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Propaganda and a longer runway

by Ian Apperley
With oral submissions on the long term plan being heard by the city council this week, we see the airport runway extension plan starting to come undone. Consultation to date has been, in my opinion, a sham, typical of the arrogance of the uninformed and money men (and women) who try to sell us this snake oil.

First up, best dressed. Before we get to the submissions, a contact has sent their theory on why the airport is so hell-bent on getting a longer runway.

The real reason for the airport expansion is this: Given that WIAL is a natural monopoly, it is regulated by the Commerce Commission, and is generally limited to a profit of 8.4% on its assets. Increase the asset base, in the form of a lengthened runway (and not incidentally, a new terminal) and magically, WIAL can charge more for the same services it already provides, even if no additional airlines arrive. It’s that simple. Unfortunately one suspects that most of those increased profit dollars will end up in the hands of Infratil, and not back with ratepayers.

In plain English, the more land and assets that the Airport has, the more it can charge, regardless of whether more airlines come, or not. So for Infratil and the Wellington City Council, the big spending would result in increased dividends.

The Council has been effusive in its self-praise of the consultation for its long-term plan, highlighting the volume and spinning the positive side of things such as the airport extension. Which is interesting, because the Council did not put out enough information on what the extension will cost. There is no business case. None. Therefore, this can be seen as no more than the usual propaganda that we have come to expect around a pet project.

There is also a floating question about the legality of the way that the Council has been operating in regards to the extension. That will come out in the next few months.

So far most Councillors refuse to be drawn on where they sit. Typical political machinations. However Helene Ritchie is definitely opposed and Simon Woolf is wavering, as his Facebook post suggests:

A solid business case (including a CBA), Resource Consent approval, and a Long Haul airline to carry passengers and freight,(in a manner which is cost effective, and incentive based), is a bottom line for me.

As it should be for all Councillors. But so far, none of the others have had the courage to take the same stand. It really is simple. A business case will drive out the answers to these questions at which point, with other reports including probity, environment, and the impact on rates, an actual consultation can take place, rather than the faux, shiny, media-managed circus we have seen to date.

The Board of Airline Representatives (BARNZ0 spoke to the Council yesterday and my sources tell me they were under some attack, led by Justin Lester, who appears to have committed the city to $90million of potential costs and damn the consultation.

Justin Lester took a political line, rather than engaging on any of the important economic/demand/viability issues. He asked “Why did you go to the media before you provided council with your submission” – obviously wanting to try and discredit them. The BRANZ executive director John Beckett, who was excellent, replied by saying that they spoke to the media at the same time as they submitted. Whatever effect Justin was after, it just made him look petty.

They (BARNZ) had their economist with them, and he was able to shoot down all the economic questions he was asked. Swampy Marsh tried to suggest that the work BARNZ had done was not as comprehensive as EY and PWC, and asked could their work be relied on, in comparison to EY and PWC’s positive reports. The economist said that he disagreed that EY’s report was positive, that it wasn’t and was heavily caveated, and PWC reinforced the caveats and EY’s high level findings. Later he found a number of references in the EY and PWC reports that confirmed this, and urged Councillors to “read the report thoroughly”.

The main dispute was how much airlines would be charged for landing fees if the runway was extended. BARNZ said its research showed a cost shortfall of $50m a year, which would have to be paid by travellers or airlines or ratepayers. Jo Coughlan said existing airlines wouldn’t pay for the longer runway if they didn’t use it, to which John replied “words are fine, but we’d like to see an ironclad guarantee that this position would hold”. He added that it would need to be paid for by someone, so would in effect fall back on the existing airlines, and that the only way for airlines to recoup this would be through higher fares. Putting up fees would, he said, discourage other airlines from flying into Wellington.

All very good points. However unlikely to have any effect given the council’s idea of “consultation”, which has been followed by Lester and others speaking about committing $90million.

Of course, it’s not just about money. We know that should an extension go ahead then the marine environment will be destroyed in that area (after only getting it back), a heritage area will be wiped, noise will increase, pollution will increase, costs will increase, and we’ll be left holding the bad end of a one-third investment in a traditional oil company.

It’s a damn shame it isn’t election year.

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