An announcement today that Singapore Airlines has canned its route to Canberra is a stark admission that there is not enough demand for international flights out of Wellington, say those concerned about the ongoing spending of ratepayer and taxpayer money on the venture.

Guardians of the Bays, representing more than 600 community and ratepayer organisations and concerned individuals, is concerned that public money has been used to subsidise the route despite it being obvious for some time that it was not successful.

Guardians of the Bays Co-Chair Richard Randerson said it was no surprise that Singapore Airlines was pulling the plug on the Wellington – Canberra – Singapore route.

Despite spending at least $3 million dollars of ratepayer money to promote the route, publicly available loading data clearly shows that the route achieved less than a 50 percent passenger loading. That is great if you like lots of seats on your plane, but it isn’t great for ratepayers who have been subsidising this route for more than a year – for no discernible benefit. Canberra has a similar-sized population to Wellington, and if Canberra cannot muster a payload, it is unlikely Wellington can do anything better.

Latest figures from international monitoring sites show the much touted Capital Express – or Wellington to Canberra flights – have not been working. The latest figures from the Australian Government’s Department of Infrastructure and Regional Development show that in August 2017, the Singapore Airlines Wellington to Canberra flight had an average passenger load factor of 128 passengers per flight (based on 16 return services). That is a load factor of 48 percent.

Further figures show that international passenger traffic at Wellington Airport was up only 1.9 percent in the 12 months to September 2017, with Australian visitors actually down 2.2 percent in the same period.

Wellington Airport has tried desperately to stack up its claims that there will be an economic benefit from the proposed airport extension for Wellington without success. It has drawn down significant amounts of ratepayer funding for its Environment Court application and for the Singapore Airlines subsidy and promotion.

“There is already evidence that the proposal is likely to cost much more than the $350m originally suggested, up to $500m according to one expert.

“The proposed airport extension is not about what is good for Wellington. It is about what is good for Wellington Airport and its multi-billion dollar owner Infratil.

Co-chair Dr Sea Rotmann said it was time for the Mayor and Councillors of Wellington City to cut their losses on the proposed airport extension and move on.

In a meeting with Wellington Mayor Justin Lester, shortly after he was elected last year, he was clear that the Council’s support of the Wellington Airport extension was dependent on demand for the route.

This change of route proves that Wellington Airport and Singapore Airlines are scrambling to find a route that works economically.  It is a shame that Singapore Airlines has got caught up in this debacle as it has an excellent brand but appears to have been captured by vested interests.

“It is time for our community leaders to follow the Government’s lead and focus on spending that improves the lives of Wellingtonians and all New Zealanders, not just the few,” she said.

Original article

Wellington’s parking and transport are bigger challenges to Wellington businesses than lack of international capacity via Wellington International Airport, according to the Wellington City Council’s 2016 Survey of Wellington Businesses.

Richard Randerson, co-chair of broad-based residents’ group Guardians of the Bays, says the survey is further evidence that Wellington Airport’s proposed runway extension is not the silver bullet Wellingtonians have been promised.

“The Airport and the City Council have been promising ratepayers that long-haul flights into Wellington will create more business opportunities for local companies, but this survey shows that businesses are wise to the real issues – and accessibility within the city is a much bigger concern.

“The survey also shows that over 90 percent of business do not feel disadvantaged by a lack of business opportunities or the size of the local market.”

Mr Randerson added that the City Council had been quick to give the Airport Company $3million of ratepayer money last year to help scope its resource consent application even though their own 2014 research showed just 10 percent of local businesses thought more international flights into the capital would provide advantages.

“We are now looking to the next generation Council and we are seeing the majority of mayoral candidates ignoring the red flags and maintaining that the return on a $90 million investment in the runway extension will be beneficial for the city.

“This report shows businesses don’t feel the need for it; 525 of 776 public submissions opposed the Airport’s resource consent application last month and Infratil, the Airport’s majority shareholder, isn’t prepared to put forward funds in line with its shareholding. These are warning signs that the business case will not be robust and they are being ignored.”

The report also shows the costs of being a Wellington business are forcing some companies to consider relocating or closing down.

“Wellington businesses already pay 46 percent of rates despite only occupying 21 percent of rentable property.[1] A number of the mayoral candidates are building their campaigns on the promises of costly white-elephant projects, like the runway extension, and not properly addressing the follow-on impact on rates for businesses and residents.”

City Council’s “on track” spin on survey

Original article on scoop.co.nz

By Pattrick Smellie

Aug. 15 (BusinessDesk) – Wellington’s airport runway extension initiative fails on the grounds that lower North Island and South Island travellers are already flying to long-haul destinations through Auckland or Christchurch and the region is not a magnet for tourists, who are more likely to favour Auckland and Queenstown as an arrival point.

That’s the conclusion of a study commissioned by the lobby group for international airlines, including Air New Zealand, lodged in opposition to Wellington International Airport’s application for a resource consent to lengthen the capital city’s runway by 350 metres.

The new study, by Australian-based Ailevon Pacific Aviation Consultants for the Board of Airline Representatives in New Zealand, said the likelihood of airlines establishing new long-haul services to the capital is “extremely remote, implausible at best”.

It contests the findings of a study by rival aviation industry consultants, InterVistas, which APAC said has over-estimated demand for long-haul services to and from Wellington, which it said has not benefitted from the boom in international tourism that has boosted arrivals, particularly to Auckland and Queenstown, in recent years.

“Visitor demand growth from long-haul markets to Wellington has lagged not only the New Zealand average but also other airports in New Zealand without long haul international services,” said the APAC report.

Using Australian Bureau of Statistics and International Air Travel Association (IATA) data, APAC concluded that Wellington’s strongest growth has been in short-haul traffic between the capital and Australian cities and the Pacific Islands, where most of the growth in new routes to Welllington has been in recent years.

“Presently, Wellington has no markets with sufficient origin-destination demand beyond New Zealand, Australia or the Pacific Islands that could support non-stop services with adequate frequency.”

The report makes almost no mention of improved export freight-forwarding opportunities that might arise from a longer runway – the main benefit cited by Wellington Chamber of Commerce head John Milford, who called for support from local businesses ahead of last Friday’s deadline for submissions to the Wellington Regional Council on WIAL’s application for a resource consent to undertake the $350 million project.

WIAL is seeking to make Wellington an alternative long-haul destination to Auckland, the country’s dominant airline gateway, the existing second gateway Christchurch, and Queenstown, which is increasingly connected by direct flights from Australia.

WIAL is owned 66 percent by Infratil, the NZX-listed infrastructure company, and 33 percent by Wellington City Council. It is seeking the majority of the runway extension cost from central government and Wellington ratepayers, arguing the benefits would accrue more to the country and the region rather than the airport owner, which cannot justify the expansion on purely commercial grounds.

APAC disclosed in its submission that it has undertaken work for key opponents of the Wellington plan, Air New Zealand, Auckland International Airport, and Queenstown airport, in which AIA has a shareholding, but says its analysis is independent.

“The simple fact is that Wellington International Airport’s catchment region is too small and too slow-growing to warrant non-stop long-haul services,” said APAC, which makes serious accusations about the quality of the InterVistas analysis undertaken for WIAL.

“InterVistas .. have either failed to accurately reflect the nature of demand at Wellington International Airport when benchmarked against neutral and industry-accepted data sources, including data sources InterVistas purports to rely on, or appear to have reinterpreted the data to support a case for long-haul demand,” the APAC report said.

In a submission on the runway extension application, the New Zealand Air Line Pilots Association said there was increased risk of a serious accident or incident, especially from larger planes using Wellington Airport, unless an adequate Runway End Safety Area (RESA) of 240 metres or a recognised equivalent solution is used.

