

[Outback Pilot]

Give it to them Virgin Blue, and hope you Win! :) :) :)

[Airtart]

SACL to defend vigorously Virgin Blue claims

Sydney Airports Corporation Limited (SACL) today confirmed that it had received a summons filed in the Supreme Court of NSW on behalf of Virgin Blue Airlines Pty Ltd. SACL again stated that there was never an agreed price structure or a completed agreement with Virgin Blue regarding access to the former Ansett terminal.

SACL said the filing of the summons represented yet another negotiating tactic for access to the former Ansett terminal in Sydney Airport’s domestic precinct. The Corporation restated the following information as a matter of public record in response to Virgin Blue’s attempts to yet again drag out commercial dealings through the media:

Virgin Blue has never produced any evidence that in any way substantiates its claims
A series of letters from Virgin Blue to SACL during May and June clearly show that, from Virgin Blue's management perspective, there was no confirmed deal
Virgin Blue requested the Federal Minister for Transport and Regional Services to review its claims. Mr Corrigan was asked to put his claims in writing
SACL has been briefed on the outcome of an independent third party review by the Department of Transport & Regional Services. So has Mr Corrigan and Virgin Blue
SACL understands from media coverage that the Government has informed Virgin Blue that there is no evidence of any completed transaction between SACL and Virgin Blue regarding access to the former Ansett terminal
More importantly, there was nothing in the Government's briefing to cause SACL to review its position which is supported by strong legal advice
SACL stands by earlier statements in which the Corporation totally rejected unsupported assertions by Virgin Blue that there is, or was, agreement finalised on Virgin Blue’s expansion. Documentation confirming that no agreement had been finalised was revealed to all potential bidders through the data room process during SACL's privatisation.

SACL again stated that there were discussions on principles and there was a discussion document. However, no agreement was concluded as those discussions subsequently broke down on critical issues such as price and IT operating platforms – issues that remain outstanding even today.

SACL has also issued public statements covering the above which remain as a matter of public record on the Corporation’s media web site.



SACL is also surprised at Virgin Blue's decision not to resume negotiations with SACL, despite the fact that it is calling for this repeatedly in its publicity. In fact, Virgin Blue has refused to participate in commercial discussions on the use of the terminal since privatisation of SACL. However, SACL remains keen to engage with Virgin Blue on its expansion plans for the Australian market.



It is disappointing that the very airline that won consumer support through opposing the concept of an Australian domestic aviation duopoly now appears to be using this current negotiating strategy to ensure any potential new entrant has no access to crucial terminal space in Australia’s major domestic airport.

Federal Transport Minister John Anderson says the Government cannot do any more to help resolve the dispute over terminal space at Sydney Airport for Virgin Blue.

Virgin Blue has taken the dispute to court, claiming the new owners of Sydney airport have scrapped a legally abiding agreement with the previous owners for access to some of the former Ansett terminal gates.

Mr Anderson says both sides need to resolve the issue.

"This really is a matter for the parties to sort out commercially now," he said.

"I've done all I can to draw the parties together to get them talking and they've got to take it forward.

"I believe that both sides have an interest in sorting this out, Virgin needs access to the terminals, the airport needs Virgin using the terminals."

[Airtart]

Sydney Airports Corporation Limited (SACL) today said that it remained bemused and amused by Virgin Blue’s apparent reversal of position (yet again) regarding the former Ansett terminal.

SACL says it would still like to engage Virgin Blue in commercial discussions, but would ask that as a first step, they sort out their own differences.

The statement issued from SACL follows comments made earlier today by Sir Richard Branson that Virgin Blue would be mounting a campaign against Sydney Airport over access to the terminal.

Over the past few weeks the travelling public has seen:

Chris Corrigan of Patrick Corporation, and a shareholder in Virgin Blue, argue that SACL is keeping Virgin Blue out of the terminal and taking SACL to court over the issue
David Huttner, Commercial Manager with Virgin Blue argue that the airline would never re-engage SACL in discussions to access the same terminal
Brett Godfrey of Virgin Blue launch a campaign that sees Virgin Blue eager to expand the domestic express terminal in Sydney out of which they currently operate, and
today, Sir Richard Branson advise that Virgin Blue will launch an Australia-wide campaign to promote their claim to access to the former Ansett terminal, and so that they can move out of the domestic express terminal.
One half of Virgin Blue (the Corrigan half) wants access to the former Ansett terminal (and in doing so have claimed the current domestic express terminal facilities are on par with a "bus shelter" and a "tin shed"). The other half (the Huttner half) do not want to engage SACL in discussions and would prefer to expand the domestic express terminal which they view as being ideal for their business model and their customers needs. Today's quote; "The tin shed has done us very well." David Huttner.Radio 2UE 30/8/02.

