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Where’s a business plan to support the mayors’ runway enthusiasm?

leaning tower
Studio Pacific Architecture

by Ian Apperley
Wellingtonians are a funny bunch. We hate change yet we want change. We are prepared to lampoon anyone who promotes a change, or anyone who is perceived to be slowing change down. Case in point. A massive negative reaction to a new, I thought clever, design for the airport control tower. Can’t have that mate, it’s weird. Case number two, a negative reaction to anyone who asks questions about the airport extension. Just get on with it mate, stop being weird.

But the last few days have me swaying away from the extension and back to the weird files. Weird, because the mayors have come out strongly promoting it, and promising to reach into our wallets to do it, when the support for it and the economics aren’t really making a lot of sense. Even more weird, asking Wellingtonians to provide feedback on the idea but not actually giving enough information to make a submission. Where is the business case?

It’s gone from bad to worse for the idea over the last few days with a number of counter-punches landing on the idea of extending our runway.

The most recent is that Air New Zealand is pulling certain international services out of Christchurch and re-homing them to Auckland. It appears that Auckland is being increasingly used as the national hub. This signals a move from two hubs, Auckland and Christchurch, down to one. So the question has to be: why would Wellington get any more flights? Let’s not forget, we sell the South Island as the premium New Zealand tourist experience and while Wellington is a fun place, it doesn’t compare to that attraction. Most of our tourists are pass through as people move from Auckland to Christchurch. As an aside, the reduction in Christchurch flights will impact our tourism.

That Auckland hub for Air New Zealand, or other airlines, makes total sense. All their operations for international are there. All their operations for domestic are there. They can charge people from flying to hub to the other regions. They need far less infrastructure in the outer regions. They make more profit. This has to be their strategy.

Wellington Airport is owned by Infratil and the WCC. About two-thirds and one-third respectively. But the regions’ Mayors want to stump up with half the cost of the extension. There is still a shortfall. Infratil has decreased the amount of money it wants to invest over the last year to sit, I think, at around $65m. That leaves another $85m that needs to be found.

That means that the airport basically gets gifted $135m. The airport should rightfully pay two-thirds, they want to pay $65m. That’s weird. Well, not really, because the airport has said it doesn’t make economic sense for them to invest in the total amount they should be up for.

Simon Bridges, the Transport Minister (god save us all), isn’t buying it either. This is what RadioNZ reported yesterday:

Minister Simon Bridges said he was waiting for a business case to cross his desk but in the meantime he had his doubts. “I’m sceptical. I think whilst there would be regional advantage, the case that I would want to see is the case for a national advantage to New Zealand in spending a very significant sum of money on extending that runway. I think pure regional advantage wouldn’t be sufficient to see the government involved.”

And there’s more, in a fuller report:

He expressed reservations about committing public money to a project which would benefit a private company, Infratil, which owns two thirds of the airport. “Effectively were council and the government to come in, there would be significant public money with a very significant private benefit. And we’d need to work through that, were we in principle to decide it were the right thing to do, very very carefully,” he said. Minister Bridges said he wanted to see the business case for the project, which was yet to be completed.

At least he wants to see the business case. Because it’s important and it goes to the heart of consultation with us, the potential investors.

The Mayors are committing us to a rate increase while at the same time consulting on whether we want the airport extension or not. This is not unusual for Council. Sadly. The thing is, that consultation shows we don’t want it.

As of the time of writing this morning, 58% of the submissions on the longer runway idea are against. In fact, 60% of respondents to the overall long term plan, are against it in its current form.

On National Radio this morning, it appears that discussions between Air New Zealand and the WCC aren’t working out of as expected. If at all. The mayor dodged repeated questions on whether Air New Zealand would or would not commit to long-haul to Wellington with an extended runway, though Celia confirmed that Air New Zealand’s strategy was to hub out of Auckland, and the Christchurch move supported that. That gives you the answer in a roundabout kind of way.

All of this is of course already costing us money with up to $6.5m tagged into the short-term and over $1m spent on a report that hasn’t convinced anyone that this is a good idea. More from the RadioNZ report:

Wellington City Council deputy mayor Justin Lester said if the project went ahead it would borrow its $90 million share of the $350 million total, but admitted ratepayers would have to shoulder some of the cost.

Rates increase. Here’s the bottom line really. How many of us are convinced that this is enough of a good idea that we want to reach into our pocket and give money to a private company to build a bigger airport in the hope there will be some kind of trickle-down effect to us. I’m not yet convinced, it’s time the WCC and WIAL released the business case so we can see what it is that they want us to pay for.

This article was first published this morning on Ian Apperley’s Strathmore Park blog.