The runway extension and the drop in international travellers

by Dr. Sea Rotmann
Wellington Airport have released their full-year results, reporting a drop in international passengers by nearly 9,000 people.

The much lauded Singapore Airlines Capital Express route, which Mayor Justin Lester promised would be “a boon for Wellington offering cheaper travel” and “bring more visitors to the capital”, has failed to make much of an impact in its first six months, as international numbers drop while the Wellington to Auckland route sees the biggest growth.

While not supporting the ratepayer subsidy given to test the Singapore connection, the trial has also confirmed what many suspected, the demand is simply not there. Better to know this now, before the council commits another $90 million on the proposed runway extension.

So what does this mean for the extension? In a meeting with the Guardians of the Bays earlier this year, Mr Lester stated that if the Capital Express route take-up indicated a lack of demand, the runway extension would be taken off the table.

We hope the Mayor will stand by this promise. The City Council should not be supporting this white elephant project that is riddled with flaws and will drain the region of much needed financial resources.

The Environment Court hearing on the proposed extension’s resource consent has stalled as the Airport and the Civil Aviation Authority continue to try and shut-down the New Zealand Airline Pilot’s Association’s critical concerns about the safety of the proposed extension. Last week the Pilot’s Association has written to the Supreme Court raising concerns that the case is being driven by Wellington Airport’s commercial interests.

What we’ve seen in the Airport’s results would appear to support their concerns.

The New Zealand Herald has reported that, despite dropping international passenger numbers, Wellington Airport and its majority shareholder Infratil have increased profits by 29 percent. Aeronautical income rose by 6.7 percent to $70.3m, with profits coming from rent paid by airlines, for things such as counter space, gate space, hangars, storage, maintenance facilities, along with landing and parking fees. The Airport is profiting nicely from the four-times weekly Singapore Airlines flight.

So who has lost out? Wellington City and the Wellington ratepayers, whose rates have been spent on subsidising and marketing a route that is under-performing and demonstrating little long-term viability.

At the time of the Capital Express’ announcement commentators said that the new route, which continues to be heavily subsidised by Wellington ratepayers, would stimulate large numbers of travellers.

Six months in and this appears to be untrue. And if the passengers aren’t coming it’s the City that misses out on the economic benefits, not the Airport.

At this stage, we can only call on Mr Lester to acknowledge these statistics and re-allocate the $90m extension budget to worthier and more critical projects, and implore the Supreme Court to recognise that human safety cannot be ignored in favour of corporate welfare and profit margins.

Dr Sea Rotmann is co-chair of the Guardians of the Bays

 

34 comments:

  1. laidbackchap, 19. May 2017, 14:24

    I assume that your saw this report two days ago.

     
  2. Steve, 19. May 2017, 15:11

    Those of us who don’t live in a privileged location would like to see our airport grow. It will benefit everyone. We then won’t have to lose half a day (or longer) of our lives transiting Auckland. OMG it’s people like you lot that have held this city back for the last 40 years. Please move to Auckland. They deserve you.

     
  3. luke, 19. May 2017, 21:29

    A longer runway would allow a higher take off weight and a lower operating cost per passenger with an increase in demand. Hard to say there is no demand for something currently not provided. There is no demand for electricity, sewage or access roads to new subdivisions before houses are built either. Should we not build those bits of infrastructure either?

     
  4. Planespotter, 19. May 2017, 22:36

    This article is a misrepresentation of what is going on. Auckland airport has seen a huge (unprecedented) increase in international services (they have a long runway) and so some of Wellington’s international market (including new travellers) are now connecting domestically via Auckland. Wellington’s reported international passengers have remained flat despite this as a result of the new Singapore service. The international passengers reported at the airport do not represent the full Wellington international market as so much of it travels via Auckland domestically. They only represent the international market which are using Wellington’s international services. I think the airport reported very strong domestic passenger growth some of which will be the growing international connecting market via Auckland.

     
  5. Ross Clark, 19. May 2017, 22:40

    A number of points, and from the outset I would say that I don’t support the idea of a runway extension, at all:

    * The SQ service/market does need time to develop; I suspect that much of the problem is that SQ are using a B777 when a B787 would fit the market better. It would also allow daily services.

    * On that basis, the service subsidy is still a much better use of public money than looking at spending close to $500m on the runway.

    * Alternatively, more needs to be done to improve the transfer at Auckland International; this could involve using direct flights to the international terminal itself, meaning that the border control process would shift to Wellington and thus be a lot easier. AIAL need to build a new domestic terminal, next to the international one, anyway.

    * WIAL would do *much* better to wait for aircraft technology to develop to the point that aircraft would have the range to get to Singapore in one hop.

     
  6. Hel, 20. May 2017, 17:24

    Seriously there comes a point when passionate advocacy moves to exaggeration. Singapore Air have canned 3 flights out of service travelling 4 times per week, this doesn’t even register as material in any way.