NZALPA president Tim Robinson said despite his members having the most to gain from the runway extension, they were opposed to it unless it included the RESA. He suggested an alternative though known as Engineered Material Arresting System in use globally, which is a crushable material installed on an existing RESA to declerate an aircraft in an emergency.

Earlier this month, the association filed an appeal against the High Court’s decision to turn down a review of the runaway’s 90-metre safety area.

(BusinessDesk)

See article here.

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JOHN NICHOLSON/FAIRFAX NZ

Wellington Airport: Is it fair for public money to fund corporate profit and assets?

 OPINION: Wellington Airport’s CEO, Steve Sanderson, wrote glowingly (Dominion Post, June 25) of the benefits from extending Wellington’s runway 355 metres into Cook Strait.

The homework has been done, the benefits are clear, the money will flow, the resource consent application has been lodged and all that remains is for Wellingtonians to make supportive submissions to the Environment Court, he writes.

Who could disagree that tourism, student numbers and business ventures would benefit from better connectivity? But would a runway extension achieve such benefits? And might there not be better ways to invest public money for that purpose?

The costings for the whole project are murky. For some years now the cost of the extension has been stated to be $300 million. It matters not whether the extension goes 300m into Evans Bay, as originally proposed, or 355m into Cook Strait, as now proposed.

READ MORE:
Steve Sanderson: Extending the Wellington Airport runway is the only option
Wellington Airport has no ‘Plan B’ if $300m runway extension fails to fly
Airport claims not all planes need to be able to land on longer runway
Pilots challenge safety zones for proposed runway extension
Airport submits resource consent applications for $300m extension
Wellington Airport’s runway extension could pump $2b into the economy
Airlines label runway extension ‘wasteful from a national perspective’

Inflationary adjustment is not considered, nor any allowance for cost over-runs inevitable in a project of this size. A cost that never changes whatever the plan has zero credibility. The true cost will almost certainly be much more, maybe as much as $500m.

And who will pay? Sanderson says the economic modelling has been “compelling from our perspective”, and that the airport will be “funding its fair share of the cost”. An earlier statement from the airport company said  it would stump up $50m, about 17 per cent of the $300m estimate.

Considering that the airport owns two-thirds of the asset, and that owner Infratil is a huge global company with no shortage of investment funds, few would regard 17 per cent as a fair contribution. A proportional figure would be 67 per cent, or $200m, but the airport does not regard the venture as sufficiently profitable to warrant investing more than $50m.

Instead, it seeks $250m from the public purse in what is a stunning example of corporate welfare. The benefit accrues to the largely privately-owned airport by significantly enhancing its value, thus allowing it to hike airline, parking and other charges and reap an increased annual profit – largely at the expense of Wellington’s travelling public and business interests.

Infratil also benefits from owning a more valuable sale proposition.

Is it fair for public money to fund corporate profit and assets?

The ‘build it and they will come’ argument lacks credibility. Air NZ and BARNZ (Board of Airline Representatives New Zealand) are notably opposed to the project as being completely unviable.

BARNZ has a membership of 26 airlines flying in and out of NZ, and the judgment of such a broad group of primary airport users is weighty. The Government has also indicated the project is not a priority in terms of strategic significance.

A proper business case is essential to establish the actual costs and test the claimed benefits based on inflated passenger and revenue projections. It has cost Wellington ratepayers $3m so far to get the project to the resource consent stage. This is potentially wasted money if a robust business case finds it unviable.

What homeowner would spend big money to get resource consent for a home extension without knowing if the money was there to build it? The airport has put the cart before the horse.

Environmental issues are also a key concern. Lyall Bay is one of the cleanest pieces of ocean in the region. It is the habitat of the little blue penguin, giant kelp forests and other important marine life. The South Coast is a special environment in Wellington and has a marine reserve and its own management plan.

Dumping several million tonnes of rubble into the ocean will cause major environmental issues and ruin many recreational uses, including surfing and fishing.

Climate change concerns are another reason for improving existing connectivity rather than maximising flights.

There are better ways for the council to spend our money. Wellington has many attractions: international student numbers are up, visitor numbers are increasing and creative business ventures abound. Spending $300m to enhance business infrastructure, on earthquake strengthening, student resources and visitor experience would be of great benefit.

We are also a city that cares for people at the margins, as the council’s commitment to a living wage demonstrates. Money is urgently needed for social housing and support so that the homeless and marginalised may play a full role as citizens.

Steve Sanderson has encouraged Wellingtonians to make submissions to the Environment Court. Guardians of the Bays makes the same plea: make sure you ask questions of this project. This is your money, your city and we deserve a progressive vision that is built on something more than subsidising private companies.

Economic, environmental and social factors do not support the project. Other ways of improving the quality of life for Wellington’s residents and visitors alike are called for.

Opposition to the proposed runway extension is growing if attendance at the recent Guardians of the Bays information evening is anything to go by. A diverse range of groups, from business, community, recreational and environmental organisations are asking questions to peel away the public relations spin around the ill-conceived, expensive airport extension proposal.

Groups as diverse as Forest & Bird; various Residents’ Associations; Wellington businesses; Save the Basin; the Surfbreak Protection Society; Hue te Taka Society; OraTaiao: The NZ Climate & Health Council; the Wellington Underwater Club; 350.org and the Green Party, to name a few, were represented at last week’s meeting. It quickly became clear that everyone present was deeply concerned at the spin being put out by the airport company, and the potential cost it will have to ratepayers and taxpayers, and of course to the beautiful Wellington south coast.

The meeting was MCed by Bishop Richard Randerson, who has national standing for his work in faith-based and place-based communities. He made it clear that an airport extension does not make Wellington more progressive, particularly when the ratepayers and taxpayers are being asked to subsidise one of New Zealand’s wealthiest companies.

Dr Sea Rotmann, co-Chair of the Guardians of The Bays, outlined the group’s main areas of opposition in her presentation [gview file=”https://guardiansofthebays341400583.files.wordpress.com/2021/06/b54e9-gotb-info-evening-presentation.pdf”%5D where she blew away a few airport myths like:

  • There will be little impact on marine ecology – but their ‘experts’ didn’t even know that Moa Point was a breeding habitat for the critically-endangered reef heron, nor do they know what the infill material will contain.
  • There will be little impact on recreational activities – but they haven’t really done a great job at collecting the data to support this statement. Council officers have not yet referred the application to the Environment Court because there were so many inconsistencies and information gaps resulting in 46 questions and a further resource consent needed.
  • The extension will result in fewer greenhouse gas emissions – yeah right, especially seeing it is meant to increase long-haul passenger numbers by 16.1 million versus business as usual!
  • The extension will withstand rising sea levels and 8m waves – yet all you need to do is visit Lyall Bay in winter and you’ll see 10m+ waves on a regular basis, not to mention the issues around sea level rise and storm surges affecting all access roads to the airport.
  • Trust the airport and their ‘experts’, they know what they’re doing – this from an organisation that wasn’t even able to collect a full set of data because of the bad weather in Cook Strait, who have little idea what the infill material will be (but it may be contaminated dredge spoil from CentrePort), who wanted to hide construction noise under BAU aircraft activities, who didn’t know they needed a resource consent for stormwater discharge and who have commissioned 4 economic reports claiming bigger and bigger benefits, despite their methodology continually being savaged by an army of independent economists…

Tim Jones, who brings to the group valuable experience from the campaign against a proposed Basin Reserve flyover, ran over a few traffic facts – did you know that if the project goes ahead, 1.5 million m3 of fill will be transported from Horokiwi and Kiwi Point quarries by truck through central Wellington, along SH1 through both tunnels to the airport, often every 2 minutes and all during the night? And that the revised route through Vivian Street, Karo Drive, Wellington Road, Lyall Parade, Onepu Road, Rongotai Road, Evans Bay Parade may actually pose serious safety hazards?

