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The runway extension and the ratepayers

by Ian Apperley
In an opinion piece today, city councillor David Lee points out dangerous thinking about the costs of the airport runway extension. In particular, that ratepayers are likely to pick up the lion’s share of the costs despite being a minor shareholder.

We’ve been watching the efforts by Justin Lester and others in the Council to sell the idea to the public. Pollyanna statements, linking anything positive they can to the extension in an effort to tart the extension up, sponsored articles in Capital Magazine by Infratil, a flashy website, and the rest.

Which is a problem. Because the indicators so far are not happy. Let’s look at what we know:

1. The Prime Minister, the Transport Minister, and the Economic Minister don’t support the runway extension. That doesn’t mean we can’t do it, it just means that there will be no cash from the Government.
2. Treasury will not support it without a formal business case in their format being written. That format is objective, there is nothing flashy about it. But as far as we know the WCC and Infratil haven’t used their format.
3. BRANZ, the airline association, which has 22 international airlines in its membership, won’t support it.
4. Air New Zealand has said even if the runway is extended, they won’t use it for long-haul flights.
5. The Pilots’ Association has taken the airport to court over its safety limits. If they win, an extension may be forced on us. We’d have to pay for the extension to meet safety requirements, not to allow larger planes.
6. Wide bodied aircraft will not be able to take off with a full load, even with the extension. In order to allow full payload takeoff, the runway would have to be even longer. No one has done the math on whether, with a lighter payload, those aircraft could make a long-haul route. Say to Hong Kong or Los Angeles.
7. The airport’s initial assessment showed very few economic benefits for decades. Which is a problem, because the world changes fast.
8. Climate change. Sea levels in Wellington are rising the fastest in the country, because of subduction (we are slowly sinking), and that, coupled with expected climate change, makes the long-term life of the airport problematic.
9. Costs for the airport extension seem very optimistic. Similar costs in Hong Kong show between three and four times the cost of what has been quoted here.
10. Wellington is not a tourist gateway. Tourists land in Auckland and Christchurch and travel in either direction to the other, passing via Wellington. In much the same way that Vietnam works, so does New Zealand. You don’t land in the middle of Vietnam, you start in the North or South and work in the opposite direction.
11. Tourist numbers in Wellington have been rising steadily without any extension.
12. There are unanswered questions around safety with a northerly takeoff pattern. Currently, the airlines have to do quite a bit of extra work and planning in order to deal with an engine failure. This includes dual-GPS and a flight path that takes them up the Hutt Valley and then left through Haywards. This was introduced so we could fly fully-laden A320s. What happens in that scenario with aircraft that are far heavier?
13. Costs for infrastructure upgrades will be high. Bigger planes means different equipment, different gate configurations, more fuel, and far more airport services. Taxi turning ways may need to be widened. These have not been included in costs to date.
14. The extension needs resource consent. It doesn’t have it.
15. WCC funding is contingent on signing a long-haul airline that commits to Wellington. That hasn’t happened. Probably because it is incredibly expensive.

When you start to question the sanity of pouring millions of dollars into the idea, which the WCC has been doing, you are attacked as trying to somehow sabotage Wellington’s economic growth. This is simple politicking by self-interested parties who are happy to play the man, not the ball, and pander to the residents’ sense of stasis. All the while refusing to deal with the facts above, brushing them away.

Unfortunately for some councillors, that stasis has led to an optimism bias on a scheme that looks like a White Elephant in the extreme. Allegations of corruption, self-interest, and conflicts of interest have been flying. As my great-grandfather (who oddly enough, built the last extension) used to say “Never attribute to malice what you can to stupidity.”

As I have commented before, I think the WCC is in a position of conflict. It, we, own 33% of the airport. It would be better for an independent body, say the GWRC, to take control of the process of public consultation, if it ever happens.

The feeling that I am left with is a Council that is singing its usual tune, “we know better than you.” They’re following a promotion and sales role as opposed to an objective analysis.

Wouldn’t it be nice to hear the Council say “We aren’t sure this is going to fly. There are dozens of challenges that must be overcome. We have a hunch this would be a good thing for the city and we will continue to invest money in investigating it. We will make those investigations completely transparent and publicly available. We’ve removed officials and politicians from the process who are perceived to have a conflict of interest. $90 million, or more, is a significant amount of money for the ratepayers to invest and there may be better projects to support. In the meantime we are going to look carefully and long at the options because it may be the right thing to do. There is no rush.”

