Once again the Guardians’ concerns with regard to the inadequacy of the information and therefore the flimsy nature of the business case has been endorsed, this time by an international expert.
Isn’t it high time that we start listening to some experts other than the shills paid by the airport? But – you will say (if you are Justin Lester) – these are just shills paid by Air New Zealand, who clearly have a nefarious “Anti-Wellington” agenda! Well, we find it hard to argue that Montie Brewer can be accused of an “Anti-Wellington” agenda, seeing he is an actual world expert (not like InterVISTAS who get paid to lobby) and doesn’t have any skin in the game either way.
What is so incredibly disconcerting to us is that none of the Councillors who are so willing to throw our taxpayer money at this have read any of the reports! Not even the discredited, half-baked ones that the airport did which they paid for with our money! Cause anyone who reads these reports – and the many retorts against their validity – can make up their own mind pretty quickly about how well the data was collected or how far the facts have been stretched by wild guesswork and extrapolation.
Just tell us this – Justin Lester et al: Why does the Council, which is a 34% shareholder of the airport, yet gets little over 10% of the profits (thanks to some very creative accounting), pay half of all costs even though the most optimistic, discredited cost-benefit analysis says it will only get a third of the benefits – in 45 years!? This is utter insanity and needs to stop. You are not entitled to gamble with our money and give corporate handouts to a billion dollar company without doing your research first and at least insist on a proper business case that stacks up!
You and Andy Foster saying that a ‘nudge, wink’ promise from an airline will be enough for you to commit $90m of our money to this white elephant is insanity. We can only imagine how much Infratil, the airport and international airlines laugh every time after you leave the room. Please, just once, read what Montie (or Ian, or Keith, or Michael, or Brian) has to say and make up your mind based on facts not what the big boys in the business suits promise you in secret handshake deals!
Promoters of the Wellington airport runway extension are mistaken to expect that building it will be enough to attract airlines to establish new long-haul routes to the capital, says an international airline expert brought to New Zealand by one of the project’s biggest critics, Air New Zealand.
Montie Brewer, a former chief executive of Air Canada who sits on the boards of Irish airline Aer Lingus and Swiss International Airlines, said New Zealand is risky for global carriers because of its distance from major long-haul destinations. They would be more likely to increase service frequency and plane sizes through established routes into Auckland before looking even to Christchurch, let alone Wellington, he said.
“I’m not a Yank coming down here to tell you it’s a dumb idea,” he told BusinessDesk but warned there was a high risk that “no one’s going to use that runway”, meaning existing users would end up paying for it, risking higher airfares.
“If you’re trying to build this to entice a planner to decide to fly here, you would probably do best to talk to some planners first.”
Owned 66/33 by NZX-listed infrastructure investor Infratil and Wellington City Council, Wellington International Airport is pursuing the majority of funding for the $300 million project from the council and central government and is working on a business case to demonstrate it would pay for itself through increased economic activity.
While modelling undertaken for WIAL by global air route consultancy INTERVistas used “the right process”, the rates of passenger growth it projected were “quite low” and unattractive compared to other global opportunities, said Brewer.
“When you look at the list (of possible new services), New Zealand doesn’t come up on that list very well,” he said. It tended to be a leisure rather than a business traveller’s market, so potential customers were more focused on price than convenience and there was a limited domestic outbound market compared to alternatives.
“I might think I need to have New Zealand in my portfolio, but not in the same way as London, Tokyo or Paris. It’s not like my customers are complaining about not being able to connect through Christchurch. That’s not my customer. That’s Air New Zealand’s problem.”
He praised Wellington airport success for its new service to Singapore via Canberra, which he said Air New Zealand wouldn’t like because airfares to Singapore would fall, but the Singapore Airlines service starting on Sept. 1 was being achieved without the runway extension.
“You can fly wide-bodied jets across the Tasman already,” he said. Globally, airline economics meant that “if you are in any non-hub city, competition is via different gateways.”
An international carrier would “creep up” on services to New Zealand and would most likely target Auckland first, as a known quantity with plenty of competing short haul carriers able to take its passengers to onward locations, at first using “the smallest possible airplane”, such as a Boeing 787 Dreamliner.
“If there’s more demand to come down here, they’ll put on a 777, then a 777-300. They can handle all the demand into New Zealand for the next five to 15 years by up-gauging their current aircraft.”
If bookings from one gateway in their home country were strong, the next likely move would be to fly to Auckland from a second gateway rather than targeting a second New Zealand destination, which could harm the profitability of existing services to Auckland. At that point, it would also consider whether other routes altogether were more attractive.
“I’m thinking about Athens, Denver, wherever. You’re competing with the whole rest of the world.”