Rob le Petit from the Surfbreak Protection Society reiterated the support of the surfing fraternity who love their surf and whose members include leading experts in planning, oceanography and the environment. Did you know that Lyall Bay is one of the birthplaces of NZ surfing, yet the airport are proving particularly sneaky by trying to make deals with the surfers promising them an untested ‘wave focusing device’ while on the other hand the airport is aggressively attacking the legal obligations that protect the Lyall Bay surf?

Keith Johnson is standing for Mayor because he is sickened by the lack of commitment by the current crop of would-be Mayoral contenders to fairness, accountability, economics and good governance. He is especially appalled by Wellington City Council’s championing of the runway extension. Dr Johnson is a transport economist and told the meeting that the cost-benefit-analysis ratio the airport has conjured up of 1.7 (now 2.3!) is nonsense and should more realistically be less than 1.

What’s more, not only do we not know how much it’s really going to cost, the benefits the airport wizards have created keep going up, up, up – like the length of the extension (or Pinocchio’s nose!) which has grown from 300m to 363m – yet the costs, we’re told, remain the same! We should be afraid, very afraid, about putting our trust into a project of this magnitude which carries so many uncertainties and risks.

Infratil lier plane

Wellington City Councillor and former airport planner David Lee asked who is going to fund this Great Big White Elephant? The Government’s said NO, the other Councils in the region have said MAYBE to the tune of $60m, with Wellington City Council earmarking $90m (in addition to the $3m they already paid up front). As David said – this level of corporate welfare STINKS. The big winner is the airport who is only contributing about $50m! And this still leaves a $100-150 million shortfall which Mayoral candidate Justin Lester is on record as saying that if the government doesn’t step in ratepayers, or investors – whoever they might be – will have to pay.

These are some of the many, many reasons why this airport runway extension is simply madness, and why so many diverse groups will fight it to the end. But the biggest killer of the project, seeing this is the whole reason why the Council is pushing this so much, was delivered by John Beckett, the Executive Director of the Board of Airline Representatives (BARNZ). BARNZ represents all 24 airlines that are flying into New Zealand, including the five that fly into Wellington.

John made it very clear that no long-haul airlines flying to New Zealand support this project, and the reason is simple economics: the aviation sector is extremely competitive with high costs and thin margins. Long-haul aircraft need high load factors in order to operate a route profitably. It is unlikely that any airline in Asia or North America would fly non-stop long haul into Wellington because the market is too small. Their first choice would be Auckland, and then Christchurch, on the grounds of population and proximity to tourism highlights. Wellington comes a distant third. As John pointed out, the route projections and cost-benefit analysis provided by the airport’s economists are overly optimistic, and BARNZ’s economic experts, NZIER, will be on hand to dismantle the airport’s arguments in court. Without additional flights attracted by the extension, it is also likely that airport charges will rise on all other routes into Wellington in order to cover the costs and profits.

To summarise why we need to keep asking questions about the proposed runway extension:

  • There is no proven demand for it and no long-haul airlines will come here and stay the course.
  • The real cost is not known and likely to be much more than the current forecast of $300 million.
  • The benefits are unreal and over-inflated – simply conjured up by the Airport wizards…
  • Only Wellington City Council has made a commitment to fund some of the extension, leaving a huge funding shortfall.
  • Wellington City ratepayers will pay for this folly disproportionately – in terms of inter-generational debt; cost overruns; interest charges; environmental, health and recreational impacts; ensuing traffic chaos; and cost increases for every passenger and anyone using the airport, for example when parking a car.
  • Wellington Airport is in a highly risky location, both in terms of safety and impacts from climate change such as rising sea levels and other environmental catastrophes, which are already endangering access.
  • It will destroy so much of what people most love about Wellington: the Lyall Bay surf, the rugged south coast, the little blue penguin and reef heron nesting habitats, fishing, diving and the collection of kai moana, not to mention the joy it brings to everyone when we get orca visitors
  • Climate change (which threatens our economy, health & well-being) and the global agreement to move towards zero net climate-damaging emissions have been completely ignored in the airport’s cost-benefit ‘analysis’.
  • The cost-benefit analysis, when done properly, shows an actual return of investment of less than 1. That means that this is a financial loser where we are set to gain less than a dollar for every dollar spent!
  • It represents economic incompetence on the part of our politicians whose lazy thinking sees the runway extension as the answer to all our economic woes – when they are the last people we should rely on to ‘pick winners’. Justin Lester even used the Chair of Infratil, the majority shareholder of the airport and a multi-national company, in his election video. And when he got asked about this on his facebook site, he swiftly deleted the questions!
  • It provides a corporate handout to a large, very wealthy company with a billion dollars to spend which it is choosing not to invest in Wellington’s runway extension. Infratil is laughing all the way to the bank because it thinks it is getting away with taking your rates for their airport, which will end up being poured down Cook Strait.
  • This is nothing but the badly thought-out vanity project of some politicians who want to ‘leave their legacy’ by building a Great Big White Elephant on our South Coast.

We have developed a handy submission guide that can be used by every person and group wanting to join us in the Environment Court to fight this environmentally damaging case and colossal waste of ratepayers money.

If you want to join us, please subscribe to the Guardians of the Bays and help us ensure that Wellington does progress – but in the smartest, most sustainable and positive ways, not with out-dated ‘think big’ projects and corporate welfare.

 

This report clearly shows why Christchurch, not Wellington, is the obvious second long-haul airport in New Zealand. In summary:

  • ChCh airport already has a well-established runway that can fly in large, long-haul planes safely
  • ChCh airport has no curfew and does not operate in the middle of the city
  • ChCh has greater tourism and manufacturing and industry importance than Wgtn
  • ChCh airport is higher ranked on most metrics than Wgtn: on ASKs (average seat km), seats and cargo payload
  • It also has a higher degree of choice for passengers
  • Emirates, Singapore, China Southern and Fiji airlines already fly long-haul from ChCh
  • It has much greater cargo capacity than Wgtn
  • It already has 3 runways and a completed major terminal upgrade
  • It is entirely in the public hand (75% City Council, 25% NZ Govt) and will remain so
  • Queenstown, not Wellington is its biggest competitor (but not for long-haul flights). Queenstown is the second busiest airport in the country already.

REPORT:

New Zealand is a remote country and Christchurch, on the South Island, a more remote city than either Auckland or Wellington. Being located at the far end of the world must impact on connectivity.

The government has transformed New Zealand from an agrarian economy into a more industrialised, free market one that can compete globally and Christchurch plays its part with specialised industrial and commercial activities. For these reasons, and others – notably tourism – the airport there has established itself as, at least jointly, the country’s second most important one. Christchurch airport has also played an important part in the city’s recovery from recent serious earthquake events.

This report examines Christchurch International Airport by way of several sets of metrics, looks at the airports that can be considered rivals to it, and at its construction activities and ownership.

An overview of New Zealand’s history and economy

The British colony of New Zealand became an independent dominion in 1907. It assumed a non-permanent seat on the UN Security Council for the 2015-16 term, an indicator of the progress by this small country of only 4.7 million people onto the global stage, a country the same size by population as Ireland or Costa Rica.

The islands of New Zealand are isolated from Australia across the 2000km (1200 mile) Tasman Sea, with Chile 9000 km to the east, Antarctica  to the south and – apart from a few South Pacific islands – the nearest northern landfall being far western Russia in the Bering Sea. New Zealand is about as remote and secluded as it gets for an economy to operate successfully. That remoteness ensured that it was one of the last places to be settled by humans.