Sadly, the politicking, Pollyanna statements, and propaganda are likely to continue. Ratepayers deserve better.

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

13 comments:

  1. Michael Gibson, 3. November 2015, 18:09

    I agree that ratepayers deserve better. Councillors.

     
  2. Maria van der Meel, 3. November 2015, 22:16

    Just check the airport’s 2030 Master Plan (published in 2010) about a possible runway extension – it says, on page 22, that this “is not expected to be needed in the next twenty years.” Voting to spend $90million of ratepayers’ money in the council’s ten-year plan does not make sense when the airport has stated this.

     
  3. Michael Gibson, 4. November 2015, 9:41

    You can’t expect officers to advise councillors about 2030 Master Plans & you certainly can’t expect the Mayor to read them.

     
  4. syrahnose, 4. November 2015, 12:19

    At face value there seem to be some fairly dubious arguments and lame logic going on here.

    4. Air New Zealand has said even if the runway is extended, they won’t use it for long-haul flights.

    The point is to get some competition in. ANZ has its own bases in Auckland and will do anything to protect its market domination.

    5. The Pilots’ Association has taken the airport to court over its safety limits. If they win, an extension may be forced on us. We’d have to pay for the extension to meet safety requirements, not to allow larger planes.

    Might as well pay for something longer and get benefits as well.

    6. Wide bodied aircraft will not be able to take off with a full load, even with the extension. In order to allow full payload takeoff, the runway would have to be even longer. No one has done the math on whether, with a lighter payload, those aircraft could make a long-haul route. Say to Hong Kong or Los Angeles.
    Seems a generalization and doesn’t smell correct. Which wide bodies? 787 vs 777: the 787-8 Dreamliner can take off with 200 fewer feet of runway than the 777-300ER, 10,300ft. 787 uses 20% less fuel. 787 is 5/8ths the weight of a 777 and carries 2/3 fuel weight.

    7. The airport’s initial assessment showed very few economic benefits for decades. Which is a problem, because the world changes fast.
    Huh? Isn’t that the logic of almost all long term infrastructure.

    8. Climate change. Sea levels in Wellington are rising the fastest in the country, because of subduction (we are slowly sinking), and that, coupled with expected climate change, makes the long-term life of the airport problematic.
    Its already been established that Auckland Airport would be well under water decades before Welly’s. Which suggests, Welly ought to be extended longer ASAP as it could take over Auckland’s entry point.

    9. Costs for the airport extension seem very optimistic. Similar costs in Hong Kong show between three and four times the cost of what has been quoted here.
    Obviously it should have been extended back in 1972 to accept 747s when it was far cheaper, which might have stopped so many corporate headquarters moving away from Wellington since then.

    10. Wellington is not a tourist gateway. Tourists land in Auckland and Christchurch and travel in either direction to the other, passing via Wellington. In much the same way that Vietnam works, so does New Zealand. You don’t land in the middle of Vietnam, you start in the North or South and work in the opposite direction.
    Chicken and egg thing, innit. Vietnam?!???? Is that the best example to compare with NZ? The two capitals are in the extremes and Da Nang and Hue more like Nelson, not like this country’s capital. I travel to lots of new countries each year and start in lots of places and end up in others or circle my way around and back.

    11. Tourist numbers in Wellington have been rising steadily without any extension.
    Numbers are up all over NZ, the issue should be are they relatively higher than ChCh and Auckland. And if it became an entry point, would those figures rise to similar levels or at the same rate?

    I’m as irritated by WCC’s endless rate rises and ill conceived spending as anyone, and especially angry about Wellington Airport’s monopolistic fleecing of citizens and the blind eye WCC turn to this because of their profit share, but those are separate issues from whether an extension can turn around Wellington’s decline and decreased importance in future.

     
  5. Mathew, 4. November 2015, 13:35

    @ syrahnose: Obviously you are not irritated by the WCC’s ill-conceived spending if you support the ratepayers paying for a private corporation’s runway extension. The WCC just keep going on about it, all the while saying how great it is that we already have a bumper tourism industry in Wellington. It’s a symptom of WCC bipolar disorder .

     
  6. Ian Apperley, 4. November 2015, 17:20

    “At face value there seem to be some fairly dubious arguments and lame logic going on here.”

    I don’t agree with that. Lame logic suggests that you are writing off the negative comments without analysing them. The lame logic is being perpetrated, fronted, by the Deputy Mayor, and questions should be asked of probity and conflict of interest.

