"Concern over Australian terminals"

Thursday, May 30, 2002

Concern over terminals
By Jane Boyle
Australia - The Financial Review


Bidders for Sydney Airport fear that 15-year rent deals being negotiated
to allow Qantas and Virgin Blue to move into Ansett's domestic terminal
could block access for other carriers and affect the value of the
airport.

Sydney Airports Corp is believed to be close to completing deals with
the airlines to take over Ansett gates for 10 years, with an option to
extend for five years. 

Bidders are concerned that the deals could require any other airlines -
including future new entrants and regional carriers - that wish to rent
space in the Ansett terminal to pay up to half the revenues they earn
there to the incumbent airlines.

Sources close to the sale process said airport bidders, which are
finalising bids before the June 12 deadline for binding offers, had
voiced concerns to the Federal Government and its advisers on the sale,
Salomon Smith Barney.

The bidders have called for any deals with the airlines to be deferred
until after the airport sale process is complete. They have warned that
otherwise bids for the airport, which is expected to bring more than
$4.5 billion, could be reduced by as much as $100million.

However some sources agrued that long-term deals with Qantas could be
posative for the value of the airport.

But the airlines, which fear airports will raise charges once airport
price controls are removed at the end of June, want to finalise
long-term rent arrangements quickly to provide certainty.

Former Ansett regional subsidiary Kendell, which is to be sold with
Hazelton Airlines to Australiawide Airlines, has also expressed concern.


Virgin Blue's head of commercial operations, David Huttner, said the
airline was in advanced discussions with SACL, but said the final terms
had not been decided. Qantas declined to comment on the negotiations.

Other sources said other carriers would have access to space not
required by Qantas and Virgin, at market rates.

It is believed that under the proposals, Virgin would move into the
eastern Pier A of the Ansett terminal, which has nine gates. Qantas
would move its QantasLink regional and other operations into the western
Pier B of the Ansett terminal.

There would be other apron space and the common express terminal, which
Virgin Blue would vacate, available for other carriers, sources said.

Virgin wants to move into the Ansett terminal in the third quarter, and
Qantas is also keen to move in as early as possible. But it is expected
to take several weeks to prepare maintenance, IT and security at the
terminal, which has been idle since Ansett's collapse.


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