SACL is also surprised at Virgin Blue's decision not to resume discussions with SACL, despite the fact that it is calling for this repeatedly in its publicity.

Virgin Blue has a choice: they can persist with their media stunts and publicity campaigns; or they can engage in commercial negotiations which is the only way this dispute will be settled.

As a first step, the two parts should at least meet among themselves to get their act straight.

SACL remains committed to seeing Virgin Blue passengers having access to the former Ansett terminal, and has again called on the airline to engage SACL in negotiations.

[Airtart]

SYDNEY - He did it against British Airways. Now flamboyant British billionaire Richard Branson is bringing his shock PR tactics to bear on an Australian bank he says wants too much money to let him use a Sydney airport terminal it owns.

In a campaign reminiscent of the "No Way BA-AA" that emblazoned the tailfins of Virgin Atlantic aircraft when the British giant and American Airlines were mulling a tie-up, Branson vowed to paint "Macquarie - what a bunch of bankers" on his local Virgin Blue fleet.

He accused Sydney Airport of backing away from a handshake agreement on access fees to the terminal of collapsed Ansett Australia before the airport was bought by a Macquarie Bank-led consortium for A$5.6 billion.

"If we give in to this sort of extortion, the costs of this airline will go up, and if the costs of the airline go up, air fares will go up and that's something we won't let happen," Branson, 52, said.

"Macquarie, stop the Sydney airport rort" will be another slogan carried in an aggressive campaign to embarrass Macquarie.

Sydney Airports Corp wants to run the second terminal as a common user facility, leaving space for any new entrants.

Qantas, which operates out of the other main terminal, has agreed to take six slots in the 18-gate terminal and SAC spokesman Peter Gibbs says talks are taking place with Singapore Airlines.

Virgin Blue is 50 per cent owned by Australian firm Patrick Corp.

- REUTERS

:D

[Airtart]

VIRGIN BLUE MATURING

1 September 2002

Michael Pascoe

"...Sydney Airport said that they were offering a peace pipe and we had a word with them about what the peace pipe amounted to and sadly the figures that they were quoting were still well adrift to the deal that we reached with them some months ago."


Virgin Blue is two and a very different child to the one born in 2000 on the eve of the Olympics. It's no longer the tiddler; it's the country's second airline after Qantas and is a real contender.

It's got a local half owner in Patrick Corporation and Ansett's failure helped, but good luck is also being in the right place at the right time and having done all the hard work.

A hiccup is greater access to Sydney airport, newly privatised and under the control of Macquarie Bank and its various funds, but founder Sir Richard Branson is in town, as if you hadn't noticed ... and Macquarie is in his sights ... he spoke to Michael Pascoe in Sydney yesterday.






Sir Richard Branson, Virgin: I think the chances are that it will have to be settled in the courts or possibly by the competition authorities and Sydney Airport yesterday said that they were offering a peace pipe and we had a word with them about what the peace pipe amounted to and sadly the figures that they were quoting were still well adrift to the deal that we reached with them some months ago.

Reporter: Have you had any discussions yourself with Sydney Airport?

Branson: I haven't myself because as far as I'm concerned we had reached an agreement and I felt that they should stick by that agreement and if I get a call from Tony Stewart saying that by and large they are willing to go along with the terms of the agreement I'd love to have a meeting with them and I'd love to smoke his peace pipe..

Reporter: What does it really come down to though, getting the four people in that meeting on the stand under oath, David Mortimer in particular, and asking them what that handshake might have meant?

Branson: I think in the end, in court, we're obviously all going to have to give our sides of the story as far as - at least four of the five people involved.. we had a deal and I'm not quite sure what Tony was smoking in his pipe to think that we didn't have a deal.

Reporter: What is the thrust to the legal action you've started?