Map locating Christchurch in relation to Wellington and Auckland, and New Zealand in relation to major Australian cities

The capital and administrative centre, Wellington, and the commercial one, Auckland, are both situated on the North Island, so the prospects for developing international air transport (especially direct flights) on the South Island at Christchurch must be adversely affected.

Over the past 30 years the government has transformed New Zealand from an agrarian economy, dependent on concessionary British market access, into a more industrialised, free market economy that can compete globally. This dynamic growth has boosted real incomes, and has broadened and deepened the technological capabilities of the industrial sector.

Per capita income rose for 10 consecutive years until 2007 but fell in 2008-09. Debt-driven consumer spending drove robust growth in the first half of the decade, fuelling a large balance of payments deficit that posed a challenge for policymakers. Inflationary pressures caused the central bank to raise its key rate steadily from Jan-2004 until it was among the highest in the OECD in 2007-08.

The economy fell into recession before the start of the global financial crisis and contracted for five consecutive quarters in 2008-09. In line with global peers the central bank cut interest rates aggressively and the government developed fiscal stimulus measures. The economy pulled out of recession in 2009, and achieved 2%-3% growth between 2011 and 2015. Nevertheless, key trade sectors remain vulnerable to weak external demand and lower commodity prices. In the aftermath of the Canterbury earthquakes (see below) the government has continued programmes to expand export markets, develop capital markets, and invest in innovation.

GDP growth fell slightly in 2015 and is projected to continue at 2.4-2.5% through the next five years. The following text and charts deal with the New Zealand economy in general.

GDP Growth of New Zealand (percentage change)

Inflation dipped to 0.3% in 2015 but is expected to rise to 1.5% in 2016.

Inflation and average consumer prices of New Zealand (percentage change)

The unemployment rate is expected to remain static during the next few years.

Unemployment rate of New Zealand (percentage of total labour force)

A  logical comparison is New Zealand with Australia. In 2015 Australia’s GDP growth rate was slightly higher than New Zealand’s at 2.37%. Inflation in Australia was much higher at 1.8%, while the unemployment rate was 0.5 percentage points higher than New Zealand’s.

Tourism – Asia Pacific overtakes traditional UK inward visitor market

The inward visitor market to New Zealand is dominated by Australia as might be expected. However, Asian markets have been growing strongly led by China, which now accounts for over 11% of visitors. China and the US have overtaken the traditional UK visitor market while the figure for Japan has risen to 2.8%, though that is still some way behind the UK’s percentage share. Of the top 12 visitor source countries eight are in Asia Pacific.

Visitor arrivals by market, 2015

After stagnating between 2010 and 2012 visitor numbers have been growing steadily.

New Zealand annual visitor arrivals, 2010-2015

Modern-day New Zealand is a developed country with a market economy that is dominated manufacturing and tourism, along with exports of dairy products, meat and wine. The nation is rated as a World Bank high income economy.

Auckland, on the North Island, is the largest and most populous urban area with a population of 1,454,300 – 32% of the national total. It is the largest Oceanian city outside Australia and is rated as a Beta World City. It is the economic capital of the country.

The capital city, administrative centre and second most populous urban area is Wellington (population 400,000), also on the North Island but at the south western tip, close to the Cook Strait between North and South Islands.

Christchurch – agriculture, light engineering and CIT are the main industries

Christchurch is the largest city on the South Island and is the seat of the Canterbury Region. The population is 381,800, making it New Zealand’s third most populous urban area.

The agricultural industry has always been at the economic centre of Christchurch, farming being part of the original ‘package’ by which New Zealand was sold to immigrants. The high quality of local wine has increased the appeal of Canterbury and Christchurch to tourists.

Christchurch is also the second largest manufacturing centre in New Zealand

However, Christchurch is also the second largest manufacturing centre in New Zealand after Auckland, the sector being also the second largest contributor to the local economy. While heavy engineering including steel work once predominated, manufacturing is now mainly of light products and the key market is Australia. Before clothing manufacture largely moved to Asia Christchurch was the centre of the New Zealand clothing industry. The firms that remain mostly design and market their goods, with manufacture taking place in Asia.

In the last few decades technology-based industries have sprung up in Christchurch, including mobile phones and software. Locally and nationally the IT sector is known not for its size (being the third largest in New Zealand), but for producing innovative, entrepreneurial solutions, products and concepts.

Tourism is also a significant part of the local economy. Its hotels, a casino, the close proximity of the ski fields and other attractions of the Southern Alps and other factors make Christchurch a stopover point or destination for many tourists. The city is particularly popular with Japanese tourists. In this respect, having an airport that meets international standards is a clear requisite.

The city was rocked by two major earthquakes – in Sep-2010 and Feb-2011. The second caused most of the damage and casualties and an insurance bill of up to NZD30 billion. Smaller earthquakes have frequently affected the city and region since then, and 4500 of them were recorded in the Canterbury region in a four year period between 2010 and 2014.

However, the city has experienced rapid growth following the earthquakes. The central city rebuild has been gaining in momentum and there has been big growth in the residential sector, with approximately 50,000 new houses expected to be constructed in the Greater Christchurch area by 2028. The airport was widely praised for the way its emergency plan dealt with the effects of the two largest earthquakes.

These airport profiles often contrast and compare the target airport with a set of peer airports, nationally or internationally or both.

In this instance the selected airports are Auckland and Wellington within New Zealand. Additionally: Brisbane in Australia (the centre of a tourism industry, as is Christchurch), and Perth in Australia because it is similarly remotely situated away from the economic and aviation hubs of the eastern part of Australia.

The two tables below compare these airports.

Some are O&D airports handling tourism or business traffic or both. Others are hubs, though this is at a minor level on a global scale.

Rankings by assorted metrics (1):  

Airport/metric world ranking Type ASKs Seats Frequencies Cargo payload Pax 2015 (unless stated) (million) City population (million)
Christchurch O&D 279 266 227 295 6.1 0.4
Auckland O&D/hub 60 114 115 109 16.3 1.5
Wellington O&D/hub 372 270 192 339 5.7 0.5
Brisbane O&D 66 85 85 94 22.2 3.4
Perth O&D/hub 77 147 180 118 13.8 2.2

Within New Zealand it can be seen that Christchurch has a greater aeronautical impact than does Wellington, though both trail Auckland. That Christchurch is almost 100 places higher in the ASK ranking than Wellington is testimony to its ability to attract long haul flights. Notably, the Australian market is significantly larger all round, whether expressed in terms of population or aviation metrics.

The table below summarises Christchurch International Airport’s (CIA’s) route network and the table below that compares CIA with its peer group in network terms.

Christchurch International Airport, network summary (at 26-Apr-2016)

Total Airlines 9
    Domestic only 1
    International 8
Total nonstop passenger destinations 23
    Domestic 15
    Africa 0
    Asia Pacific 8
    Europe 0
    Latin America 0
    Middle East 0
    North America 0
Total nonstop freight destinations 2
    Domestic 1
    Africa 0
    Asia Pacific 1
    Europe 0
    Latin America 0
    Middle East 0
    North America 0

Rankings of selected peer airports with Christchurch airport, by assorted metrics (2): 

Airport Total airlines Pax traffic 2015 (unless stated) (million) Airline to pax ratio International airlines Nonstop passenger destinations Nonstop freight destinations
Christchurch 9 6.1 0.67 8 23 2
Auckland 24 16.3 0.68 23 52 6
Wellington 7 5.7 0.81 5 24 0
Brisbane 26 22.2 0.85 21 61 6
Perth 23 13.8 0.6 21 38 1

A low reading in the airline to pax ratio column can indicate a higher degree of choice for passengers at any individual airport, and Christchurch has one of the lowest of the group.

