Coronavirus (COVID-19) pandemic: impact on Perth Airport

30 December 2020 © David Eyre

COVID-19 travel restrictions/bans:

• 1 February 2020: Australian Government imposed a travel ban on anyone arriving from, or transiting through, mainland China, unless they had been out of the country for 14 days.

• 17 March 2020: Australian travel ban raised to highest Level 4, and Australians were advised not to leave the country, for the first time in Australia’s history. All Australians wishing to return home were told to do so as soon as possible, as many countries around the world introduced border closures and/or travel restrictions, including Australia.

• 20 March 2020: All non-residents and citizens were banned from entering Australia, as 80 per cent of coronavirus cases were someone who contracted the virus from overseas or someone who had direct contact with someone who had been overseas.

• 6 April 2020: The Western Australian Government closed the WA State border, meaning people from other States could not enter, unless an exemption has been granted (for people with particular occupations, or people travelling on compassionate grounds). Previously, people entering WA had to isolate for 14 days.

• 14 November 2020: The Western Australian Government introduced the controlled State border, enabling arrivals from “Very low risk states (all except NSW and Victoria) (no community cases in 28 days) to arrive without having to quarantine. Arrivals from low risk states (VIC and NSW) have to self-quarantine for 14 days in a suitable premises and present for a COVID-19 test on Day 11 (if still in WA).

• 8 December 2020: The Western Australian Government upgrades NSW and VIC to ‘very low risk’, so arrivals no longer need to quarantine.

COVID-19 impacts Perth Airport

22 March 2020: Perth Airport media release stated that the Coronavirus pandemic had had an “immediate and devastating” impact on passenger numbers and revenue. Aviation revenue, which is charged per passenger, had dramatically fallen due to decreased passenger numbers, but Perth Airport still had to provide and pay for airside and terminal services.

8 April 2020: Perth Airport media release: CEO Kevin Brown emphasised that it is vital that Perth Airport remains operating to support the resources industry, as well as the movement of freight in and out of Western Australia, including urgently needed medical supplies.

With international and domestic flights reduced to almost zero, FIFO flights which normally account for up to 25 per cent of Perth Airport passengers, now represented almost 100 per cent of passenger numbers. FIFO flights are vital for the continued operations of the resources industry, which is sustaining the Australian economy during the financial downturn caused by the pandemic.

Perth Airport expected a loss of up to $100 million in revenue in the 2019/20 financial year. Airport revenue is charged per passenger, but airlines are being charged less by airports, due to lower passenger numbers.

Perth Airport’s staff agreed to reduce working hours and use their leave entitlements, while all members of the Executive took a pay cut, cancelled bonus payments, froze recruitment, cut non-essential spending and deferred most capital works projects.

Airlines, retailers, service providers and tenants are also under financial pressures.

4 May 2020: Perth Airport announced the loss of more than one million passengers in April 2020 alone, a 97% decrease in international and interstate passenger numbers compared to April 2019. This follows the loss of more than 300,000 passengers in March 2020.

In April 2019, 865,000 international and interstate passengers passed through the airport’s terminals, but in April 2020, this dropped to just 24,000. Total passenger numbers dropped from 1.23 million in April 2019 to just 193,000 in April 2020 – a drop of 1,037,000 passengers.

International and interstate passengers are normally 75% of Perth Airport’s passenger traffic.

On 26 June 2020, Perth Airport issued another media release, noting for the second consecutive month, passenger numbers were down by more than one million. Passenger numbers data for May 2020 shows a drop of 99 per cent in international passengers compared to May 2019. Interstate passenger numbers fell by almost 97 per cent for May. Regional passenger numbers were down 65 per cent with FIFO flights accounting for almost all intrastate travel.

Terminal, retail and car park closures

Perth Airport was forced to close Terminal 1 Domestic and partially close Terminal 1 International and Terminal 3. Only Terminals 2 and 4 remained fully open, to support the FIFO flights for the resources industry. The decreased passenger numbers also forced the closure of all retail outlets in the terminals and the closure of most of the airport’s car parks.

With the easing of travel restrictions for interstate travellers from 8 December 2020, Terminal 1 Domestic was re-opened.

Revenue from major Australian airlines stops (temporarily)

For a number of months, Perth Airport was not receiving any payment for its services from its two largest customer airlines.

Qantas / Perth Airport disputes

Qantas and Perth Airport have had a number of disagreements in the past few years, over terminal usage and an ongoing legal battle over airport charges in 2018/19.

Qantas decided in April 2020 that it would not pay Perth Airport any aviation or lease payments for February and March 2020. Perth Airport claimed this reduced revenue by $20 million, but Qantas said the charges were far less than this.

Perth Airport took control over Terminal 4 from Qantas in January 2019 and Qantas said the non-payment was related to an arbitration process to determine the value of Terminal 4. Qantas believes the terminal is worth $200 million, but Perth Airport valued it at $50 million.

On 5 May 2020, Qantas CEO Alan Joyce said the airline was having good discussions with other Australian airports but Perth Airport was taking an “aggressive approach” throughout the pandemic.

In response, Perth Airport highlighted that they had reached agreements with 25 out of 26 airlines, with Qantas being the only exception. They also stated they were open to consultation.

On 15 May 2020, Perth Airport and Qantas issued a joint media release stating that they had resolved their dispute on mutually beneficial terms.

“The agreement provides greater certainty for Perth Airport on the payment of aviation and lease charges while Qantas has secured a partial abatement of payments to the airport in light of the particular challenges facing its operations due to the coronavirus crisis. All lease termination and breach notices issued by Perth Airport will be withdrawn.

In addition, both parties have agreed to a revised timeline for finalising the sale of Terminal 4 from Qantas, with both parties committing to providing their submissions to an independent expert by no later than 30 June 2020 for a determination on fair market value of this asset.” 

Virgin Australia enters administration

Virgin entered voluntary administration on 21 April 2020, with debts of over $7 billion, including owing Perth Airport $16.5million.

Liens were placed on four Virgin aircraft at Perth, but following assurance from the administrators, the planes were no longer physically blocked.

Virgin Australia continued to operate reduced services throughout the administration period.

Following a takeover by Bain Capital, Virgin Australia exited administration on 17 November 2020.

Perth Airport first in Australia to receive COVID-safe airport rating

On 12 October 2020, Perth Airport announced it had received the new “Airport Health Accreditation” rating, a global scheme launched by the Airport Council International to ensure Covid-safe practices are robust and consistent around the world.