Branson: Basically the - our argument is that - I mean Tony for instance phoned me in England and tried to persuade me not to bid and that was the start of this process, he argued to me that by us not bidding because we didn't want all the gates but that the Airport could look after the other gates and that would bring down the costs of - the costs to us and the cost to our travellers and he had two such meters, two such telephone calls to me in England and finally persuaded me to come down to Australia to talk to him. When I got to Australia I had a word with him on the phone from Brisbane, we talked about possible legal complications about us not bidding, both of us talked to our respective lawyers and we got legal clearance to talk; I came to Sydney, he came to my hotel, the Holiday Inn, and by and large by the time I'd left the principal points had been agreed; he told me that I could trust him and I got on a plane and went back to England.. and then subsequent to that David Mortimer, Chris Corrigan and Brett Godfrey and Tony met and a deal was agreed and as far as we're concerned that was then put to bed; we decided not to bid, similar discussions by the way took place with Melbourne Airport, took place with Adelaide Airport, took place with Brisbane Airport and all those other airports stuck by a verbal understanding a handshake, and all of those other terminals have either now opened as Virgin Terminals or about to open as Virgin Terminals.

Reporter: So you're obviously concerned about a potential conflict of interest with Sydney Airport at the start and collusion among potential bidders for Ansett's assets?

Branson: Yes I mean we were obviously concerned should two people, potential bidders be allowed to get together to agree a deal.

Reporter: Do you think that's ethical?

Branson: Umm we took legal advice at the time and we're told that it was fine .. the fact that a deal had been reached between us were given to the Administrator .. the Administrator has come out publicly to say that as far as he was concerned he'd been informed by Sydney Airport that we had a deal and so I think there's only really one person in this party that is actually questioning whether or not we had a deal.

Reporter: Given the concerns you had, given that you sought legal advice even before the meeting, could people be surprised that nothing was put in writing, nothing was even initialled?

Branson: Obviously in an ideal world perhaps we should have actually got it signed off, I've known Tony for some time, I felt that I could trust him, all the other deals that we did with all the other airports, none of them were actually signed, everything was done on a handshake and in business you can do things with a handshake and generally speaking a handshake's honoured.

Reporter: Most of the attention in this fight has been on the four-party meeting, Mortimer and Stewart, Godfrey and Corrigan, in your previous meeting, your prior meeting with Stewart, did you ever deal on price then?

Branson: No I hadn't agreed to the details of the thing with Tony Stewart, I was leaving that up to Brett Godfrey and Chris Corrigan to deal with, what I had got from Tony Stewart was just an assurance of trust and him pledging to me that I could trust him, that if we didn't bid that a deal would be reached prior to bidding and that the sensible thing to do was for us not to bid for them - for them to buy it and that he would reach agreement with our team before the bid had to go in.

Reporter: On what basis could he give, or you take, something as vague as that?

Branson: Well at the time that I left there was still a final meeting to go ahead, I mean a lot of meetings had taken place, most of the deal had been agreed at that stage and I knew that there was going to be a final meeting between David Mortimer himself, and Brett Godfrey but he said he wanted to make a deal and if somebody says they want to make a deal and they believe already by that stage that the terms that were on the table were acceptable I went home believing that a deal would be reached and I then got a call a few days later to say a deal had been reached and we would not be bidding.

Reporter: So there were terms on the table at that stage?

Branson: Oh very detailed terms on the table, I mean by the time he came to the Holiday Inn I mean 99 per cent of all the terms had been agreed and it just needed a final meeting with the Chairman to finish off the sort of final one per cent.

:rolleyes:

[Airtart]

Virgin Blue asked Macquarie Airports shareholders 10 questions at the EGM today. Sydney Airport has been asking questions of Virgin Blue for some weeks. Here are 10 questions that should be put to Virgin Blue's two shareholders.


PLEASE EXPLAIN …No1:

IF A DEAL OVER ACCESS TO THE FORMER ANSETT TERMINAL AT SYDNEY AIRPORT WAS COMPLETED ON 18 APRIL 2002, AS VIRGIN BLUE CLAIM, WHY WAS VIRGIN BLUE STILL WRITING TO SACL ADVISING THAT THERE WERE SIGNIFICANT ISSUES STILL TO RESOLVED AND REVIEWS YET TO BE UNDERTAKEN? FOR EXAMPLE:

Virgin Blue wrote to SACL on 1 May 2002 noting that
"…the amount proffered in the ‘discussion document’ between our respective principals was never considered by our Board nor agreed by our newest shareholder."

On 4 June, Virgin Blue wrote to SACL urging SACL to continue negotiations:
"…to finalise the agreement in the very near term".


