REBLOG Strathmore Park Blog: Singapore Airlines just saved Wellington $90m

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News this week that Singapore Airlines will be flying “direct” from Wellington to Singapore via Canberra single-handedly proving that we don’t need a $300m plus runway extension to access Asia and saving the ratepayers the $90m that was looking earmarked for the project.

Rejoice Wellington.

In a Powerpoint Presentation written by what appears to be a PR Company engaged by the Wellington City Council, (WCC Presentation), the platitudes run thick and fast. Sadly, as usual, the propaganda is flowing in some places.

“It proves that direct flights to Asia will be feasible.”

Well, no, it proves that flights to Singapore via Canberra will be feasible right up until the point other competition enters the same market. Because right now Singapore Air gets the march on consumers wanting to fly to Asia, but once another airline starts the same route, the economics are likely to be stuffed proper. And Singapore Airlines are getting subsidised by the ratepayers it seems.

In terms of direct flights to Asia, it really doesn’t prove anything. In fact, so far, the WCC and WIAL have single-handedly failed to explain how it will be economically viable. We already know that twenty airlines have said they wouldn’t use it, even if built, including Air New Zealand. We know that the airport’s business case has overstated the benefits.

Anyway, we don’t need that long airport now and the massive burden on ratepayers, because, we can fly direct to Asia with a small break in Canberra. This is good news. Because those of you who do fly up there know that you end up with a good three hours most times transiting Auckland.

Would I use the route? Yup. Definitely. If it is a similar price.

But it’s not.

A quick look at airline prices shows that Singapore is quoting $1,800 for it’s new route but I can get that same route for hundreds less if I don’t mind going via Auckland.

The entire airport extension debate now is boiled down to spending $90m or more to save 90 minutes of travel time. Assuming that the airport extension stacked to start with, which it doesn’t.

It also means that any airline that was considering long-haul out of Wellington would have to think again. Reason being that if I could pay less to transit through Canberra or the Australian East Coast from New Zealand than a direct flight, I’d take it.

Tiredly, the presentation utilises Intervista statistics on the number of people who are likely to travel to Canberra and beyond. Apparently 90,000 people will use it a year. By my calculation, with four flights a week, that is a plane with 432 passengers on board. Roughly the maximum load for a 777.

Are we really going to fill a 777 for every single flight?

It was interesting to see how the Canberra press reported this remarkable achievement.

Canberra Airport wins back ‘international’ title after patchy history

Wellington puts through 5.5 million passengers a year, Canberra barely does 3 million. It has a poor reputation in the international stakes, WIAL looks positively golden by comparison.

I wonder what deals were done to make this miracle occur?

Well, we are subsidising it according to GOTB.

What this article curiously omits, however, is the important question around subsidies. Who subsidises the airline, to what extent and for how long? We can safely assume that both Canberra and Wellington Airports have offered a sweetener to seal the deal – like waving the landing charges? Who pays for that? Surely not the airports, so is it other travellers who are not using this route? We also learned that the Wellington City Council is subsidising this route by about $9 per passenger – for the next ten years! That adds up to over $8m based on the extra 90,000 passengers per year this new route is meant to attract. Apparently, this money will not be taken out of increased rates but ‘Destination Wellington’ marketing budget and no new budget is needed for it. What exactly is ‘Destination Wellington’ other than a ratepayer-funded slush fund with little oversight? Will every airline coming to Wellington be able to expect such a deal? Wouldn’t a lot of these passengers have come to Wellington anyway, but via other hubs? – Source

Tt’s still less than $90m.

But that is not stopping the Council from making these bullish statements:

  • The argument that direct flights will not be commercially viable is now redundant
  • It proves the runway business case has substance

It truly is amateur hour is it not?

This is not a direct flight, so by that count, the first statement appears idiotic.

The runway business case does have substance, as do other substances, brown ones. The runway business case is dubious at best in my opinion and the number of questions sent to WCC and WIAL that have gone unanswered is substantial, and telling.

The fantastic news is that we do have more choice to fly into Asia and hopefully that will open other routes up via the East Coast of Australia.

It also proves definitively that a $300m, corporate welfare, ratepayer subsidised runway extension is completely unnecessary.

So let’s spend that money on something that is going to give us a solid return. Not a chunk of concrete that will be underwater in a decade anyway.

Right now, a whole bunch of our decision makers really need to stop drinking the Kool Aid.

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