Leadership in transit at Perth Airport

When Kate Holsgrove sets off for a break at the end of the year she will join a cohort that has been the core focus of her own organisation’s management team in recent years.

Ms Holsgrove – fresh off a year-long stint as Perth Airport’s acting chief executive – will be an outbound international passenger.

The significance of international travel may already be starting to wane for some, particularly against the backdrop of what seems to be an ever-increasing list of flights servicing the Western Australian capital.

But it was only March last year that the state’s borders were reopened to the world after a 697-day closure: among the longest pandemic-related border closures anywhere in the world.

When the pandemic hit and the borders closed, Perth Airport’s international passenger numbers plummeted 97 per cent.

The facility remained open to facilitate the ongoing work of the state’s resources sector but endured significant financial losses in doing so.

The airport reported a loss of $64.5 million in FY21; the first in its history. At the time, then chief executive Kevin Brown said the losses reported in aeronautical services effectively meant the airport was subsidising each passenger by almost $6.

Mr Brown, who left the airport late last year to take up a role leading St John WA, oversaw an initial turnaround in FY22.

In the lead up to Mr Brown’s departure from Perth Airport, the organisation posted a $149 million net profit after tax.

It was close to breaking even on aeronautical services, and much of the financial performance was driven by upticks in the value of its expansive investment property portfolio and positive market adjustments.

It was against this backdrop just less than a year ago that Ms Holsgrove, who as chief commercial officer was already part of the organisation’s c-suite, stepped into the role of acting chief executive.

The year with Ms Holgrove at the helm has been one of investment, growth, collaboration and negotiation, as the airport bounced back from a downturn beyond its control.

The airport reported an after-tax profit of $110.4 million in FY23, bolstered by significant increases in foot traffic, and a further $35 million jump in the value of its property portfolio, although this was partially offset by a market write-down of $51.4 million due to interest rate fluctuations.

Underlying earnings before interest, tax, depreciation and amortisation were up 44 per cent to $403.8 million, from $280 million a year prior.

Passenger numbers rose 6.8 million year-on-year to 14.2 million, returning the airport to positive revenue from aviation services for the first time since the pandemic’s impact was felt.

From the lows of FY21, Perth Airport realised revenue of $14.18 per passenger, closing in on pre-pandemic levels.

At the same time, the organisation carried out $36 million worth of boarding gate upgrades and made an $8 million investment in self-service check-in facilities.

A further $70 million was spent on security equipment screening to get up to standard with new federal requirements, while $80 million was spent on aviation support facilities and a maintenance hangar to support Virgin Australia’s regional and charter flight operations.

Ms Holsgrove may have entered the role with a set finish date, but the progress made at the airport over the past year was very much business as usual.

“I’ve purposefully made sure that I haven’t looked at this as a kind of caretaker role, and continued making the decisions, whether that’s around our people or infrastructure and investment decisions,” she said following the release of the airport’s FY23 financials.

“We’ve got a very dynamic business, so we couldn’t really afford to wait for Jason [Waters, incoming CEO].

“It’s been very much business as usual, and I’m very proud that we’ve been able to still make those big decisions and big investments.”

Among further investment priorities are plans for a multistorey car park and an airport hotel, which is in the early concept and approvals stage.

Perth Airport’s new runway project – first recommended more than 40 years ago by a joint Commonwealth and state government commission into Perth’s infrastructure needs – is in the federal government’s environmental approvals pipeline.

“[Once we have approval] we’re looking at getting started as soon as possible, for clearing that land and moving into developing Perth’s new runway,” Ms Holsgrove told Business News.

“As you know, it’s a large project – it’s just over a billion dollars – and we’re very excited to be able to get onto that.”

Delivery of the new runway is expected by mid-2028. And it will be needed, with the airport experiencing record aircraft movements.

The consolidation of the airport also remains in planning, with progress made in recent months on the at-times testy relationship with under-fire national carrier Qantas.

The negotiations are a key sticking point for the long-term plans to consolidate the airport, with all international flights bar Qantas leaving from Terminal 1 on the airport’s eastern side (about 15 minutes from T3 and T4).

“With Qantas, we are making better progress than we have in the past and the relationship is improving, but it’s a very challenging commercial negotiation and we’re not there yet,” Ms Holsgrove said.

High-profile negotiations and infrastructure investment may be the hallmarks of Ms Holsgrove’s time as chief executive, but smaller changes to airport policy have had a significant impact on the ground as well.

That includes an adjustment made to the pricing mechanisms applied to parking at the airport, where a 15 per cent price drop in long-term parking fees has corresponded with a 430 per cent surge in the number of online bookings at T1 and T2, compared with pre-COVID levels.

At the same time, drive-up transactions for the airport’s short-term car parks remain 15 per cent below pre-pandemic levels, now in competition with the Airport Central train station opened in October last year.

“There was a great opportunity during COVID to really understand our customers and we did a lot of research into what the value drivers were for them,” Ms Holsgrove said.

“We created some cheaper, long-stay products specifically for those [fly-in, fly-out] workers who are here for eight to fifteen days.”

FIFO has done much of the heavy lifting on the passenger front, too, with the airport still slightly off where it was pre-pandemic in terms of interstate travel, and 8 per cent from its previous passenger mark internationally.

Ms Holsgrove said regional traffic had consistently been up between 20 and 40 per cent each month compared with pre-pandemic levels over her tenure: a figure attributed to the enduring strength of the sector and the push within WA to produce battery minerals.

But the airport expects further improvement from international flights, especially as pre-pandemic routes return and new direct flights come online.

Last financial year marked the return of A380s from Qatar and Emirates, the first Philippine Airlines flight from Manila, new services to Jakarta and Denpasar from Indonesia AirAsia and Citilink, and increased capacity on the Singapore Airlines service to Singapore.

All Nippon Airways has subsequently restarted direct flights to and from Tokyo, and Vietjet launched direct flights to and from Perth in November. Vietnam Airlines will follow suit in December.

At the end of October, Qantas unveiled plans for a direct flight to Paris four times a week, expected to launch ahead of next year’s Olympics.

For Ms Holsgrove, the return and growth of the international pathways on offer through Perth Airport over the past year has been a particularly welcome development.

“I’m very proud of the aviation connections we’ve been able to build, and particularly the role that we’ve played alongside the government and Tourism Western Australia and other partners to really make sure that WA is top of mind internationally with our airline partners,” Ms Holsgrove said.

“Growing aviation connections is something I’ve personally found very rewarding and very satisfying.”

The growth of the airport’s presence as a property owner and developer is also notable. The airport area has become a shopping precinct in its own right, and the value of its property portfolio has increased $120 million over two years.

Fast food outlets and a car wash are next in line for the area, with a Woolworths having opened in September as the anchor of the new Dunreath Village shopping centre.

A number of warehouses have also been constructed, including an Officeworks distribution centre.

Ms Holsgrove estimates about 500 hectares of land remain available for development in the Perth Airport area, with opportunity in retail, office and industrial.

“I think the airport is seen positively,” she said.

“We’re only eleven kilometres from the city, so we’re very central, and there’s a great opportunity for those partners looking for space in Perth.”

Having overseen an eventful year leading Perth Airport, Ms Holsgrove will relinquish the role to former Perth Mint chief executive Mr Waters before the end of November.

The acting chief executive said she was very satisfied with the airport’s progress over her 12-month stint, and the way the staff had seamlessly embraced the challenges of a rebounding sector.

“I’m very proud of the results we’ve been able to achieve and the relationships we’ve built for the future,” she said.