PLEASE EXPLAIN…No 2:

WHEN INTERVIEWED BY CHANNEL 9’S "BUSINESS SUNDAY" ON 9 JUNE 2002, VIRGIN BLUE’S CEO BRETT GODFREY SAID QUITE CLEARLY THAT VIRGIN BLUE AND SACL HAD YET TO COMPLETE A DEAL. (SEE BELOW). SOME TWO MONTHS LATER – VIRGIN BLUE IS CLAIMING THAT A DEAL WAS FINALISED ON 18 APRIL 2002 ? PLEASE EXPLAIN….?


NATIONAL NINE NETWORK : BUSINESS SUNDAY 8.40AM 9TH JUNE, 2002.

DISCUSSION ABOUT VIRGIN AIRLINES FUTURE STRATEGY FOR THE AUSTRALIAN AIRLINE MARKET.INTERVIEW WITH BRETT GODFREY, VIRGIN BLUE.




Virgin’s Brett Godfrey is talking to Helen McCombie.


BRETT GODFREY – VIRGIN BLUE:

Well, we’ve had tremendous discussions with Sydney Airport for a long time now on that and I think we’re pretty close, yeah.


REPORTER:

How close?


GODFREY:

Well, I’d be ready to sign. You know, we’ve been working on a term sheet for quite some time and I think there’s basically one substantive issue that, you know, I think is negotiable for a win-win and then it’s a matter of just being able to get in.


(THIS ISSUE WAS PRICE)

PLEASE EXPLAIN…No3:

IF A DEAL WAS COMPLETED ON 18 APRIL 2002 AS VIRGIN BLUE CLAIM, WHY WERE PUBLIC STATEMENTS BEING ISSUED BY VIRGIN BLUE THAT CLEARLY INDICATE THAT NEGOTIATIONS WERE STILL UNDERWAY?

In fact, in a 3 June press statement posted to their web site, Virgin Blue requested the federal government to stay out of the way of negotiations in early June 2002. Why would Virgin Blue need to ask the government this in June, if a deal was – as they continue to claim – completed on 18 April 2002?





3rd June 2002 (EXTRACTS BELOW)

VIRGIN BLUE REAFFIRMS ITS VIEW THAT AIRPORTS SHOULD BE OPEN TO ALL

Virgin Blue is in advanced negotiations with a number of airports ….
In negotiations with all airports including Sydney, the airline has never asked to restrict access ….
In Sydney, Virgin Blue only expects to need six of the nine gates on Pier A, leaving three available for other carriers. It is not known how much of Pier B Qantas intends to use. Even if the entire Ansett facility is fully utilised in the future, there is still the Domestic Express Terminal, which is now successfully serving a fleet of 18 aircraft
Any attempts by the government to delay Virgin Blue’s negotiations with SACL will only further limit the airlines growth……


PLEASE EXPLAIN…No 4:


AFTER CALLING ON THE FEDERAL GOVERNMENT TO "MEDIATE", AND HAVING RECEIVED INFORMATION ON THE OUTCOME OF THIS "INTERVENTION", WHY HAVE VIRGIN BLUE NOT ANNOUNCED THE GOVERNMENT’S FINDINGS?


What are they hiding, and why is it not featuring as part of the media campaign they are continuing to run? Is it because the Government analyse did not back up their claims?




PLEASE EXPLAIN…No 5:


WHERE ARE THE NEW AIRCRAFT THAT VIRGIN BLUE SAY THEY HAVE ACQUIRED TO OPERATE IN AUSTRALIA?


Virgin blue’s David Huttner said in a recent press statement that SACL would be held liable for new aircraft purchased by Virgin Blue and now unable to be accommodated at the domestic express terminal. Where are these aircraft?


PLEASE EXPLAIN…No6:


CHRIS CORRIGAN IS CALLING THE DOMESTIC EXPRESS TERMINAL AT SYDNEY AIRPORT A ‘BUS SHELTER" AND A ‘TIN SHED", AND APOLOGISING TO VIRGIN BLUE PASSENGERS FOR HAVING TO USE IT. MEANWHILE, CEO BRETT GODFREY IS PROMOTING PLANS TO EXPAND THE SAME FACILITY WHICH HE HAS TOLD MEDIA IS PERFECT FOR HIS CUSTOMERS.


WHO DO WE BELIEVE…?




