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Virgin Australia's survival is important for regional airports

Premium Analysis

Virgin Australia is one of the first of what will inevitably be many airlines going into administration, or worse,  as a direct result of the current pandemic. The impact of airline failures is keenly felt also by airports, notably smaller regional ports.

Most large Australian airports are leased, from a procedure in the mid-late 1990s although many of the original firms involved have now moved on. Typically three to six or more investor companies are involved, in leases that are around 50 years (so now over 20 years into them).

A number of smaller Australian airports were heavily dependent on Virgin Australia and there is speculation as to whether some investors, notably those that aren’t Australian, might decide this is the time to discontinue some of those, particularly where services are exposed to substantial competitive threat. The larger airports are mostly better positioned to ride out the storm, with high capitalisation courtesy of multiple leaseholders and easier access to additional debt funding.

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