Sydney Airport will regain day-to-day ownership of the dedicated Qantas domestic terminal next month, paying Qantas $535 million to buy out the airline's lease some five years ahead of schedule.
Terminal 3 has been the exclusive domain of Qantas for almost 30 years, with all other domestic airlines relegated to the neighbouring Terminal 2, although the lease was due to expire in June 2019.
"This deal provides certainty," Qantas CEO Alan Joyce said of the agreement. "The lease was always going to revert after 2019."
Qantas will retain use "priority usage as the primary airline customer of Sydney's Terminal 3" from 2019 to mid-2025, Joyce stressed, including access to most check-in and baggage facilities and departure gates, but from September would pay Sydney Airport Corporation a per-passenger fee, as does competitor Virgin Australia for the partial use of T2.
In the short term Sydney Airport will take over the running of T3 retail stores.
The longer game, however, remains a co-siting of domestic and international flights at the terminal, allowing more seamless connections for Qantas passengers transferring between Australian and overseas flights.
Sydney Airport CEO Kerrie Mather said that would not happen over the next five years but could be achieved before 2025.
"The integration of terminals is a key plank in our long-term master plan," Mather re-iterated. "Acquiring Terminal 3 allows us to be able to achieve that."
Qantas has already handed its Brisbane terminal lease back to Brisbane Airport in exchange for a $112 million fee and is looking to similar arrangements with Melbourne and Perth airports to further boost the airline's bottom line.
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About David Flynn
David Flynn is the editor of Australian Business Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.