PLEASE EXPLAIN…No 7:



HOW CAN QANTAS AND SACL AGREE TO TERMS FOR QANTAS TO OPERATE OUT OF THE FORMER ANSETT TERMINAL, WITHOUT MEDIA STUNTS, WITHOUT THE THREAT OF LITIGATION AND THROUGH STANDARD COMMERCIAL NEGOTIATIONS, BUT VIRGIN BLUE CANNOT EVEN SIT AT THE TABLE?

After several media stunts, various press releases, an advertising campaign and now a publicity campaign, Virgin Blue have yet to sit down at the table and engage SACL in constructive commercial discussions over access to the terminal.



PLEASE EXPLAIN…No 8:

WHY CAN VIRGIN BLUE AND PATRICK CORPORATION RUN A BUSINESS ON COMMERCIAL TERMS, DELIVERING A COMMERCIALLY ACCEPTED RETURN ON INVESTMENT AND PROFITABLE OUTCOME FOR THEIR SHAREHOLDERS, BUT SYDNEY AIRPORT SHAREHOLDERS IS EXPECTED TO SUBSIDISE VIRGIN BLUE’S ACTIVITIES AT SYDNEY AIRPORT?

Does Virgin Blue object to Sydney Airport being operated commercially?



PLEASE EXPLAIN…No 9:

ACCORDING TO VIRGIN BLUE PRESS STATEMENTS, THE NEW TERMINAL FACILITIES IN MELBOURNE (FROM WHICH VIRGIN BLUE NOW OPERATES) MEET THE NEEDS AND EXPECTATIONS OF VIRGIN BLUE PASSENGERS. BUT VIRGIN BLUE MANAGEMENT ‘S REFUSAL TO ENGAGE SACL IN COMMERCIAL DISCUSSIONS OVER ACCESS TO THE WORLD-CLASS FORMER ANSETT FACILITY IN SYDNEY EFFECTIVELY CONFINES THESE SAME PASSENGERS TO THE DOMESTIC EXPRESS TERMINAL IN SYDNEY?



PLEASE EXPLAIN…No 10:


WHY DID SIR RICHARD BRANSON HOLD A PRESS CONFERENCE ON FRIDAY 30 AUGUST TO DENIGRATE ONE OF SACL'S SHAREHOLDERS AT THE VERY TIME WHEN SACL'S CEO WAS INVITING HIM MEET IN AN EFFORT TO SOLVE THE IMPASSE?


Is Sir Richard thinking of his passengers or the future public float prospects of his airline?


The travelling public deserve some answers. So do we, and so should the media.

From SACL website:confused:

[Route Discontinuity]

It's interesting to see that SACL and SQ are currently in nogotiations with regard to the SY terminal..........

Which bank does SQ have shares in?????

[TIMMEEEE]

Not only myself but everyone I talk to has said they are just sick and tired of the "Aussie Battler Image" that Virgin Blue and Brett Godfrey/Huttner/Branson/Corrigan purport.

I agree that VB have filled a niche in the market but if its OK for all the other operators who want to use the ex AN Terminal to pay the going rate then why isnt it good enough for VB?

These guys want to have their cake and eat it also.
So what if pax have to spend an extra $2-$4 per sector to use a terminal with aerobridges?????
Im sure when its windy and pissing down rain that they'll appreciate not being soaked or blown over.
Plus the little fat kids and overweight parents can stuff their faces with junk food from a number of outlet stores.

To add insult to injury Godfrey and Corrigan do indeed have conflicting stories over what are their true intentions.
One VB executive as Airtart mentioned, described the current VB terminal as a bus-shed which is inadequate and Godfrey saying it's ideal and they'll expand on it!!
Stop treating the public like fools people!

Now with SQ looking to start a domestic operation with 24 aircraft the boys in VB are only just realising that they may have missed the boat indeed and are in panic mode so to speak.

Bite the bullet, pay a few extra bucks (like the others have to) and stop the insulting media crap.

If VB wants to stay a cut-price/discount airline then great.
They've done a good job so far and if they really want to stay cut-price then stay in the shed and save those customers some $$.