     
  7. Michael Gunson, 21. May 2017, 12:04

    The “need” for an airport extension has been artificially created by WIAL’s majority shareholder. This project is being driven by a corporation desiring to increase its asset portfolio largely with rate payer money – your money.

    The Guardians of the Bays has been established from the grass roots to specifically oppose this land grab. There has been no grass roots community group established specifically to promote a runway extension south into Cook Strait.

    And while one can only wonder why some organisations like the Hurricanes have supported the proposal, and why the the Lyall Bay Surf Life Saving Club has done likewise with a conditionally supportive submission, signs on the new clubhouse stating “proudly sponsored by WIAL” may provide some assumptions.

    The question that has been thrust on the wider Wellington community by a direct referral to the Environment Court is “Airport extension south into Cook Strait, yes or no?” From the beginning, the questions should have gone through a full community dialogue from a regional perspective starting from the point “is this an appropriate place to create an international airport? and if not, where else in the region should one be placed?” Just because a report back in the early nineties recommended staying with the current location does not mean that that decision should be set in stone.

    The Wellington Airport has also provided Infratil with a fantastic vehicle to expand the company’s property acquisitions around the airport’s boundary. Big business has no place in owning monopolized strategic assets.

     
  8. Mark Shanks, 22. May 2017, 9:07

    @ Steve – the proposed airport extension will not benefit everyone. Hence the 700 submissions opposing it. So you lose a few hours transferring in Auckland and then you spend the time you lost lying on the beach or eating out?? Seems to me we have to sacrifice some things and a little bit of time (which certainly could be reduced if the suggestions from Ross Clark re AIAL were implemented) is a small price to pay for the environmental damage, the longer term costs and inappropriateness of WIAL’s plans. Why should each region in NZ have international capability? It’s ridiculous for such a small country. We should be improving our intra-connectedness not each region competing against one another.

     
  9. Ross Clark, 23. May 2017, 1:26
  10. glenn bond, 23. May 2017, 6:55

    Once again a nimby group opposing progress–” 700 submissions opposing it”, so that means over half a million greater wellington residents, either don’t care or favour it. If you really dont like it….SHIFT, and let the rest of us enjoy the benefits.

     
  11. Mark Shanks, 23. May 2017, 7:41

    @ Glenn – I suggest you shift and live close to an international airport of your choice.

     
  12. luke, 23. May 2017, 8:05

    I suggest we build the runway extension and @mark shanks moves somewhere else.

     
  13. TrevorH, 23. May 2017, 10:53

    I oppose the extension because the economic case is laughable and ratepayers are being screwed (yet again). Simple as that.

     
  14. aidy, 23. May 2017, 12:24

    @ glenn. Seeing as the airport has failed to make a convincing business case for Expansion, and refuses to fund it from the large Infratil cash reserves, maybe you could explain why you prefer to throw tax or ratepayers’ money on a white elephant project?
    The case for expansion has no merit other than to increase the Infratil asset base, and so their share price.
    The airlines don’t want it, there is no demand for that many international flights from Wellington as is shown by Jetstar cutting routes to Melbourne recently. Wellington isn’t a natural entry point to NZ, it is a hub airport and it will only increase landing charges, to be passed on to airport users.
    The environmental case for an airport in that location is weak, with the threat of rising sea levels or earthquake damage to transport infrastructure. The runway is in the wrong place for a large international Airport if that is what the region really thinks it wants. Maybe it is time to look at alternative sites. Ones where there could be suitable and adequate safety areas for the runway, and less aborted landings due to weather conditions
    The surfers don’t wish for it, WIAL has no respect for the wave quality in Lyall Bay, as its actions to remove the protection on the surf break and modifications to the corner have shown. And the talk of a wave focusing structure is purely a sop to get them onside.
    And yes, local residents don’t wish for a noisy, expensive, un-needed show of modernity that will do nothing to reduce travel times or costs, but will destroy Moa Point and irrevocably change the character of Lyall Bay. For once I’m happy to be a Nimby, Happy with Wellington just the way it is thank you

     
  15. Esjay, 23. May 2017, 12:49

    Shifting is a simplistic and pathetic argument to decry those who live in the vicinity of the airport. This argument has gone past its use by date – get real! In accordance with the RMA everyone has the right to defend the environment – something to do with democracy in my book. Let us hear a plausible realistic argument why the extension should proceed without Crystal Ball gazing! In other words, basic facts that would substantiate pie in the sky expenditure. If WIAL is that determined to proceed with the proposal then it should put up the money where its mouth is. It can afford a monstrosity of a car park and a proposed new hotel – looks like it’s got money to burn! So Steve, you want the naysayers to shift, then why don’t you start a campaign to buy and sell the homes of affected residents to satisfy your pipe dream?

     
  16. Antony W, 23. May 2017, 14:03

    Way to go, Glenn. Bring on the runway extension. This city needs to move forward, or risk being left behind.

