Council says COVID won’t hurt $205m airport windfall

Council says there’s no issue with the impact of coronavirus on an annual payment which was set to reap $205 million over 99 years.

Council says the impact of coronavirus will not stop revenue forecasts being realised on an annual payment due to reap $205 million over the life of a 99-year airport lease.

Palisade Investment Partners had engaged in a deal with Sunshine Coast Council for a 99-year lease of Sunshine Coast Airport, a deal forecast to total $605 million.

A final project payment of $290 million was due to be made by June, 2022, for the new, expanded 2450m runway, and a council spokeswoman said that remained on track.

“In line with the agreed contractual arrangements, Palisade Investment Partners (Palisade) has complied with all of its payment obligations to date,” the spokeswoman said.

“Palisade has not made any approached to council to seek to renegotiate its obligations in this regard ($290 million payment).”

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As part of the deal, Palisade must make an annual payment to council, based on 5 per cent of gross revenue earnt by Sunshine Coast Airport.

The payments were to be made over the 99-year life of the lease, starting in 2017-18.

The coronavirus pandemic has had a disastrous effect on the airline industry and Sunshine Coast Airport and its revenues had also been hit hard.

But to what effect the reduced revenue had impacted the forecast $205 million deal with council remained unknown.

Sunshine Coast Airport departures and arrivals have been much quieter since the pandemic struck.

“The annual revenue forecasts were conservative at the time and there is no reason to believe they will not be realised over the life of the lease as originally forecast,” the council spokeswoman said.

“The amount of the annual payment made to council – which is based on 5 per cent of gross revenue earned by the Sunshine Coast Airport – is commercial in confidence to the operations of the Sunshine Coast Airport Pty Ltd.”

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Sunshine Coast Airport spokeswoman Ayllie White said the airport had been “significantly impacted by COVID-19” but they remained confident in its ongoing success.

“While COVID-19 has impacted our revenue, the airport will honour its commercial obligations as part of our lease agreements,” she said.

She also allayed fears about possible impacts on airfares in the region.

“Having secured new routes and being optimistic that our core airlines and routes will come back strongly, we expect airfares will be competitive and the airport will offer travellers a greater choice of airlines and destinations,” Ms White said.

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“The airport looks forward to continuing to deliver substantial returns to the Sunshine Coast community, not only through revenue share arrangements, but through broader economic contributions to tourism, business and freight.”

The council spokeswoman said the Sunshine Coast Airport Expansion project, council’s largest infrastructure project ever undertaken, would be finished before Christmas, ahead of schedule, and “in line with the project budget”.

“This will provide a significant asset to underpin the future economic development of the region and ultimately delivered at no enduring cost to the ratepayer,” the spokeswoman said.

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