    4. Air New Zealand has said even if the runway is extended, they won’t use it for long-haul flights. “The point is to get some competition in. Air NZ has its own bases in Auckland and will do anything to protect its market domination.”

    Why wouldn’t you extend that domination to take over another port? The reality is that Air NZ can’t afford to drop another long-haul into another city. Why? Economics. The other aspect is that the airport is already a known and agreed monopoly, governed by the Commerce Commission. And as for competition, we have it already.

    5. The Pilots’ Association has taken the airport to court over its safety limits. If they win, an extension may be forced on us. We’d have to pay for the extension to meet safety requirements, not to allow larger planes.
    “Might as well pay for something longer and get benefits as well.”

    If it plays out, then we may have no choice, owning a third of the airport.

    6. Wide bodied aircraft will not be able to take off with a full load, even with the extension. In order to allow full payload takeoff, the runway would have to be even longer. … “Seems a generalization and doesn’t smell correct.

    I talked to international pilots who have flown the A320s, 777s, 787s, 747s, 767s, and more. Bottom line is that they both said to me, they won’t be able to fly full loaded. So… Two questions remain. Can they fly with reduced load to long-haul destinations? IF they can, does the payload make it economically viable to do so?

    7. The airport’s initial assessment showed very few economic benefits for decades. Which is a problem, because the world changes fast. “Huh? Isn’t that the logic of almost all long term infrastructure.”

    Maybe, but from an economic perspective stretching the case until it pays seems a little off.

    8. Climate change.

    Both airports have the same issue. We are “sinking” faster.

    9. Costs for the airport extension seem very optimistic. Similar costs in Hong Kong show between three and four times the cost of what has been quoted here. “Obviously it should have been extended back in 1972 to accept 747s when it was far cheaper, which might have stopped so many corporate headquarters moving away from Wellington since then.”

    Interesting point. I agree. If we roll back to the 1940s, the Americans were all for extending the airport massively, to the north. They proposed a plan to bulldoze Mapuia into Evans Bay to push it out. The government of the time declined it. Otherwise. we would have had the majority of the northern bay as airport. Missed opportunity? Regardless, the costs seem very light.

    10. Wellington is not a tourist gateway. Tourists land in Auckland and Christchurch and travel in either direction to the other, passing via Wellington. In much the same way that Vietnam works … “Vietnam? Is that the best example to compare with NZ? The two capitals are in the extremes and Da Nang and Hue more like Nelson, not like this country’s capital…”

    I think it’s a great example. Especially seeing as it works this way in New Zealand. And let’s be honest, Wellington City with a population of 175,000, at a stretch, is a lot like Da Nang and Hue which have never tried to market themselves as international ports. They rely on their own character to attract tourists.

    11. Tourist numbers in Wellington have been rising steadily without any extension. “Numbers are up all over NZ, the issue should be are they relatively higher than ChCh and Auckland. And if it became an entry point, would those figures rise to similar levels or at the same rate?”

    That’s a great point. Unfortunately we don’t get good metrics. What we get is flag waving pollyanna press releases. Still, it’s on the rise.

    “I’m as irritated by WCC’s endless rate rises and ill conceived spending as anyone, and especially angry about Wellington Airport’s monopolistic fleecing of citizens and the blind eye WCC turn to this because of their profit share, but those are separate issues from whether an extension can turn around Wellington’s decline and decreased importance in future.”

    Ah. Now you hit the heart of the argument. My view is that you need a pan-economic investment strategy. Of which, the airport may be one factor. What we know is that this Council has delivered none of the economic projects they have promised in the past five years. Second point is, that Infratil should pay for two-thirds. That’s how any business would work. But they have stated that it doesn’t make sense. I think they are hoping we will be stupid enough to pay. Now, there is nothing wrong with that, but if we, you and I, are going to sink that money into the airport, then we should take a larger share of the company. That’s never been discussed.

    Awesome comments, it’s great to debate with someone who is thinking. Thank you.

     
  7. Rick Morgan, 4. November 2015, 17:59

    8 Subduction means Wellington is sinking? The Pacific plate (where Christchurch is) is subducting under the Australian plate (where Wellington is) i.e Wellington is lifting BUT during large earthquakes.

    Bigger planes = more people = more traffic in & out of the airport but WCC is dragging the chain on improving the roading to the airport – why?? Build the road first!

    WCC is unwilling to maintain the current level of airport extension and is not repairing erosion, + they built the tunnel under the extension below the peak sea storm surge level so it regularly floods.

