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Jetstar still looking into northern Australian hub; states Darwin is too expensive

20-Oct-2010
Jetstar CEO, Bruce Buchanan
Jetstar CEO, Bruce Buchanan

Jetstar Group CEO Bruce Buchanan stated the airline is still looking into other airport options in northern Australia, despite the Qantas Group recently reaching a new pricing agreement with Darwin International Airport. According to Mr Buchanan, Darwin is one of the carrier’s most expensive airports and it expects it to become even more expensive in the next few years.

He stated the new agreement is “not what I'd call a fantastic outcome but we realise that in an environment where there's one provider of these services, we could continue to argue for years and years and years or we can say we understand the situation we've got and we've decided to negotiate a path that at least lets us deploy the existing aircraft we have committed in Darwin”. Due to the airport’s high costs, the carrier is unable to properly achieve its “virtuous circle” concept, in which it aims to increase capacity utilisation to decrease unit costs.

Despite the lack of infrastructure choices in northern Australia, Jetstar remains committed to its concept for a northern hub. The LCC has considered constructing its own airport in the Northern Territory to bring competition to the region, but has been unable to receive approval from the Australian Government. Mr Buchanan stated the carrier will now have a “serious think” and resume talks with the Northern Territory Government and Northern Territory Airports regarding “our internal competitive dynamics for capital” as there are a number of other “opportunities” wanting the carrier’s aircraft and future capital. 

Jetstar now plans to operate up to nine additional weekly services to/from Darwin, with the first new service to commence during Dec-2010, with an increase in Darwin-Denpasar frequency. The carrier added that it plans to launch Darwin-Manila multiple weekly A320 service early next year, subject to regulatory approval. Additional domestic growth for Jetstar from Darwin will include new services from Adelaide, Sydney and Melbourne delivering more than 3000 additional weekly seats to Darwin, with the carrier to operate more than 70 weekly services from the Territory hub by early 2011. The expansion from Darwin is aligned to the LCC’s pan-Asia strategy to enhance its route network between Australia and Southeast Asia. In the 12 months to Jun-2010, the carrier handled 930,000 passengers through the Darwin hub, double the prior year’s number of international travellers entering Australia on Jetstar.

Following Mr Buchanan’s comments, Darwin International Airport CEO Ian Kew admitted the airport is more expensive than other Australian airports. However, Mr Kew argued the carrier is receiving value for money at the airport, as it offers “very good infrastructure facilities” and “excellent services” and is open 24 hours. The airport is in discussions with all other airlines at the airport on a new pricing regime and hopes to conclude talks “shortly”. Darwin Airport now plans to invest approximately AUD98.3 million into further enhance facilities over the next 10 years, including a AUD33 million terminal expansion. The airport last year cancelled plans for a AUD60 million terminal and airport infrastructure upgrade project, claiming Jetstar refused to pay a further AUD2.50 per passenger in airport charges on top of the AUD14.00 it was already paying. Jetstar responded stating charges were only part of the issue that led to the suspension of the expansion plans.

Darwin Airport’s passenger and landing charges are certainly among the most expensive in Australia, up there with the country’s biggest airports by traffic, Sydney and Melbourne Tullamarine. Cairns Airport, from which Jetstar operates a number of its Japan services, also has especially high passenger charges compared with the country’s other smaller airports.

Airport charges comparison for current financial year

Airport

Terminal Charges (per passenger)

Landing

Safety & Security (per passenger)

Aircraft Parking

Other

Sydney Airport

International: AUD28.14

Domestic: AUD8.15

Regional: AUD4.95

Terminal 2 New Investment Charge: AUD0.44

International: included in passenger charge

Domestic: AUD3.81

Regional: AUD3.78 per tonne

Freight: AUD4.72

International: included in passenger charge

Domestic: AUD2.19

Regional: AUD0.96

International: AUD38.50 per 15 minutes

Domestic: AUD35.00 (excl GST) – 45 min incl in terminal charge

 

Melbourne Tullamarine Airport

International terminal: AUD15.06

Domestic: AUD9.08

Not using terminal: AUD3.81

International and Domestic passenger aircraft: nil

Freight aircraft: AUD8.17 per 1,000kg MTOW

Security: AUD0.27

Passenger and bag screening: AUD4.54 (international terminal)

