Stuff Opinion: Wellington needs a longer runway? Yeah, right



When the canon of lost causes is examined in the future, somewhere near the top of the list for Wellington will be the local airport’s weird campaign for a longer runway.

In recent weeks, Wellington International Airport has been running full page advertisements in local newspapers which, while no doubt welcome cashflow for the publishers of The Dominion Post, deserve to be judged as a case of good money thrown after bad.

Despite a lot of local booster-ism to the contrary, the value of direct connections to Asia and North America from this country’s third largest city is very difficult to discern, unless you happen to be an airport shareholder.

The shareholders in this case are the Wellington City Council, with 33 per cent, and Infratil, the infrastructure investor that sets high rate of return hurdles for its investments, holding 66 per cent.

Their long-running public relations pushes for a runway extension costing around $300 million to allow new generation passenger jets to land here rather than routing through the country’s only regional hub, Auckland, and its second international airport, Christchurch.

The cheekiest part of this push has been the suggestion that the economics won’t stack up unless there’s a contribution to that whopping bill from central government.

Frankly, pigs might fly before that happens.

Economic Development Minister Steven Joyce may be able to convince himself that subsidies to the film industry, commercial innovators and the America’s Cup can all be justified on sometimes nebulous assessments of national benefit.

Even Finance Minister Bill English can see there’s been some sort of boost to New Zealand’s global profile as a high-tech services provider and tourism destination from the Tolkien juggernaut, even if he can’t put his hands on a bit of paper that proves that in cold, hard dollars.

But no ministers are buying the Wellington airport extension argument.

Nor should they.

The most comprehensive assessment of the runway extension’s prospects was produced earlier this year, after a suspiciously long gestation period, by accounting firm EY.

The airport trumpeted the result as showing “the direct economic benefit to the Wellington region, between 2020 and 2060, will be up to $684m in today’s dollars”.

That’s not just a rubber number. It’s meaningless. If such flimsy analysis were produced as a business case for the Infratil board, it would either be laughed out of the room or there would be no Infratil in very short order.

Broken down into actual flight numbers, the EY report says this: a runway extension might be worth between two and five long haul flights a day in 46 years’ time. Say what!?

To put that in some kind of context, consider that in terms of today’s aircraft movements in and out of Wellington, which averaged 239 a day in the year to the end of September, just 15.5 are international flights at present, all of them trans-Tasman.

You don’t have to be a highly paid financial analyst to be doubtful that two to five more flights a day by 2060 will pay for a $300m runwayextension. Airlines currently using the airport have sought assurances, which have not been forthcoming, that they won’t be expected to pay for the upgrade.

Look at it another way. The EY report’s $684m cumulative benefit by 2060 equates to roughly $14.8m of annual revenue over 46 years. Yet based on Wellington airport’s charging formula, the airline lobby group BARNZ (Board of Airline Representatives of New Zealand) says the airport would need to charge $50m more annually to pay for the longer runway.

On top of this, EY suggests some of the predicted new international services wouldn’t even fit the criteria of a new long haul service, but would connect to long haul services out of Australia. That’s the very thing the plan is supposed to be avoiding – a short hop followed by a long hop.

The short-form description for this plan is that it’s a pup, even before considering the question of whether a resource consent could ever be granted for a scheme that will require a major landfill operation stretching either into Evans Bay or Cook Strait.

Why then, does it have such strong regional support?

The first reason must be that anyone would support new infrastructure they didn’t have to pay for directly. However, since the prospect of central government kicking the can seems remote, what other reasons could there be?

For Infratil, could it be that it hopes to plump the value of its stake in a regional airport prior to possible sale? A consented development option for a runway extension has to be worth something.

And for Wellington, the runway extension is part of the argument for the more pressing need to unblock road transport bottlenecks across the city.

None, however, are good enough reasons to spend $300 million on a project that looks unlikely on even the most optimistic scenario to pay for itself.