    Surely if the pilots succeed in getting the airport improved, it will be the airport company’s responsibility.

    Your council is a BIG business that manages many things (roads & services etc) that affect you every day – how clever are the people who vote for councillors, who have not shown any ability to run a small business, to run the biggest business in their area?

     
  8. Ian Apperley, 4. November 2015, 18:26

    “8 Subduction means Wellington is sinking? The Pacific plate (where Christchurch is) is subducting under the Australian plate (where Wellington is) i.e Wellington is lifting BUT during large earthquakes.”

    An incorrect assumption, but understandable. The GWRC have put a report out in the past few months that shows the sea level in Wellington is increasing rapidly, more than the average. We are subducting, according to that report, rapidly.

    “Bigger planes = more people = more traffic in & out of the airport but WCC is dragging the chain on improving the roading to the airport – why?? Build the road first!”

    Bingo! The NZTA is already in on the act having bought a lot of property on Wellington Road. Which is sitting empty. But the green belt rules aren’t going to allow them to use an inch of land. Bottom line is, any of you who live in Eastern Suburbs know that airport traffic is already insane at certain times of the day. It will get worse.

    “Surely if the pilots succeed in getting the airport improved, it will be the airport company’s responsibility.”

    Correct. And we may all pay for that. The safety standards could require us to build the extra 240 (300) meters. Regardless.

    “Your council is a BIG business that manages many things (roads & services etc) that affect you every day – how clever are the people who vote for councillors who have not shown any ability to run a small business, to run the biggest business in their area?”

    Sadly, councillors are not chosen for their skills, just their faces. So we’re a bit buggered in that department. Justin Lester is the poster boy for this schmozzle.

     
  9. Esjay, 4. November 2015, 19:58

    Now that property values have increased, this will be an ideal opportunity for a rates increase WITHOUT any connection to the LTP and $90million PLUS the $32million for interest charges. So where does that leave the ratepayer? When councillors have no idea about business investment, it’s easy to see that harum scarum voting will surpass logic.
    Let’s face it, someone in the Council has to come clean. It should tell the ratepayers why the council is taking the initiative in this saga, while the board of Infratil is sitting back in delight waiting upon the “mugs” to throw money at their airport.

     
  10. Hel, 4. November 2015, 22:48

    Ian, I think you are wrong about the basis of the pilots’ action. The action is surely with the CAA and not the airport and is with regard to the safety areas required in the event there was an extension of the runway, not the existing runway. Surely the CAA assesses the safety of takeoffs in any direction, I am not sure how you could possibly assert there are safety concerns.

    I can’t help feeling the sea level change arguments are spurious at best. The runway is significantly above even the most pessimistic sea level change projections. I think we’re in more danger of having a Venice-like CBD than a submerged runway.

    It is fairly obvious why AirNZ will not fly long haul out of Wellington and that is because it does not fit with their Auckland hub model that has served them well.

    Interesting that Wellington is not a tourist gateway and yet is enjoying strong tourist growth. I suspect Wellington is constrained because it has limitations on its runway.

    Totally agree with you that councillors are not elected for their skills and sadly I suspect the nuances of such a complex and significant decision are beyond their skills or experience. However I would express the same concerns around GWRC who if it is possible are even more challenged. I’m happy to wait to see what real material comes out, before jumping to premature judgements. Didn’t the airport report that they were commissioning a cost benefit report, which is the normal basis for Treasury and NZTA investment considerations.

     
  11. Esjay, 5. November 2015, 10:06

    Hel, I suggest that you should reassess your argument. AirNZ are using a logical argument in that if there were 200 incoming passengers and 40 going out, economics surely come into the equation. A cost benefit report does not fit the basis of a funding from Treasury, it’s a business case that is required.

     
  12. Ian Apperley, 5. November 2015, 15:50

    Hi Hel: the action is definitely against the airport. The link is here: https://www.nzalpa.org.nz/Media-Centre/News/ArticleId/13/nzalpa-files-proceedings-in-high-court-resa
    You are right about the CBD. I was sitting in the Featherston Tavern over winter, it’s on Featherston Street, when we had a decent storm and king tide at the same time. Their basement started to fill with water, which, apparently is a quite common occurrence these days in buildings closer to the sea.

     
  13. Hel, 5. November 2015, 21:54

    Hi Ian, thanks. the pilots assn is seeking a judicial review of the CAA decision to effectively ok preservation of the existing safety area for any runway extension. Think the article you kindly referred me to infers this.