The Qantas Airways Limited (ASX: QAN) share price is down 0.7% after the ASX travel share announced an agreement with Perth Airport regarding upgrades and developments. The S&P/ASX 200 Index (ASX: XJO) is up 0.5%, so Qantas shares are underperforming the market today.
Perth is an important destination for Qantas because of Project Sunrise, with Qantas creating ultra-long-haul flights over the coming years. The long-distance flights will use Airbus A350s, which arrive in 2026.
$5 billion Perth Airport investment plan
Qantas announced a 12-year agreement under which Perth Airport will invest approximately $3 billion in new terminal facilities and a new parallel runway, which is expected to open in 2028.
Perth Airport's overall capital investment will total $5 billion, delivering two multi-storey car parks, major access roadworks, and the airport's first hotel.
Qantas and Jetstar will relocate all services to a new terminal in the Airport Central precinct, which will enable the growth required to turn Western Australia into a "major domestic and international hub" for the airlines. Qantas will also invest in new aircraft.
Jetstar and Qantas plan to add 4.4 million seats to and from Perth annually by the time the new terminal opens in 2031. As part of the agreement, Qantas plans to build a new engineering hangar in the precinct.
The airline said the upgraded hub will significantly enhance inbound tourism and give Aussies more options when travelling to Asia, Africa, India and Europe.
Perth Airport will also invest in upgrades to terminals 3 and 4, where Qantas currently operates, to create additional capacity while the new terminals are built. Jetstar will relocate its domestic services to terminal 2 from September 2024.
The upgrades to terminals 3 and 4 will allow Qantas to add more services and destinations from Perth, including Auckland and Johannesburg, from mid-2025, subject to meeting border agency requirements. The works will also include gate upgrades to accommodate the ultra-long-haul aircraft for Project Sunrise.
As part of the agreement, all outstanding commercial issues between Perth Airport and Qantas have been resolved.
Management comments
The Qantas CEO Vanessa Hudson said:
This is the largest airport infrastructure deal in our history. It will enable us to create a world-class western hub and significantly expand our domestic and international services over the short, medium and long term.
Not only will it allow us to bring hundreds of thousands more travellers to and through Western Australia each year, it will also make it easier for overseas tourists to connect to more destinations across Australia.
Perth-London and Perth-Rome are two of the most popular flights on our international network, which gives us confidence in our strategy to ramp up WA flying over the next few years as we receive new aircraft and grow our fleet.
Qantas share price snapshot
Since the start of 2024, the Qantas share price has risen 12%, as seen on the chart below.
