An over-optimistic take-off

graph

by Neil Douglas
An aspect of the recent print advertising for Wellington Airport has been disingenuous.

The airport’s take-off graph of passenger numbers is far too steep, because the ‘runway’ – the horizontal axis – has been foreshortened, giving the same ‘distance’ between 2020 and 2030 as that for 2010 and 2015, when it should in fact be double the distance.

Not only that, but if the observed straight line growth between 1989 and 2010 is extrapolated, as would be the normal procedure in road traffic forecasting, only 7.4 million passengers would be using the airport in 2030 and not the 10 million as the advertising would have us believe.

Top graph: I have prepared this more realistic take-off graph for future Wellington airport patronage.

Dr Neil Douglas is a Wellington-based transport economist.

Wellington.Scoop
Take-offs are also an issue for the airport’s optimistic plans to extend its runway into Evans Bay. Caution about the plans came in a Wellingtonian interview in July when a former pilot and airline inspector warned about regulations affecting takeoff gradients.

There are other dissenting voices. After a recent enthusiastic article in the DomPost by the Chamber of Commerce’s cheer-leading Raewyn Bleakley, three letters offered a different spin.

“The first rule of business is to ensure there’s a market for what’s intended to be bult or made,” wrote John Westwood. “How many airlines have said they’d use an extended runway for long-distance flights? I haven’t read of any.”

“Grossly inflated claims of economic benefit in the BERL report don’t stack up,” wrote Steve Mahoney. “It seems some naive councillors … have fallen for a slick powerpoint presentation and are about to buy a pup from some big business boys.”

“A case has not been established to convince anyone that the extension is essential,” wrote Stan Andis. “No … airline is queuing up for landing rights, so why should the Wellington extension be regarded as a special case? Let Infratil go it alone.”

And in a DomPost oped article on Friday, Richard Randerson of the Guardians of Evans Bay said the runway extension project had “questionable benefits.” He questioned BERL’s “somewhat inflated” forecast that a longer runway would result in twice as many overseas students coming to Wellington. And he said it was telling that Infratil (who own two thirds of the airport) was willing only to contribute one third of the cost of extending the runway.

Mayor Celia Wade-Brown won unanimity from her councillors when they voted to spend $1m helping the airport pay for a resource consent application for the longer runway. The mayor continues to align herself with a majority of the city’s business leaders who are in favour of the $300m extension. But she’s starting to express caution about how it might be paid for. In the DomPost this morning she says: “The airport should pay a significant portion.” More than only a third of the cost, one would hope.

And not everyone in the business community is supporting a longer runway. The ranks of the doubters now include Bob Jones. His criticism of the runway extension plan is reported in an interview in the latest issue of FishHead magazine.

 

13 comments:

  1. Ross Clark, 30. September 2013, 9:15

    The investment is hardly economic – what *is* needed is better connections through to Sydney (to Emirates’ connections), and perhaps direct flights into the Auckland International Terminal (thus sparing travellers a lot of mucking around by having to use Auckland’s domestic terminal.

     
  2. Transport 101, 30. September 2013, 10:05

    Neil Douglas is probably not as expert in the transport area as he pertains to be. He obviously hasnt heard of the concept of induced traffic or stimulated demand. Traffic/demand is stimulated when the current market is suppressed as a result of poor connectivity (in the case of some roads), high costs (in the case of fuel or PT fares), and negative market activity (GDP).

    What Douglas fails to show is how Wellington Airport has performed compared with Auckland and Christchurch (pre earthquake) where the growth rates at both airports have been signficantly higher, driven by more services and choice for passengers and lower fares. By contrast, Wellington passengers are forced to fly via Auckland adding time and cost for long haul flights, pay significantly higher fares to Australia because there is a lack of competition that new airlines with large planes provide, and regional domestic services suffer from higher fares through the Air NZ monopoly. A runway extension will reduce travel times and costs, increase competition which will reduce fares, and allow big planes to fly on the Tasman.

    According to the latest airport stats, passenger numbers have increased by 66% between 1997 and 2013 (16 years) even when the world has suffered from the GFC over the last 5 years. Another 16 years will take the timeframe to roughly 2030 and a 66% on current numbers will be 9.1M passengers, and that’s assuming business as usual, and no runway extension!

    And as for Richard Randerson’s article, I think the overwhelming comments in support of the runway extension tell the story. It had little to no facts to it.