[OSCA]

I think that a few substantive points have been missed during the many claims and counter claims of both Virgin Blue and SACL. I have no doubt at all that an in- principle agreement was reached between the parties way back in April. I think this agreement was reached because of the belief that airlines flew aircraft and should not own a property portfolio and the party that was best able to maximise the utilisation of the former Ansett terminal was the operator of the airport. During these discussions what effectively was agreed was that Virgin Blue would take 9 dedicated gates in pier A (the old pier) and roughly about 24 checkin counters. The agreed price was $18 million dollars or there abouts with some minor IT related details to be worked out in the futue. In return Virgin Blue gave the guarentee that they would not bid for the facillity. Now one must remember that Virgin blue were the only other party that was able to bid for the terminal. Qantas was ruled out due to ACCC monopoly concerns and the holder of the lease had to be and operating airline. This being so one could have certainly expected the price of the terminal to be signifigantly higher if two bidders have been bidding against each other. Virgin took the veiw that instead of bidding for the facility and pushing up the costs they let SACL get the terminal at the low price of $190 million and therefore the costs associated with using the teminal would be lower hence the agreement between the two parties before the bidding process.

Some people may ask why the deal was not signed way back in April. Firstly Virgin thought they could trust the airports CEO and Chairman and secondly SACL did not have ownership of the terminal so a contract would not have been able to be drawn up until June 1 when SACL took control of the Ansett facility . Interupting this whole process was the sale of the airport to Macquarie Airports and the government putting a hold on any contracts being signed until after the airport was sold.

Now if one looks at deal that Virgin agreed to it is still a very good deal for SACL. For a facility with 18 gates, Virgin were set to take 9 gates at a cost of $18 million. Say SACL had got another $18 million for the remaining gates you have a very substancial return on what was an investment of $190 millon and we are not even taking in account the leases of the shops and other concessions in the terminal. That is a 30% return on investment without the shops. If one works out what SACL wants now it's in the vicinity of 60% and if thats not an outragous use of monopoly power I don't know what is. One must remember that airlines will not carry these costs they will be passed on to the travelling public in the form of higher airfares. Yes you and I will end up paying again, on top of the Ansett levy which is not going to former Ansett employees, and the noise levy which is now going stright into the pockets of the government as all the issulation work has been completed.

Now some people may ask why can Qantas afford to take 6 gates and Virgin can't. The answer to that is to be found in the 30 year lease deal that Qantas and Ansett signed way back in 1990 for leases on there respective terminal spaces. I should think that these deals in todays prices would be very favourable and even though Qantas have invested heavily building the wonderful terminal they now have in Sydney , one must remember that once the lease on the land expires SACL must pay Qantas a comercial rate for the terminal facilities so they will eventually recoup much of that capital expenditure. At the end of the day the 6 gates that Qantas have leased are perfect for them as they will be branded gates that look like Qantas gates and they will only use them when they are needed which is during peak times. They will definately use there own facility to it's full capacity before putting aircraft through the Ansett facility where they will pay per passanger. SACL have also caved in to the signifigant issue of the bridge linking the QF and AN facilities. Originally SACL were holding out for QF pax to be checked in and walk through the shopping area of the AN terminal however I would suggest that as an act of deperation to get someone in their terminal they have set this demand aside. Perfect for QF. They dont have to rent checkin counters, they don't split their operation and passangers are moving through their shopping areas where I suspect they get a cut of the turnover. Virgin on the other hand would have to put every single passanger through the Ansett facility at a per passanger charge thus putting them at a distinct disadvantage to QF who would have much lower terminal costs. Add to this Virgin need signifigantly lower airfares to attract business and one can see why Virgin are taking such a stand on this issue.


As for the terminal being a common user facility, it should be. Qantas with 80% of the market and in a virtual monopoly position as far as domestic airport space goes in Sydney should relinquish their gates at AN should a third carrier be masochistic enough to start an operation in Australia at the moment. Virgin should have and a third carrier should reasonbly expect to have gates where they can base there operation. As much as SACL likes to put spin on the fact that this terminal should be totally common user and any airline should be able to use any gates, any person that knows anything about domestic aviation knows that this is inpractical as turn around times are shorter, aircraft are smaller and it would be a nightmare to move equipment from bay to bay all the time. Add to this the fact that regular business travellers like to check in late and have a good idea of where their flights are boarding ala QF CITIFLYER and you could see that this would cost Virgin business. SACL needs to learn that international operations are totally different from domestic and this sort of common user stupidity does not function anywhere else in the world. Airlines by all means share terminals but they almost always have tenancy over gates except when they are so small an operation that they lease gates for a set amount of time. This scenario may work in a small port like Canberra but in a station like SYD where throughput is high it would be a nightmare.

