In short:
Melbourne Airport has agreed to the Victorian government's request to back the cheaper option of an above-ground railway station.
The stand-off has delayed the start of the construction of the long-awaited multi-billion-dollar project.
What's next?
The timeline for the project remains unclear — while the airport says it wants to see it up and running by 2030, the government has previously announced it would be delayed until at least 2033.
Victorian Premier Jacinta Allan has dashed hopes that Melbourne's long-awaited Airport Rail Link could be opened by the end of the decade, despite the airport's operators backing down on demands for an underground station.
The project has been delayed by four years — until 2033 — because the state and airport could not agree on where to build the station.
The airport wanted it built underground, Victoria wanted it above ground as it is cheaper and quicker to build.
This morning the airport's CEO Lorie Argus said the airport was backing down in recognition of the need to get on with the rail link.
"Victorians have waited long enough for an airport rail line," Ms Argus said.
"We will work with the Victorian government to deliver their preferred above-ground station at the airport so the rail line can become reality."
The airport said it hoped its compromise would help get the rail line up and running by 2030, but Premier Jacinta Allan was unmoved, telling reporters that the delay had already been caused.
"You'd have to ask the airport how they think after four years of delays that can magically be washed away," she said when questioned about the timeline for completion.
"We needed their approval to be able to get into the airport footprint itself to be able to do early investigations or site investigations, we haven't been able to do that.
"For a project the airport aren't putting one single dollar into, mind you, they were continuing to pursue that position right up until late last night."
Airport pushes for rail to be completed by 2030
The stand-off over the station had been a major stumbling block to beginning construction on the long-awaited $10 billion rail link from the airport in Melbourne's north-west to the CBD.
In November 2023, federal Transport Minister Catherine King appointed an independent mediator to try to resolve the impasse between the airport corporation and Victorian government.
Last month, meditator Neil Scales reported the $10 billion project remained "viable and necessary" and that the station should be above ground unless a "comprehensive" case was put forward for an alternative.
This morning, the airport said the mediator wanted it to submit an extensive business case for an underground station, which could have added another two years of delays to construction without any certainty that it would succeed in getting its option approved.
"Enough reviews have been done now," Ms Argus said.
"We need to accept the state position and work constructively to get that train in place … so we've made the compromise."
The airport said it was hoping to immediately resume discussions with the government with an initial focus on the station's design, the construction timeline and redress for the land required for the above-ground option.
It said construction on the rail line needed to start as soon as possible to prepare for the airport's third runway opening in 2030, bringing an estimated 45 million passengers in and out of the airport.
Ms Argus said one of the biggest challenges for the construction of the project was the airport's need to be operating 24 hours a day, seven days a week.
But she said most outstanding matters should be able to be negotiated "pretty quickly, because we were well progressed when the project got paused last year".
The premier said the state would now work with the federal government to proceed with the project but was concerned by the airport's calls for compensation for losing the use of Commonwealth-owned land to build the station.
"So we still clearly have some further negotiations, some further discussions to have with the Commonwealth and with the airport as to how we can progress this project because that is a very, very big question that the airport has raised today," Ms Allan said.
Ms Allan said she expected there would be an additional fee on top of the daily commute charge to travel to the airport but could not say what the final fare would be.
The rail line will run through the City of Moonee Valley council area in Melbourne's north-west, where Mayor Pierce Tyson has welcomed the breakthrough.
He said the new station would also be a major benefit for airport workers, a large proportion of whom live in his community.
"It's Christmas in July here," Cr Tyson said.
"This is such a huge announcement, we're so excited and so happy."
Cr Tyson thanked the airport "for conceding this point on the underground station".
"We've been waiting over half a century in our community and we really just wanted it to get bloody done."
He said it made sense to be elevated rather than underground.
"Anyone who knows Melbourne Airport knows that there's a lot of overground fly overs for carparks and I think it's absolutely appropriate for the station as well.
"If there is an elevated station, that's where the departure terminal is, elevated on level one."
Melburnians won't believe it until they see it, commuter advocate says
The Public Transport Users Association said an above-ground station was better than no station at all.
"The airport does continue to get busier and it's becoming very congested around the airport precinct so providing rail access is very important going forward," said spokesman Daniel Bowen.
He said the airport and government must ensure a seamless connection between trains and terminals.
"That there's good weather cover, that's convenient, a short walk, it's easy to find particularly for new travellers who may not be familiar with the precinct," Mr Bowen said.
"I think for many Melburnians they won't believe we've got an airport rail link until it actually opens and there are trains running."
Shadow Minister for Transport Infrastructure, David Southwick, said he wanted to see the airport rail project given precedence over Suburban Rail Loop plans.
"We've said all along this should be the priority project," he said.
"No more excuses, no more hiding, no more delays, we need to get on with it."
Airport visitors 'happy to see anything built'
Most of the passengers catching flights today that the ABC spoke to indicated they would have preferred an underground station.
But all said they would just be happy for any station, at this stage.
"I think whatever works, to be honest … get it done, build it wherever, as long as they make it easier to get to the airport from the city," Jonathon Healy said.
Architect Billy Kavellaris said the project would not meet best practice, but he was just happy there would be a rail link to and from the city.
"It should be international standards, it should go underground," he said.
Greg Patrick said the quicker the rail link could be built, the better.
"The traffic at the moment, getting in here today was horrendous. You got to the car park and it was just bumper to bumper so I'd be happy to see anything built."
Gurminder Singh said he was a regular overseas and domestic traveller and was concerned the above-ground station would mean a loss of car parking.
"I would love to see the proposal in the sense of how big the area they're covering up," he said.
"Just having a train is a bonus for Melbourne," said Kirsten Yokoyama, who said she would no longer have to make the 50-minute drive to pick up her daughter who was arriving home from a trip.