Consultant bags Qantas on price

An airport services consultant and Town of Port Hedland adviser has attacked Qantas, claiming it generates “massive” profits on its flights between Perth and Port Hedland.

The Airport Group’s Paddy Jilek told Hedland residents during a public meeting on July 1, the airline viewed the resources industry as a cash cow.

“You know this as a community resident as well as I do, the margins Qantas have got on their flights here are absolutely massive, ” he said.

“In fact, BHP will tell you they think they are subsidising Qantas’ routes all over Australia by the route through to Port Hedland.”

“So there is a lot of give there.”

Mr Jilek’s attack came as the Town and its councillors are set to decide in August whether to lease the Hedland airport to a private manager on a 50-year contract for an expected $150 million-plus upfront payment.

The decision could have a direct impact on Qantas and Virgin Australia’s operations at the airport.

Mr Jilek and TAG are acting as advisers for the Town, having been appointed in November 2014 to guide it through the lease process.

His attack also came as Pilbara MLA Brendon Grylls last week told a forum of airline and airport representatives from North West WA that he hoped to see ticket prices in the Pilbara brought down.

“The way you change the cost of flights and the availability of flights is to … attract new players and interest into the market, ” he said. “If I can spend my time trying to bring new competition to the table to put pressure onto the existing carriers, then that would be good use of my time.”

Mr Jilek’s earlier attack on Qantas came in response to a question about how a consortium of large investors, such as sovereign wealth and pension funds, could boost the airport’s services.

He argued these investors already owned other airports, which gave them a “leverage” and muscle to negotiate with airlines that Hedland’s local government lacked.

However, AirlinesRatings.com editor and independent aviation expert Geoffrey Thomas poured cold water on the idea, arguing airports have “virtually no power” to get airlines to reduce fares.

“The only way airports can help reduce fares is if they drop their charges, which rarely if ever happens where an airport has a monopoly, ” Mr Thomas said.

“In the case of Port Hedland, it is a monopoly and the evidence is that monopoly airports raise charges above inflation.

“However, in Europe and the US, where there is more than one airport serving a city, airports do get into bidding wars to secure an airline’s services.”

He also dismissed Mr Jilek’s claim the Port Headland route was subsidising the rest of the airline’s network as “rubbish”.

“Not a chance. The Qantas group has 1000 flights a day and Port Hedland only accounts for five return flights a day from Perth, ” he said.

Fares on smaller planes and on shorter routes serving regional destinations are more expensive, but that was the economy of scale in aviation, Mr Thomas said.

“You simply can’t compare the fare charged on a 162-seat 737 with that on a 300-seat A330 flying between Sydney and Perth or a 490-seat A380 flying from Perth to London, ” he said.

Qantas did not reply to a request for comment.