The table shows that Christchurch has three more international airlines operating than Wellington, although the number of international destinations is similar.

Again, the clear leader in all categories in New Zealand is Auckland Airport, although that airport is smaller in its size and scope than Brisbane.

Seat capacity growth overtaken by traffic growth in 2015

Seat capacity has been growing at a rate of a little over 5% per annum for the last two years, after a previous year of static growth.

CIA, seats capacity year-on-year, system-wide

Passenger traffic figures rose less quickly than capacity in 2014, but at a slightly higher rate than capacity in 2015 (+5.4%).

Christchurch International Airport, annual passenger numbers

22% of seat capacity at CIA is domestic. Christchurch serves a wide variety of domestic airports, approximately 15 in all and including the Chatham Islands to the east.

Christchurch International Airport, international vs. domestic capacity seats share (25-Apr-2016 to 1-May-2016)

Air New Zealand has two thirds of total seat capacity

Christchurch is one of three Air New Zealand hubs and the airline dominates capacity at CIA, with a  67.2% share. The range in capacity is vast, with Air New Zealand having 103,000 seats in this chart period and Air Chathams – just 100.

Jetstar Airways, the Qantas Group LCC subsidiary, is the second largest airline and operates domestic services.

Otherwise no airline has over 4.1% of capacity, as is the case with Virgin Australia, Australia’s second largest airline, whose Virgin Australia NZ division (previously Pacific Blue) was integrated back into Virgin Australia in Aug-2014.

Intercontinental airlines such as Emirates, Singapore Airlines, China Southern and Fiji Airways have an important role to play: keeping Christchurch/Canterbury connected to the wider world and sponsoring greater trade. However, their combined contribution in capacity terms comes to only 7% of the total.

CIA capacity seats, per week, system, all airlines, 25-Apr-2016 to 01-May-2016

In terms of regional seat capacity the Southwest Pacific region has easily the greatest number of seats, followed by Southeast Asia and Northeast Asia respectively. (The Middle East is not shown because Emirates flies via Sydney and Bangkok, so seats are registered to/from Southeast Asia). The lack of direct services to and from Europe is evident and that region is catered for indirectly by connections via Auckland, Australia, Singapore and the Middle East.

In the current climate of airline cooperation either via formal alliances, code shares or by ad hoc ‘beyond code share’ arrangements it would be economically difficult to justify a direct nonstop service, even using a B787 or A350, and even if the aircraft had the range. Similarly with flights to North America, which can be taken in a range of other indirect ways.

Individually, Australia has the greatest capacity (27682 seats) and Fiji the least (668).

CAI capacity seats by region, 25-Apr-2016 to 01-May-2016

This scenario is clarified further in the seat capacity ‘heat map’ below.

CAI international capacity seats by region ‘heat map’, 25-Apr-2016 to 01-May-2016

CIA’s current route network appears below. Again it emphasises the locality of the majority of air services and the small number of intercontinental connections, though these are important.

Nonstop connectivity – total number of services the same as at Wellington

The chart below again shows clearly how all the direct, nonstop services at CIA are to and from the Asia Pacific region. The total number of services is the same as at Wellington. There are no direct services to Europe from any of the peer group airports, though there are five to North America from Auckland.

Nonstop connectivity values of Christchurch, Auckland, Wellington, Brisbane and Perth departing airports for 25-Apr-2016 to 01-May-2016

Mainly a ‘full service’ airport

Four fifths of seats at CIA are on full service airlines, with almost all the remainder on LCCs.

CIA capacity seat share by airline type (system), 25-Apr-2016 to 01-May-2016

The table below compares that traffic split with the airport’s peer-competitors.

Comparison of selected airports by airline type – seat availability, 25-Apr-2016 to 01-May-2016  

Airport % of seats on FSCs % of seats on LCCs % of seats on other modes (e.g. regional, charter airlines) Clarification of previous column
Christchurch 80.1 19.8 0.1 Regional/commuter
Auckland 84.6 18.3 0.1 Regional/commuter
Wellington 79.0 18.9 2.1 Regional/commuter
Brisbane 86.1 13.6 0.3 Regional/commuter and charter
Perth 81.1 17.6 1.3 Regional/commuter and charter

This picture formed by this table is the most consistent of any produced in the series of airport profiles that has been published in the last six months (most of which were in Europe and the US). It is indicative of the way that low cost aviation has grown in both New Zealand and Australia but without supplanting full service airlines to a great extent. The percentage range for low cost is just 6.2 percentage points.

The table says little that differentiates Christchurch from the capital city airport or the chief commercial city airport in New Zealand.

Star is the dominant alliance

The main airline alliance at CIA is Star Alliance, through representation by Air New Zealand and, to a lesser degree, by Singapore Airlines. The alliance holds almost 70% of seat capacity, with hardly any representation from oneworld or SkyTeam. 28% of capacity is on unaligned airlines.

CIA capacity seats share by alliance (system), 25-Apr-2016 to 01-May-2016

The table below shows how these data compare with the peer group.

Comparison of CIA with selected peer group airports by alliance penetration – seat availability, 25-Apr-2016 to 01-May-2016

Airport % of seats on unaligned airlines % of seats on aligned airlines
Christchurch 27.8 72.2
Auckland 27.3 72.7
Wellington 24.7 75.3
Brisbane 54.1 45.9
Perth 54.9 45.1

Once again there is an evident and striking commonality between the three New Zealand airports, though this is doubtless brought about by the power of Air New Zealand in its home country. It is noticeable that the aligned airlines’ percentage figure is much lower at the two Australian peer group airports.

Seating types – a surprising lack of business class seats

Perhaps surprisingly, given Christchurch’s status as the South Islands’ chief economic driver, there are no first class seats into or out of Christchurch International Airport and the share of business class seating there is just 1.1%, compared with 4.4% at Auckland. (The worldwide average is 4.1%). Having said that, the business class percentage at Wellington is only 0.5%.

First class is almost completely absent from all of the peer group airports, amounting to just 0.2% at Auckland. Premium economy features at Auckland (1.9%, mainly on long haul services) but not at Christchurch or Wellington.

CIA schedule by class of seat – one-way weekly departing (airport comparison by seat type), (25-Apr-2016 to 01-May-2016)

Cargo – a greater balance between international and domestic capacity

As with passenger capacity cargo capacity has also increased steadily during the last three years, including an increase of 27.3% between 2013 and 2014. However, international cargo capacity is much greater than it is in the passenger arena, with domestic and international capacity balanced at 51.6%:48.4% respectively.

CIA total international capacity (cargo payload kg) by country, 25-Apr-2016 to 01-May-2016

While designated air freighters do visit CIA, according to OAG 100% of freight capacity is in passenger aircraft underbelly.

Again, Southwest Pacific is the major market as measured by capacity, but in this instance the percentage ratio has fallen in favour of Southeast Asia and North Asia.

CIA total international capacity (Cargo payload kg) by region 25-Apr-2016 to 01-May-2016

The largest single country markets by volume capacity are Australia (68.6%), Singapore, China, and Fiji. Sydney and Singapore are the top two routes.

Operational characteristics

CIA is unusual within the context of the CAPA airport profiles, being curfew-free and operating 24 hours a day

CIA is unusual within the context of the CAPA airport profiles, being curfew-free and operating 24 hours a day. It is situated in a suburb, Harewood, but 12 km (7.5 miles) from downtown.

