Decision time over private operator for Pilbara airport

Local councillors will shape the future of Hedland airport tomorrow night as they decide whether to entrust one of the town’s most profitable and important assets to a private operator.

With Port Hedland International Airport averaging an annual operating surplus of around $11 million in its last three years, the Town has typically redirected abound $3 million of this income back into its operating Budget.

But Town of Port Hedland staff believe these profits could be greatly boosted and the local government’s financial risk mitigated by leasing the airport’s management to a private operator.

Councillors tomorrow night make up their own minds as they study expressions of interest from nine private operators.

If they vote in favour of leasing the airport, Town staff will be given the green light to finalise a winning bid and present it back to councillors for approval in August.

Town chief executive Mal Osborne said each expression of interest would be “assessed against set objectives, including the financial return for the Town,” he said.

The proposal to lease the airport comes against a backdrop of significant financial reform at the Town.

With the big spending days of the State Government’s Royalties for Regions program now largely behind it, the Town has concentrated in the past three financial years on cutting costs and increasing its efficiency.

New community assets built at the height of the mining boom, such as Wanangkura Stadium and the South Hedland Aquatic Centre, have proved a boon to residents but also helped burden the Town with millions in debt and operating costs.

In a bid to maximise returns from its facilities, the Town argued a lease model would allow it to draw income from the airport without finding the funds to finance a minimum $40 million needed for works on the facility’s terminal and runways.

They believe a private investor would possess the expertise and money to speed up investment in the airport and attract new airlines and routes.

The proposal has the backing of the Chamber of Minerals and Energy WA, but Qantas head of strategic procurement Jean Elverton, while supportive in principle, raised a series of concerns.

She said in a submission to the Town it was critical a future lessee engaged in fair pricing and continued to invest in airport infrastructure.

She also criticised the current speed of investment in Hedland airport and said it already had WA’s highest aviation charges compared with similar sized airports.

“Please appreciate Qantas’ concerns given privatisations of other airports have resulted in a range of experiences from airline and customers perspective that have been far from ideal,” she said.

The Nationals Member for Mining and Pastoral Jacqui Boydell also raised a cautionary voice.

“It is such a big asset, it represents Port Hedland’s gateway to the rest of the world – it is a very big decision to make,” she said.

“To lease a big asset like that out … the community needs to feel some degree of safety that (the) risk assessment has been done and the benefits of doing it are clear to the community and rate payers.”

But the Town in its agenda item said it had engaged widely with the community during the process and that the policy of leasing the airport to a private operator was backed by the State Government’s 2015 State Aviation Strategy.

It also said regional airports in Townsville, Cairns and Alice Springs had benefited “from unprecedented increases in capital investment and business development growth” after being leased to the private sector.

To ensure the financial model adds up, it said it has engaged the Western Australian Treasury Corporation to construct a “Lease vs Keep” financial model to analyse the benefits.

It added that it would also engage in extensive due diligence of each prospective bidder for the lease.