At the end of the day this will probably be worked out through the courts. In the mean time Virgin will continue to struggle at the domestic express and SACL will continue to lose substancial amounts of money from an empty Ansett terminal and Virgin being unable to expand there Sydney operation. This battle has been fought and won by other low fare carriers such as Southwest, Ryanair and Easyjet. It has been shown that these carriers do stimulate demand signifigantly and therefore the revenue of the airports. Unfortunately Macquarie are a monopoly in our town, but I have little doubt that as there share price continues to plumett over the medium term , Virgin looks to build its own terminal and a signifigant third carrier that is hoped for fails to materialise SACL will have to cut its losses and honor the agreement that was made.

What SACL are trying to do is shift costs from the traditional method of landing charges to a per pax charge. This is fine if its a level playing field and the charges are applied across the board but at the moment Virgin will lose out in a big way to Qantas who have a firm lease at a low rates on their terminal with a small overflow to the ansett terminal against Virgin who will be charged on every passanger as they move through Sydney. When you have an airline such as Qantas in close to a monopoly position the smaller carriers must always be protected to a certain extent. In the end it comes down to the government who has done the public disservice by selling out to the highest bidder instead of the best bidder for the airport. In the end the public ends up paying for a facility it used to own all over again and the tourism industry falls in a heap due to lack of competition in the aviation sector.

Just my thoughts.

[oldhasbeen]

Haven't had a thought that long since the Carter Administration!!:D

[The_Equaliser]

Sounds like someone pushing a company line to me!! But why are Macquarie to blame, just an easy PR target I guess. They bought the airport after doing due dillegence, during which they entered the data room in which no evidence of a deal was to be found. This has been confirmed.
Virgin should be staging walk-ins at Parliament House and protesting that SACL( a government enterprise at the time) and the Federal Goverment did not honour a contractual arrangement, if there was such a thing. Why blame the guy who bought the airport after the said contract was made and had no knowledge of it.

[SydGirl]

Despite whatever 'handshake' agreement VB and Macquarie Bank ever had with each other, that was then and this is now.

If VB don't want to pay what Macquarie are asking for the terminal, then that's fine - go renovate the tin shed they are currently flying out of.

Macquarie Bank isn't a charity, if VB want the space then they should pay the price.

Finito.
SG
:)

[gregm]

OSCA,

I am somewhat concerned about the accuracey of some of your statements. For example 30% of $190 million is $57 million not $36 (2 X $18) million as you stated. If the return is $36 million then it is more like 18% return, then I suggest that you would need to subtract the operating costs for the Ansett teriminal costs which I would guess would be considerable, they would much greater than the Express terminal.

------------------------------------------------------------------------------
For a facility with 18 gates, Virgin were set to take 9 gates at a cost of $18
million. Say SACL had got another $18 million for the remaining gates you have
a very substancial return on what was an investment of $190 millon and we are
not even taking in account the leases of the shops and other concessions in
the terminal. That is a 30% return on investment without the shops
________________________________________________




Regards
Greg

[SydGirl]

Heheh Zed, indeed.

Call me jaded but I'm really over VB throwing a tanty every time they don't get what they want and then using the old "keeping the air fair" or "we're doing this for the public" lines.

*yawn*
SG
:)

Footnote : Surely I'm not the only one feeling this way?

[Bugsmasha]

I find it very two faced of Virgin Blue to be taking Macquarie to court over a hand shake deal when from day one the management pilots gave verbal confirmations to the start up pilots that the pay in 2 years will be back up to industry satndards. Now they say that there is nothing on paper and no such agreement was made.:mad: I think the seven figure sum that has been set aside to fight macquarie in the courts could be used else where dont you:confused:

[nickmelb]

i guess most airlines have complaints...but this takes the cake.check out the following site for virgin complaints..also a link to british scareways...quiet funny actually!

www.virginaircrewlies.com


cheers nick

[50 Cal]

Hey Nickmelb, lucky there isn't one of these for Qantas...imagine it: 100 pages long, sponsorship and advertising from VB, and reams and reams of horrific in flight catering stories!!!! :p :p

[nickmelb]

hahah could u imagine.......

[Pole Vaulter]

They will have to get donated legal council before they will do too much. You know the old cry "We have to keep the air fare" so who will donate or give cut priced legal help.

[Raider1]

I would be happy to see Virgin suceed in Aus but the one think I hate is DJ expecting everything on a plate and at a bargain price.
I would not mind owning a motel one day but I am sure if I say went to the HYATT and said give me 2 floors for 5 years at a pepercorn rent they would tell me to go jump.
If DJ want a flash terminal great. Go and build one and stop bludging.