This flexibility is partially exploited, in the sense that it permits early arrival of ‘red eye’ international and intercontinental services or departure of services requiring an early start. For example it is evident from the chart below for a typical day (Thursday 28-Apr-2016) that the second peakiest of the four peak hours is 0600-0700, when all activity is geared towards departures.

While the balance between arriving and departing passengers (the actual measure here is seat capacity) is fairly equal, there are occasions when it gets out of kilter. On the other hand, there is not such a degree of peakiness that further long haul services would find it difficult to operate. (Christchurch is the only other airport apart from Auckland that is capable of handling Boeing 777 and Boeing 747 aircraft in regular service).

CIA seats per hour total system, all airlines, all terminals, all origins/destinations, typical day: Thursday 28-Apr-2016

Despite the presence of long haul services, seat availability is distributed mainly in favour of flights of up to two hours’ duration. The total cumulative percentage of seat availability on flights in excess of four hours is only 3.8%.

CIA seats by length of flight (system), 25-Apr-2016 to 01-May-2016

In no uncertain terms the final chart in this section shows the intense focus on flights – and frequencies – within a short timeframe of up to 3.5 hours.

CIA frequencies (system), 25-Apr-2016 to 01-May-2016

Terminals and construction

Much of the infrastructure at CIA is in place.

The airport has two runways perpendicular to each other: a 3288 m primary runway (02/20) orientated with the north-easterly and south-westerly prevailing winds, and a 1741 m secondary runway (11/29) orientated for use during ‘nor’westers.’ The airport also has a third grass runway parallel to the primary runway, for use by general aviation.

Owing to increasing passenger numbers the airport has completed construction of a major terminal upgrade. The new construction’s primary wing opened in 2011 and the upgrade was completed in 2013 replacing the old domestic terminal and international check-in and the baggage handling infrastructure. The cost was NZD237 million (USD200 million). At the same time the airport changed its branding from Christchurch International Airport to Christchurch Airport, though it is still known internationally by its former name and the low-key rebranding may not have been as successful as hoped for.

According to the CAPA Airport Construction Database there is no significant construction activity at present. There is some maintenance work taking place on the north-south runway that is scheduled to complete soon. Otherwise, most of the activity has been in the development of the NZD25 million (USD21 million) Spitfire Square retail development of 17 stores.

The airport company will build a new Novotel hotel with 200 rooms on campus by the main terminal, to open at the end of 2017.

CIA has a 10 year strategic plan which is intended to enable it to grow its position, functioning on ‘innovation.’ This suggests that further construction activities are not required in the short- to mid-term, despite significant traffic increases recently.

Both locally and nationally there has been criticism of Wellington Airport’s proposal to extend its runway at a cost of NZD300 million (USD240 million). This criticism has been on the basis that “the probability of them [airlines] commercially wanting to fly a lot more flights out of Wellington is limited because they can already fly people to Auckland and Christchurch at reduced costs”, according to the Prime Minister, John Key.

Ownership – staying in the public sector

Christchurch International Airport Limited was established in 1988 as a company owned 75% by the Christchurch City Council and 25% by the New Zealand Government. Thus far it has avoided being lured into any form of privatisation, unlike Auckland Airport (Auckland City Council, Manukau City Council and publicly listed shares) and Wellington Airport (Wellington City Council/Infratil).

There have been several proposals that the airport should be sold in order to help out a cash-strapped council, but there is considerable resistance to those proposals.

Recently released financials for 2H2015 show tourism driving half-yearly profit up by 63.6% to NZD16.2 million, on a revenue increase of 12.2%.

Queenstown the beneficiary of Christchurch’s exposure to earthquakes

As mentioned previously, Christchurch remains heavily impacted from the earthquakes and attracting tourists back there is a challenge. Prospective intercontinental airlines may still be hesitant to go into Christchurch for the moment.

Queenstown Airport is taking advantage of this scenario and has grown significantly as an up-and-coming rival to be the gateway to the South Island. It is New Zealand’s fourth busiest airport.

Queenstown Airport serves the city of Queenstown, about 400 km southwest of Christchurch. The surrounding region is a popular adventure tourism destination, with some of New Zealand’s best ski fields, facilities for mountain biking and hiking locations. The airport commonly sees an influx in international traffic during the winter months, but is also experiencing growth in the summer as LCCs expand to/from the airport. New Zealand’s second-busiest airport by aircraft movements, Queenstown is served by Air New Zealand, Qantas, Jetstar, and Virgin Australia.

Traffic has been growing steadily in recent years, by 8.3% between 2013 and 2014 and by 14.3% between 2014 and 2015, compared with +3.5%/+5.4% at Christchurch. While traffic statistics are at the same level as 2008/9 international passengers have doubled in number.

Queenstown Airport annual – Passenger numbers

In Jun-2015, the airport opened a new international terminal and turned to its next initiative – to introduce evening flights by winter 2016. Evening flights will allow the airport to expand its capacity further without building additional terminal infrastructure in the short term and take advantage of its full consented operational hours between 06:00 and 22:00, moving from an approximate 8-hour operating window during the winter peak to a 16-hour operating window. Air New Zealand operated the first evening flight into Queenstown Airport on 30-Apr-2016 in preparation for scheduled services commencing on 23-May-2016.

There are two issues that mitigate against Queenstown establishing itself as the primary airport for the South Island

There are two issues that mitigate against Queenstown establishing itself as the primary airport for the South Island. Firstly, it cannot handle wide body/long-haul services, so it is restricted to visitors arriving from other points in New Zealand or from Australia. There are however transfer agreements in place such as the North Asia Alliance Agreement between Air New Zealand and Cathay Pacific, which has been extended through until Oct-2019.

Secondly, tourism accounts for much of its traffic. It is not a primary commercial centre as Christchurch is.

So Queenstown is and will remain a challenge for Christchurch in the future though not one that is insurmountable as long as the Canterbury region avoids more earthquake events.

Summary & Conclusions

  • New Zealand is a remote country and Christchurch is yet more ‘remote’, in the sense of distant, than Auckland or Wellington. Being located at the end of the world must impact on connectivity. In some directions there is nowhere to go.
  • The government has transformed New Zealand from an agrarian economy to a more industrialised, free market economy that can compete globally. However, the economy in and around Christchurch is still based on agriculture, although supplemented by light industry and CIT businesses that enable it to stand alone.
  • The tourism market remains dominated by inbound from Australia but is swinging slowly in favour of North Asian countries. Visitor numbers continue to grow steadily.
  • Christchurch remains in recovery mode after a series of large earthquakes in 2010 and 2011 and the airport has played a large part in supporting that recovery.
  • Overall, Christchurch has a greater aviation impact as measured by various metrics than does the capital city airport, Wellington. For example, the number of routes is the same and it hosts more international airlines operating there.
  • Seat capacity has been growing by an average of 5% in the last two years, with traffic growth slightly beating that figure in 2015.
  • Christchurch airport serves a very wide variety of domestic routes and Air New Zealand has the lion’s share of capacity at the airport.
  • Intercontinental airlines play an important role, but the sum of their seat capacity is only 7%.
  • There is a lack of direct air services to both Europe and North America but such services would be impractical in the current economic climate, and when many destinations can be accessed indirectly through mid-distance hubs.
  • In terms of the impact of low cost airlines there is nothing to differentiate Christchurch from Auckland or Wellington airports.
  • Because of Air New Zealand’s membership, Star Alliance is the dominant alliance.
  • The balance between domestic and international cargo capacity is a fine one.
  • There is no curfew at the airport and there are opportunities for other long haul services to operate if economically justifiable.
  • Most flights and frequencies are condensed into a time frame up to three hours.
  • For the time being most of the infrastructure is in place; construction activities are limited to retail development and runway maintenance. However, CIA has a 10 year strategic plan which is intended to enable it to grow its position, functioning on ‘innovation’.
  • The airport is in public ownership and looks set to stay that way
  • Queenstown Airport, at the centre of a flourishing tourist trade, presents a challenge to Christchurch Airport.

