Qantas Group and Melbourne Airport have reached a commercial agreement that will support future flight growth, a major international terminal expansion and the delivery of Melbourne’s long-awaited third runway.

The agreement covers key commercial terms between the two parties, including a 15-year Qantas commitment to support the airport’s third runway, which is expected to open in 2031.

It also underpins Melbourne Airport’s $4.5 billion international terminal expansion, which will add five new widebody aircraft gates and increase capacity for future international growth.

Qantas is preparing to expand its Melbourne operations, with the airline planning to base some of its new Airbus A350-1000LR aircraft in the city. The aircraft, separate from the airline’s Project Sunrise fleet, are expected to open new international routes from Melbourne that are not currently possible.

Qantas Group CFO Rob Marcolina said the aircraft investment would “unlock growth” for both the airline and the airport.

“Basing new A350-1000LR aircraft in Melbourne will open routes that aren’t possible today,” he said.

Qantas and Jetstar currently operate services to 17 international destinations from Melbourne, with the group signalling plans to grow the network further.

The agreement will also deliver upgrades for passengers, including a new Qantas International Business Lounge above Terminal 2. The lounge will be up to one-third larger than the existing facility, with airport views, and is expected to be completed by 2029.

Melbourne Airport’s terminal upgrades will include faster international check-in, dedicated premium check-in areas, upgraded automated bag drop facilities and expanded baggage reclaim areas.

Jetstar is also expected to benefit from the expansion, with Melbourne already its largest port, operating up to almost 1,000 flights a week at peak periods and accounting for around 45 per cent of its domestic passenger volume.

Melbourne Airport CEO Lorie Argus said the agreement marked “the most significant upgrade in the airport’s history”, combining investment in infrastructure with Qantas’ aircraft, customer experience and network expansion plans.

She said the third runway and Qantas’ 15-year commitment represented “a significant vote of confidence in Melbourne”.

Final agreements between Qantas and Melbourne Airport are expected to be executed in the coming months.