Get the facts on potential airport lease

Community members are urged to get the facts on the proposed lease for Port Hedland International Airport which is currently in final negotiation stages and due to be considered at a special Council meeting in August.
 
Mayor Kelly Howlett said that claims in yesterday’s (Wednesday 22 July) North West Telegraph needed to be corrected.
 
“I want to make sure that we are having an informed discussion about the potential lease of the Port Hedland International Airport,” Mayor Kelly Howlett said.
 
“I urge all community members to get involved in our community conversations on 5.30pm, Tuesday 28 July at ibis Styles and take the opportunity to inform themselves about the facts on the proposed long-term lease of the Port Hedland International Airport.
 
“Our website also has extensive information about the process and key facts.
 
“Unfortunately yesterday’s North West Telegraph contained misleading statements and I want to set the record straight:
 
FACT: leased airports have achieved reduced fares

• Leased airports have consistently encouraged more competition within the airline carrier market which has directly led to lower airfares.
• Airports have a strong incentive to keep fares low and increase passenger numbers – unlike airlines airports make other revenue from travellers such as retail and car hire.  More travellers leads to greater revenues. 
• History notes that privately leased operated airports have increased the size of aprons and taxiways, built new bays and gates, built more parking, expanded and built new terminals to provide more capacity for existing airlines and give opportunity for new entrants.  This directly leads to price reductions in airfares.
• Many private airports provide airlines with discounts in passenger fees if the airline grows the number of passengers on a particular route above a target threshold.  These types of incentives encourage the airline to offer discount prices to reach the passenger targets.
• Increased competition and capacity encouraged by airports has led to lower ticket prices.  Since the airports began to be privatised in 1997, real discount airfares have more than halved.  Increased competition from new carriers such as Tiger and Jetstar has been actively encouraged by airports and this has had a real impact on fares as the chart below highlights.
• Port Hedland would be a direct beneficiary of more airline carrier options and competition if this privately operated airport initiative was to succeed in reducing government restrictions.

 
FACT: airport service quality judged by passengers scores well

• Service quality is surveyed in a number of ways – by airlines (as reported by ACCC) and by passengers (as reported by Productivity Commission).
• Recent small declines in quality survey responses could be largely due to the fact that travellers have much higher service expectations from airports than they did in the past.  Since lease privatisation the major airports have spent billions in developing improved facilities for passengers raising expectations from passengers about what constitutes a good airport experience.
• Latest 2013-14 survey results highlight that passenger surveys consistently rate the major airports satisfactory or better while the airline surveys consistently rank the major airports as poor.
• The Productivity Commission states that compared to overseas airports Australia’s privately operated private airports have performed very well

 
FACT: privately operated airports have invested significant amounts into their facilities

• The ACCC notes that privately operated airports have spent large sums of money on new facilities since privatisation: “…each airport has invested in aeronautical assets over time… increases have ranged from 21.5 per cent at Sydney Airport to 206.5 per cent at Perth Airport. Each airport also reported a larger level of additions as a proportion of aeronautical assets in 2013-14 than in 2003-04.”
• The four major privately operated private airports have more than quadrupled their capital spending since 2004-05. Since 2004 $5.2 billion has been invested in these airports.
• The Federal Department of Transport and Infrastructure notes that “Australia’s major airports have continued to invest in, improve and operate aeronautical infrastructure to meet steady growth in the aviation market. They have been able to finalise negotiations for commercial agreements with the airlines on airport charges ... delivered relatively efficient pricing, high levels of productivity and operational efficiency ...”
• The Productivity Commission has also affirmed that the privately operated airports have delivered improved facilities since deregulation in 2002 and that airports are spending significantly more on new facilities than the airports did when they were publicly owned

The next community conversation forum will be held at ibis Styles at 5.30pm on Tuesday 28 July. RSVP to council@porthedland.wa.gov.au or call 9158 9300.
 
Community members can download the presentations and fact sheets from the previous forums on Town’s website at www.porthedland.wa.gov.au/airport-governance-review

Background:
The Town has been discussing the governance structure of the airport since 2013 and looking at options to see if there is a more efficient way of operating the airport – reviews have indicated that a long-term lease would be an appropriate model for our airport.

At its June meeting, Council has endorsed the next stage of the process – to seek binding bids from potential operators.  These bids are binding on the potential lessee and not on Council until it makes its final decision. This follows an expression of interest process and public consultation on the major land transaction business plan in April and May and a non-binding bid process which is currently under evaluation.

Given the potential value of the lump-sum lease premium Council also resolved to form a working group to develop a framework on the Town’s administration of the premium. The working group is meeting to work through a potential framework should Council resolve to lease the airport.  This includes the establishment of key governance principles for the management and establishment of a framework for the prudential stewardship of the lease premium. The governing principles under consideration include the establishment of a wealth or trust fund.

The group includes representatives from the Town of Port Hedland’s audit, risk and governance committee members, representatives from the Western Australian Treasury Corporation, local organisations and professional advisors as required.

Stay up to date with Town of Port Hedland news and events at www.porthedland.wa.gov.au, www.porthedlandairport.com.au and www.facebook.com/townofporthedland

For more information:
Alison Kenny, Senior Communications Officer
(08) 9158 9355
publicityofficer@porthedland.wa.gov.au