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!

From: Air NZ brings international expert to warn on Wellington runway extension

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.”

We have submitted the following to the WCC’s Annual Plan – as they were asking for ‘good ideas’ from the community of how to spend our money better. It may be largely lip-service, seeing the Council has gotten a lot of flak recently over their public ‘consultation’ (or lack thereof) processes, but we felt it was important to continue to engage with the Council and to use this democratic process.

Dr Sea Rotmann, our Co-Chair spoke to the submission and Clive Anstey had also sent it round to every Councillor with a cover letter beforehand. Councillor Andy Foster, to his credit, replied with an immediate and thoughtful response, outlining the many caveats that would still need to be met before the Council would decide to spend the $90m that were already earmarked for this proposal in the Long Term Plan. He also spoke to Dr Rotmann and Mr Anstey during the break, which may have been a bit of a mistake: He told them that his mind was still completely open (good!) but that he wasn’t sure that emotions (on both sides) weren’t getting in the way of the facts (our main emotion is frustration that the airport’s ‘facts’ are largely based on obfuscation, spin and misinformation, but OK). As example, he gave the issue that was raised very eloquently by a previous speaker who asked the Council to ensure that they would get the dividends they deserve for their shareholding, not the peanuts they actually got from the airport once its creative accountants were done with it. Councillor Foster also said that the Council would be satisfied with little more but a ‘handshake’ commitment from airlines instead of an actual signed contract, which would be needed in order to get a proper business case through the Treasury guidelines. We clearly told him that the public (and the Central Government who is meant to co-fund this White Elephant) certainly would not be happy with such a ‘nudge, wink’ deal seeing the amount of public money that was at stake – and the many airports in NZ and overseas that have failed to materialise the promised planes after extending their runways.

When Dr Rotmann went to speak, she had the 2015 WIAL Annual Report figures open on her phone. In response to Andy Foster’s claim that the Council was getting its fair share of dividends from the airport, here are the actual numbers: WIAL made $108m in profit; has $842m in assets; $438m in equity and the Council got a measly $12m in dividends. We reminded the Councillors that they had paid 50% of ratepayer money towards the airport’s resource consent reports and the Region said it would put up half of the cost of the runway extension ($150m – $90m by WCC and $60m by the other Councils, none of whom have put any money for it aside in their long-term plans, however). That is despite the (widely discredited) cost-benefit analysis by Sapere claiming that only 1/3 of the benefits would actually stay in the Region.

Dr Rotmann also raised some very good questions about what the Council’s actual job was: Was it to use public money for the common good, e.g. ensuring that the Commons and infrastructure issues such as sewerage, traffic congestion, earthquake strengthening and mitigating climate change impacts such as rising sea levels were taken care of? Or: to throw public money at a private company with billion dollar assets  – without a business case, without proper consultation and without transparent oversight – because politicians regard it as a ‘sexier’, vanity project that will make them look like they’re doing something for ‘economic growth’ during an election year?

She then asked the very pertinent question that all Councillors who had read the 27 airport reports should raise their hands. Unsurprisingly, not one hand went up. Dr Rotmann had read the reports and reminded the Council that, as a scientist holding a PhD on environmental impacts on the marine environment, she was rather uniquely qualified to comment on some of them. She reiterated some of the many failings and holes that the reports clearly showed: insufficient data collection; the inability (due to ‘adverse Cook Strait conditions’) to complete even one of the seismic boreholes that needed to be undertaken to establish that the geomorphology in Lyall Bay was actually capable of taking the 3 million tonnes of rubble safely; comments on the (apparently minor) impact on the marine habitat without knowing the actual quality and composition of the infill that was to be dumped into the bay; the design not having been locked down; different runway lengths being given etc. The faces of the Councillors did suggest that some concern was raised when she said that these reports would not stand up in Court, as they were.

Dr Rotmann implored the Council to insist that independent (i.e. by including community groups such as the Guardians when choosing the experts) peer-reviews and more data collection had to be undertaken before heading to a resource consent hearing. She also reminded the Councillors that their own cost-benefit analysis showed that if we waited ten years, we would get almost the same amount of benefits but without taking many of the risks. For example, we’d then know how well the (Council-subsidised) Singapore-Canberra route was actually going; we’d know of any technological advances that could mean we may be able to fly long-haul without an extension; we’d know further impacts from global climate change decisions such as including aviation emissions in carbon trading schemes etc. Even if we put just our $150m into the bank, by 2060 (when the cost-benefit analysis said we’d be $2b better off, NZ-wide, after spending at least $300m) we’d get over $2b in interest and the whole amount would actually go to the Region! So, for half the cost and none of the risks, we could get the same benefits! Maybe Justin Lester should start talking to Kiwibank about long-term deposit rates instead of handing out secret sweeteners to airlines?

The main point that we are making is this: the Council does not have the mandate to throw public money at a private company without very clearly being able to show that the benefits stack up (this includes a full business case and contractually committed airlines, as well as all costing and funding issues being ironed out); that the benefits far outweigh the many social and environmental impacts of a project such as this; that public consultation and due diligence has been undertaken at all the steps, including independent peer reviews; and that the facts and data are collected following the scientific method and not wishful thinking, grossly overstated assumptions and a fantasy that if ‘we build it, they will come’. Politicians like sexy projects, they like big projects that show that they are ‘getting things done’. Dealing with our massive sewerage, traffic and natural disaster preparedness issues may not be anywhere near as sexy as the ‘Lester/Wade-Brown runway extension’, but are what the actual mandate of the City Council and its elected officials is. Incidentally, all these isseus (sewerage, traffic and natural disaster preparedness) are NEGATIVELY impacted upon by the proposed extension!

So please, dear Councillors: Stop the corporate handouts (including throwing almost $10m of ratepayer money from a non-transparent slush fund at the world’s third largest airline with a Singapore head quarter) and stop calling opponents asking for transparent processes and proper facts and figures as being “Anti-Wellington” in the media. This is unbecoming of a Councillor’s job – it is hard enough to fight the spin and willful obfuscation of facts when it is coming from a billion dollar multinational. But it is an outrage when community groups looking out for the ratepayers’ interests get treated so unfairly by their elected officials. You can do better, City Council(lors)!

The esteemed Wellington City Councillors during the Annual Plan hearings

Our written submission to WCC in full:

The Wellington region faces significant infrastructure and environmental pressures which require huge investment and the proposed $150 million of regional money would be far better directed towards any of these. Such as:

  • Replacing stormwater and sewerage infrastructure and carrying out further earthquake strengthening in our CBD.
  • Addressing traffic bottlenecks – which would be exacerbated by the extra ‘truck a minute’ which would be using SH1 for three years if the runway extension proceeds.
  • Preparing for the forecast sea level rises on large parts of our coast. An issue supported by significant scientific data – and which is predicted to affect both main access roads to the airport.

These, and other issues, are already having significant negative impacts across the region – and will only worsen if not addressed.