     
  3. Peter Kennedy, 30. September 2013, 10:47

    Recent reports state that despite spending extra millions in advertising to attract foreign students to NZ, numbers were well down on projections. Very easy reasons to understand – high NZ $$, and on-going concern over seismic activity related to Christchurch. The perception is NZ is still not a ‘safe place’.
    There is a clear feeling out in the market that a proper business case must be presented for any go-ahead for a runway extension. Too much money has been ‘wasted’ by this Council on ‘pet projects’ which do not return to the ratepayers the promised returns they were guaranteed.

     
  4. Barbara Smyth, 30. September 2013, 11:33

    I agree Peter. Look after what we have at the moment, extending the runway looks like wasting money to me. We will end up paying higher rates in Wellington and higher airfares to go to Sydney where, as Ross Clark says, we can ‘hub’ to anywhere in the world now.

     
  5. Brent Efford, 30. September 2013, 15:59

    It gets worse – John Westwood quoted above says “How many airlines have said they’d use an extended runway for long-distance flights? I haven’t read of any.” I recall that Air New Zealand, surely the primary airline likely to be involved, have clearly stated that it WON’T use Wellington for flights anywhere other than Australia (in the context of using Boeing 787s, theoretically capable of using the existing runways if not fully loaded).

     
  6. Stan, 30. September 2013, 16:25

    Whenever I travel overseas my objective is always the “best price” to reach my destination. We travelled to Bangkok about 4 years ago via Sydney ex Wellington. What a nightmare that turned out to be. Our reporting time was 4am! Our stopover at Sydney was 7 hours before departure to Bangkok. The opportunity to visit Sydney was available but our budget did not permit this. When airlines offer deals ex Wellington or Christchurch I cannot find any reason to make Wellington my departure point for long haul travel.

     
  7. andy foster, 30. September 2013, 17:02

    In all this please don’t lose sight of the fact that our expectation is to produce a business case including airline(s) which would use it for long haul and determine any funding sources, not merely the resource consent.

    In terms of which airline(s) my understanding is that Air NZ is probably unlikely given they hub out of Auckland. obviously there have been conversations with other airlines.

    One of the key reasons for having a long haul connection is that the one stop hub out of Wellington then becomes all the connections that connect to say Singapore or Hong Kong or Bangkok which clearly is a much much larger proportion of world destinations and population than connections from the locations currently reachable from Wellington (ie NZ/Australia).

    All in all I would counsel making the judgement when we have the information ! There would certainly be full opportunity for that public conversation at the time.

    Kind regards

    Andy Foster
    City Councillor

     
  8. Peter Kennedy, 30. September 2013, 17:54

    Yes Andy, after the elections. And if the projected returns never eventuate, hopefully it’ll all be forgotten before the 2016 elections. We’ve seen it all before. Spend and hope.

     
  9. andy foster, 30. September 2013, 19:27

    Hmm Peter – so Councils shouldn’t do things after elections, and we get told not to do them before elections either. Three years is short enough anyway without taking large chunks of it out!
    No – clearly the possibility of airport extension is a really important issue. Many in the business community consider it the number one issue on the table, so it would be irresponsible of us not to look seriously into it. As I said, if it is judged to stack up and be worth proceeding with then there will clearly need to be extensive dialogue – I don’t see that being forgotten – and clearly in that situation we might well be contemplating construction underway or starting around 2016 elections.

    Regards

    Andy Foster
    City Councillor

     
  10. Hayley Robinson, 30. September 2013, 21:46

    Cr Foster: could you explain the logic of spending $1 million dollars of ratepayers’ money before having a detailed business case?

     
  11. andy foster, 1. October 2013, 8:58

    Part of the spending is to develop that case and the funding arrangements

     
  12. Stan, 1. October 2013, 17:26

    Cnr Foster can you please explain why consultation was ignored when you and 10 others voted to fund the Wellington Airport Resource Consent. At the same time perhaps you can explain why council voted to fund $1.0 million when it is only a 1/3rd share holder. Take a deep breath and please explain why WIAL was provided with special consideration when applying for the funding when the Draft Annual Plan process was well and truly closed. Any other applicant would have been asked to apply within the timeframes of the DAP annual process.
    Best regards.

     
  13. Peter Kennedy, 1. October 2013, 20:43

    I’m still waiting to fly to Adelaide on the direct route that was promised for take-off this year. It seems like a lot of things our councillors promise – faster bus routes, a Sanctuary that will not need funding, a network of cycle lanes, and we’re still waiting. Now, a runway extension, to cope with an unprecedented flotilla of passengers headed our way. Stunning !!

     

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