Virgin passengers paying price for fees feud

A leading airline and NT’s biggest airport are feuding over fees while customers pay the price.

Virgin passengers flying in and out of Darwin are the meat-in-the-sandwich in a stand-off between the airline and the Territory’s Airport Development Group.

Since January, Virgin has been denied aerobridge access at Darwin Airport because the airline has not agreed to a 40 per cent increase in airport charges.

The airline acknowledged the move’s impact on customers, particularly in hot and wet weather and specifically on disabled or reduced mobility patients.

It has accused major airports of monopolistic practices and said Australia’s top six airports were gold plating upgrades which will eventually have to be carried by the airlines and customers.

Virgin Australia is pushing back against Darwin airport charges. Picture: iStock

Virgin’s chief financial officer Race Strauss said there had been “an increasing and alarming trend” post Covid for airports to overcapitalise, directly passing the costs onto airlines despite objections that the extent of works is unnecessary.

“The top six airports in Australia are spending $15bn on infrastructure in the next five to seven years, much of it unnecessary,” Mr Strauss said. “This cost gets directly passed on to consumers – so that is $15bn out of the pockets of the travelling public at a time when airports are pocketing huge profits and travellers are grappling with a cost-of-living crisis.

“Airports are monopolies and we have no alternative if we do not agree to whatever capital investments they want to make which result in excessive price rises.

“To put this in context, we have some airports demanding a 45 per cent price increase in one year. This is the classic definition of a monopoly stranglehold by the airports. We cannot land our aircraft on highways. And, we cannot turn our backs on this issue just because the country’s superannuation funds are the principal shareholders of the airports.

“Airport charges are our third largest cost behind fuel and labour, representing 15-20 per cent of our cost base. It is our ability to manage costs that enables us to deliver value to customers.

“We are currently in a situation where multiple Australian airports are deliberately impacting our operations and by extension our passengers as part of commercial negotiating tactics, which we find completely unacceptable.”

The airline called for more effective regulation to ensure airports spend their money wisely and cost effectively.

In August 2023, Airport Development Group announced it would spend $100m upgrading its three NT facilities in Darwin, Tennant Creek and Alice Springs.

ADG defended investing “significant capital” to ensure ongoing airport operations, including Australian Defence Force tarmac upgrades.

“Extensive consultation has occurred with industry about the impact of runway works and upgrades, including DIA incurring the cost of upgrades to the Defence joint user area,” an airport spokesperson said.

“All airlines are aware of these costs and how they are recovered via airline agreements.

Darwin International Airport strictly adheres to the Aviation Pricing Principles set out by the Productivity Commission and has aeronautical agreements with all but one airline.

“The cost of airfares are set by airlines, independent of Darwin International Airport.”

Originally published as Virgin passengers paying price for fees feud