Australian airline Qantas has picked up a seven-figure government subsidy to do nothing much at all. In 2020, Qantas said it was considering relocating its headquarters from Sydney. The airline called for “expressions of interest” from various Australian State Governments, a move that was widely panned at the time for setting up a bidding war.
Multi-million dollar windfall to stay in Sydney
Ultimately, Qantas elected to keep its HQ Sydney, a decision that surprised no one. Sydney Airport is the airline’s busiest port by a wide margin. In the airport’s precinct is extensive infrastructure supporting Qantas’ operations. Thousands of employees work at Qantas’ Bourke Road headquarters, most of who would not have been enthused about upending their lives, their families, and moving to another city.
But that didn’t stop State Governments from offering significant cash incentives to Qantas to relocate, including to Brisbane and Melbourne. Opposition politicians said Qantas was playing the states off each other. Depending on who you asked, it was either a masterclass or a grasping gaming of state government rivalries.
In a report by Carrie Fellner in Tuesday’s Sydney Morning Herald, a leaked letter reveals the New South Wales Government offered Qantas US$38.8 million (AU$50 million) to stay put in Sydney. In doing so, virtually nothing would change at Qantas. New South Wales Treasurer Dominic Perrottet made the offer on April 29, 2021.
The key condition of the offer was keeping the Qantas HQ for at least 30 years with no net job losses over the next five years. Mr Perrottet also wanted Project Sunrise flights, if they go ahead, to launch out of Sydney and a new simulator center set up in New South Wales.
“This updated proposal demonstrates the NSW Government’s commitment to a mutually successful ongoing relationship,” the letter reads.
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Victoria & Queensland Governments pay to keep existing Qantas Group facilities
One week later, on May 6, Qantas said it would stay headquartered in Sydney. According to a Qantas spokesperson cited in The Sydney Morning Herald, the $38.8 million proposal did not reflect the final agreed figure – that’s still being negotiated. But the final amount will represent a significant financial windfall for Qantas for doing very little at all. Most industry insiders don’t know whether to admire or find Qantas’ chutzpah appalling.
Brisbane and Melbourne didn’t emerge as winners. It reportedly cost their respective State Governments to hold onto what Qantas Group functions their capital city airports already have. Qantas knocked back a “compelling offer” to relocate to Brisbane. But it did reach an “agreement” with the Queensland State Government to keep existing heavy aircraft maintenance facilities at Brisbane Airport and to increase its Queensland-based workforce by 100 personnel. The Queensland Government has declined to reveal what that cost.
Down south, the Victorian State Government reached a deal with Qantas to hold onto 1000 Jetstar jobs already based in Melbourne. Qantas would also beef up its maintenance work at Melbourne Airport, bringing 300 new jobs to the city. Like Queensland, Victoria declined to say what the deal with Qantas cost them.
Qantas also declines to reveal the value of the agreements, citing commercial-in-confidence reasons. Aside from tinkering around the edges, a few extra jobs, and some maintenance agreements, nothing much at all changes at Qantas. For that, we reckon Australia’s most audacious airline trousers a figure somewhere in the vicinity of US$50 million. Not bad for not doing very much at all.