By contrast, there are many factors regarding the extension plan which are still very much unknown quantities. These include:

  • Adopting a “build it and they will come” approach to a proposal when no major airline has suggested they will fly long-haul to Wellington.
  • It is not yet known how well the Singapore-Canberra flights will perform without subsidies such as the waiving of landing fees, marketing support and the direct subsidy by ‘Destination Wellington’. The precautionary principle would be to wait for firm results from this before pressing ahead with an extension proposal.
  • It is highly likely that aviation and shipping emissions will finally be taken into carbon accounting. This will have a huge impact on the aviation industry, especially on such a far-flung minor destination as Wellington.
  • The MBIE surf impact research is yet to be undertaken at Lyall Bay. The results of this need to be available before ‘solutions’ are offered to surfers. If not, the outcome could be a potentially unsatisfactory solution that may destroy the recreational value of this bay forever.
  • To date, the airport has only carried out a single seismic borehole to determine the geomorphology of the bay. We understand further boring was prevented by bad weather. Further boreholes should be undertaken before more ratepayer money is committed to a project that may be deemed too unsafe to proceed with.
  • The actual infill sediment composition needs to be tested before any assessment can be made on possible impacts on the marine fauna.
  • To date, all serious independent economists that have reviewed Sapere’s report have concluded the benefits are likely to be negative. It is essential to have realistic numbers for the market catchment and thus passenger forecast of the Wellington region before progressing with an extension plan.

Furthermore, the airport itself requires attention in other areas, particularly the Southern end of the runway. Much could be done to make the runway tunnel and breakwater safer. The flimsy ‘build it and they will come’ approach that is currently being taken to the proposed extension project should also be a cause for great concern. Even the New Zealand Airline Pilots’ Association – and let’s face it, no organisation is better placed to comment on the proposed extension’s safety – has stated that it would not be safe for long-haul flights without the entire bay being filled in. This would cost around half a billion dollars and surely be seen as uneconomical for one extra flight a day.

Singapore Airlines seems to be coming anyway – although, as mentioned previously, it’s a case of ‘wait and see’ regarding operating without the airport and Council subsidy. It can also rely on extra numbers from Canberra and has obviously not regarded either Capital as being a valid business case to fly to directly. So why is an extension deemed necessary?

We call on you to listen to public concerns, listen to the Pilots Association, read all the reports which are available – not just those prepared by the airport – with a critical eye and get them peer-reviewed. Stop repeating airport ‘spin’ as fact. It is essential to take into account that the airport’s mandate is to make money by getting the public to pay for this extension to their asset base. Your mandate is to protect public interest from private machinations. Public money should not be spent on corporate welfare, particularly one built on flimsy foundations which currently do not stand up to scrutiny.

How else will Wellington benefit from your idea:

Using the money currently earmarked for the extension on issues such as stormwater, traffic and natural disaster resilience, would result in a safer, more liveable and smarter city. Wellington could then be promoted as a smart, green liveable city, encouraging new residents and greater visitor numbers.

The alternative is potentially a huge white elephant on the South Coast and a vast waste of public money, the damaging effects of which would reverberate for generations to come.

pollyanna

For years now, Wellington International Airport and it’s pet monkey the Wellington City Council have been pushing for an airport extension. And for years now, it hasn’t stacked up. No small wonder when the New Zealand Institute of Economic Research (NZIER) and the Board of Airlines Representatives of New Zealand (BARNZ) slammed the business case that the Pollyanna Team had put together in support of the extension.

The WCC has poured millions after millions into this project paying for reports that have been slammed every time they are produced. This airport extension does not stack up, for anyone, other than Infratil.

Key Finding: the central scenario BCR of 1.7 is significantly over-stated.

The reason that it stacks up for Infratil is that they, being in a monopoly position, can take profit based on square meterage. This is governed by the Commerce Commission. The more land they have the more profit they can take. It is no small wonder then that attempting to secure thousands of extra square meters, with the public paying far more than their fair share, is attractive.

There are numerous gaps in the draft analysis.

But the Council continues to support the extension despite the evidence showing that it is not economically viable. Why?

The value of these benefits is overstated by $610 – 730 million through not properly accounting for the opportunity cost of labour, plant and machinery.

Having worked for Infratil (get the HR records out, boys) and knowing the WCC particularly well, both, in my opinion, suffer from the Pollyanna Principle and the Overconfidence effect.

People suffering from the Pollyanna Principle are simply not capable of seeing the bad. Generally, people focus consciously on the positive, while sub-consciously on the negative. Those suffering from Pollyannaism subconsciously focus on the positive.

The forecasts of additional passenger volumes (1.25 million) are too high by a factor that may be up to 5. More conservative, and we believe more reasonable, estimates would see around 250,000 additional passengers coming into Wellington.

The Overconfidence Effect is characterised by three symptoms. First, thinking that you are cleverer than everyone else. Second, overestimating your performance. Third, the excessive certainty that you are right.

Sound like two organisations we all know and love?

We are also only too well aware that Wellington Airport is free to set prices as it sees fit. Even if it complies with the Commerce Commission’s guidelines, it can set its total aeronautical revenue to provide a return of about 8.5% after tax on an investment in an extension of the runway. With little additional revenue from airlines needing the extension, the revenue would be obtained by lifting charges on all other services — narrow bodied international, domestic trunk and regional services.

“But what of the Councillors and Mayor?” you ask, “Surely they can see this is a gigantic lemon?”

Well, yes. But to date, only two of them have asked any hard questions on the extension: David Lee and Helene Ritchie. The fanboys number the Mayor, the Deputy Mayor, Jo Coughlan, and Simon Marsh. All who appear to be suffering from Pollyannaism.

BARNZ is therefore concerned that the airport could invest in a wasteful project, knowing that it can use its monopoly power to increase prices on all services into Wellington and derive profits from retailing, car-parking and taxis to make a handsome return on a socially uneconomic project. BARNZ therefore advises the airport that, with no known airline demand for a longer runway, the project is highly speculative and should not proceed.

Let’s get something else straight here. BARNZ represents twenty-two long-haul airlines and has said before, that even if the extension is built, they won’t use it. This is not about competition, Air New Zealand, Qantas, Singapore Airlines and Jetstar are all members.

It’s about BARNZ figuring out if this is a good deal for their members. If it was, then they would support it, if it wasn’t. Well. Read the report.

The NZIER is a well-respected company.

Are we saying that both have some conspiratorial end-game they are trying to push? Are the WIAL and WCC saying both are liars?

Neither is this about NIMBYs, unless you consider every ratepayer in Wellington to be one.

Hong Kong, which would not have enough connecting traffic to the west if there were already a direct long haul route to Singapore. Los Angeles, which the Inter VISTAS report says would only be viable for half the year, which would render it not viable. Dubai via Melbourne, which does not need an extension of the runway because Melbourne is already reached by narrow bodied aircraft from Wellington. Kuala Lumpur, which would not be viable if there is already a direct long haul route established to Singapore. It would be unlikely that there would be sufficient traffic for both hubs. Bangkok, which would not be viable for the same reason as Kuala Lumpur. Adelaide, which can already be reached without the runway extension.

It is clearly time that the Mayor and Councillors walked away from this shambles. We have poured millions into this project and the answer is really simple.

It doesn’t stack up.

BARNZ is calling on the airport’s shareholders to stop pursuing public subsidies and instead concentrate on providing efficient airport services for Wellington, enabling the city to be well connected at a reasonable cost to travellers.

The airport and fanboys have displayed a total unwillingness to answer any of these questions nor any of the previous ones. The rap sheet against the extension is now pages long.

The only question in my mind is if that Pollyannaism and Overconfidence Effect is going to cause the ratepayers to stump up hundreds of millions for a private company on a white elephant.

It’s possible. Look at the Island Bay cycleway.

These two organisations aren’t exactly rocket scientists are they? Why would we trust them with hundreds of millions of our cash?

If this was such a fantastic idea, why don’t Infratil stump up with the cash themselves?

Because it doesn’t stack up. And it never will.

Sources: 

BARNZ Submission to Wellington Airport

NZIER: Stretching Runway Numbers

BARNZ Press Release

jimjones

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.