Melbourne Airport will turn its attention to improving Virgin Australia's domestic terminal and may eventually expand its international terminal into some of the domestic space occupied by Qantas now that its T4 budget terminal has opened, says chief executive Lyell Strambi.
"[The Virgin pier improvement] is the next cab off the rank for us," he said on Wednesday after T4, used by Jetstar and Tigerair Australia, was officially opened by Treasurer Scott Morrison. "What we want to do is lay out a set of options for Virgin to really pick and choose from." 
Mr Strambi said options for upgrading Virgin's area could include reserving a more dedicated area of T3 for premium customers and making more use of the new T4 precinct for non-premium customers, as well as a revamp of the shops.
After the opening of a new domestic terminal in Perth last month, Virgin chief executive John Borghetti said the Melbourne terminal was the only major one in Australia that he wasn't happy with. "Melbourne has been an issue for a long time," he said, but added he was in talks with Mr Strambi about improvement plans.
Mr Strambi, the former head of Qantas Domestic, said Melbourne Airport was also considering the future of the T1 terminal occupied by Qantas domestic now that Jetstar has moved its operations to T4, freeing up space. Qantas holds a lease over the terminal until 2018. The carrier has sold its similar leases at Sydney Airport and Brisbane Airport back to the airport operator but has not yet done so at Melbourne Airport.

Keeping an open mind
"We are happy to talk to Qantas anytime about an early relinquishment of the lease," Mr Strambi said. "We certainly have an open mind about it. It is not the highest priority we've got at this point in time."
He said the airport might make changes once it had control of the Qantas terminal given Jetstar's move to T4 had left T1 with surplus capacity that could be used to expand the check-in area for the adjacent T2 international terminal. "It is really early at this stage," Mr Strambi said of any plans. "But you can see some benefits for everybody."
The number of international flights to Melbourne Airport has been growing at a rapid pace, reaching annualised growth of 10.2 per cent in   October, double the rate of Sydney Airport's 5.1 per cent growth, albeit from a smaller base.
"Victoria as a tourist destination is really doing well, surprisingly well," Mr Strambi said. "More and more origin markets have really come online. A lot of that has been [from China]. That is creating new demand for Australia."
In light of the ongoing growth in domestic and international capacity, Melbourne Airport is undertaking planning and technical studies for the development of a third runway, which could open around 2023. Mr Strambi said it would be important to ensure it was properly timed.
"You want to be in a position where you've got the option to proceed with the runway, but you want to squeeze the maximum utilisation out of the ones you've got before you spend that money," he said. "You don't want it too early or too late. Finding that Goldilocks time is a challenge."
Mr Strambi said Melbourne Airport could ultimately accommodate two sets of parallel runways and was likely to become the biggest airport in Australia at some stage as a result because Sydney's traffic would be split between Kingsford-Smith and a planned airport at Badgerys Creek.
"Melbourne will overtake Sydney as a single airport," he said. "Unfortunately for Sydney, they will be running it out of two airports."