International and domestic passenger aircraft: nil

Freight aircraft: AUD35.06 per 15 minutes after first three hours

 

Brisbane Airport

Qantas/Virgin Blue Domestic Terminal: AUD4.17

Domestic Common User Terminal (excl aerobridge): AUD8.32

Domestic Common User Terminal (incl aerobridge): AUD7.82

International Terminal: AUD23.12

AUD10.97 per landed tonne MTOW pro-rata per landing (minimum charge of AUD60.00)

n/a

0-5,000kg: AUD30.00

5,001-20,000kg: AUD50.00

20,001-40,000kg: AUD75.00

40,001-100,000kg: AUD120.00

100,001-250,000kg: AUD275.00

250,001-400,000kg: AUD400.00

400,000kg+: AUD530.00

Peak period pricing: AUD150.00 per aircraft per arrival and per departure

Noise surcharge: 25% of all aviation charges

Perth Airport

International: AUD8.251

Domestic: arrangement by commercial agreement

Regular Passenger Transport Services: AUD4.277

Freight: AUD8.711 per landed tonne MTOW

(minimum landing charge AUD39.779)

International: AUD6.654 (Security Recovery and Checked Bag Screening)

Domestic: AUD4.835 (Security Recovery and Checked Bag Screening)

Qantas Domestic: AUD0.95 (Security Recovery)

Freight: AUD0.877 per landed tonne MTOW (Security Recovery)

Common use parking areas: AUD34.544 per aircraft per day

Aircraft storage: AUD8.711 per tonne MTOW per day

 

Adelaide Airport

International: AUD9.41

Domestic: AUD6.79

Regional: AUD1.58

International: AUD12.45

Domestic: AUD14.76

or

AUD4.49 for aircraft weighing more than 20,000kg MTOW

Regional: AUD8.12

or

AUD2.63 for aircraft weighing less than 20,000kg MTOW

International AUD5.73 (Security and Security screening)

Domestic and regional: AUD3.20

n/a

 

Gold Coast Airport

Domestic: AUD3.15

International: AUD3.95

CUTE (departing only): AUD0.27

Domestic: AUD5.50

International: AUD5.50

Security screening: AUD1.60

General security levy: AUD0.40

AUD13.50 per tonne MTOW

Baggage infrastructure charge: AUD0.75

LAGS: AUD1.15

Canberra Airport

AUD1.30

AUD7.24

AUD0.51

n/a

New apron recovery charge: AUD0.51

Cairns Airport

International: AUD21.81 (Passenger Service and CUTE)

Domestic: AUD7.87 (Passenger Service)

Domestic: AUD3.493 per 1000kg x time factor

International: AUD5.40

Domestic: AUD3.55

Annual: AUD30 per seat based on seating capacity of aircraft

Min annual charge: AUD100

Max annual charge: AUD300

 

Hobart Airport

n/a

AUD15.50 per MTOW

(minimum charge AUD40.00)

n/a

AUD3.10 per MTOW

(minimum charge AUD20.00 after first 12 hours)

 

NT Airports

Passenger Facilities:

Alice Spings: AUD6.17 plus GST

Darwin: AUD7.64

Tennant Creek: nil

Airport Services:

Alice Springs: AUD7.50 plus GST

Darwin: AUD7.23

Tennant Creek: AUD18.00

Alice Springs: AUD21 per tonne MTOW plus GST

Darwin: AUD21.00

Tennant Creek: AUD23.00

Alice Springs: AUD13.00 plus GST

Darwin: AUD9.87

Tennant Creek: nil

Alice Springs: AUD2.75 plus GST per tonne MTOW per additional day

Darwin: AUD2.75

Tennant Creek: AUD2.75

 

However, Darwin International is a much smaller airport in terms of passenger numbers. The airport handled 2.1 million passengers in FY2009-10, including 1.6 million domestic passengers and 243,195 international passengers. Sydney Airport handled 34.5 million passengers over the same period, while Melbourne Tullamarine handed 26.3 million passengers for the year.

Darwin International, Sydney and Melbourne Tullamarine airports passenger numbers: 12 months ended 30-Jun-2010


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