     
  17. Andrew, 23. May 2017, 23:28

    The backwards thinkers are the ones who think they need to be able to fly long haul directly from Wellington. I have not had a valid passport for ten years and half of my work comes from overseas. Even if we could fly directly, most people who have travelled a bit will know a weather event can stuff up even the most direct of flight plans and land you killing ten hours going back and forward on the automatic train at Frankfurt. In situations like this you could give a damn about CHCH versus AKL versus WGTN.

     
  18. CC, 23. May 2017, 23:51

    Antony, when some flights to Australia and Singapore (even subsidised!) haven’t cut the mustard, which other international destinations might make a runway extension even marginally feasible? Sure – extend it if you can afford to, but don’t expect the ratepayers and domestic service users to subsidise yourself and a few international frequent flyers who can’t be bothered transferring through Auckland which can service far more overseas destinations.

     
  19. Marion Leader, 24. May 2017, 6:48

    Why doesn’t Antony move to Auckland? He seems pretty precious and should fit in well. I agree with CC

     
  20. glenn bond, 24. May 2017, 9:34

    @aidy, Infratil don’t own all the airport, and could you name any capital city in the developed world, that doesn’t have a true international airport. I read so much clap trap about Wellington needing to be this vibrant/resilient modern city, yet most overseas visitors can’t even get here without stopping in Auckland.

     
  21. Bogbrush Pete, 24. May 2017, 21:01

    @ Glenn Bond. I’m not sure what you mean when you refer to a “true” international airport. It begs the question as to what a false one would look like. Nevertheless, assuming we live in a “developed’ world, I suggest Ottawa, Canada as an example, Pretoria or Capetown in South Africa and for good measure, Brasilia in Brasil. T he kind of airport you envisage is a bad idea from last century that needs somewhere other than Wellington to come home to, and die.

     
  22. glenn bond, 25. May 2017, 7:24

    @Pete, I think a false international airport, looks exactly like what we have now, which is why I’m all in favour of an extension.
    Ottawa and Brasilia both have the potential for International airports as their runways are 3000 mtrs and 3200 mtrs respectively; South Africa actually has three capitals ( you forgot Bloemfontein), and out of those, two have runways of 3200 mtrs and 2559 mtrs. Wellington on the other hand has 1936 mtrs.
    The kind of airport I envisage is one which can service a global market, befitting New Zealand’s capital city.

     
  23. Andrew, 25. May 2017, 19:59

    Having a runway that can service larger planes is fine and dandy. Where are they going to park them? The apron space in Wellington is pretty tight. Or are we going to disembark passengers over near the Warehouse?

     
  24. luke, 26. May 2017, 9:36

    ive often thought the terminals would have been better located where the warehouse is from an access to the cbd perspective!

     
  25. aidy, 26. May 2017, 13:37

    @ glenn well the Hague in the Netherlands, or Bern in Switzerland spring to mind. Then there is Canberra Airport flying internationally to Wellington and Singapore………. just like you can do from Wellington.
    Western countries understand that an airport needs a large population centre close to it, to be economically viable rather than wanting an Airport to show a city’s prestige.
    The Hub and spoke model to feed an airport serving a large range of destinations works well across the Western World so I can’t see why New Zealand needs 3 international airports. And surely you know a 3200m runway is never to happen in the current location, and I doubt there will ever be a wide range of international flights, so i just don’t see the point .

     
  26. Planespotter, 26. May 2017, 23:46

    Aidy: do you not think it better that Wellington is a spoke to a Singapore or Hong Kong or Los Angeles or Guangzhou hub as well as a spoke to Auckland’s? Surely they provide significantly more opportunities for residents, for attracting visitors and for business? And you don’t need 3200m to get to these places. The extension they are planning is long enough for most new aircraft.

     
  27. Andrew, 27. May 2017, 13:35

    How many people will exclude doing business with Wellington or exclude visiting it just because they cannot fly directly? Or inversely, Wellington businesses limiting themselves for the same reason? Surely there other things that are far more attractive to both visitors and business.

     
  28. Planespotter, 27. May 2017, 20:55

    Andrew: many will. At the moment Wellington wont even be in the choice set of business’s and visitors as they probably havent even heard of the place. That changes when their national carrier starts flying to Wellington, promoting Wellington to their customers etc.

    Otherwise why do airlines open new services at all if not to stimulate new markets, business and travel.

     
  29. Bogbrush Pete, 28. May 2017, 11:38

    @Planespotter. I think you are falling for the old logical fallacy of “post hoc ergo propter hoc’. It’s not a certainty that once something happens, (the lengthening of a runway) that anything else might follow.

    Sales people do whatever they have to in order to make deals; similarly tourists seek out new places to visit without being constrained by airport dimensions. No self -respecting business operator would fall by the wayside because he/she didn’t like the size of aircraft serving the city in question.

    The arguments for maintaining the present size of Wellington Airport do override those for extension; on cost, on need, on indebtedness, on financial risk to citizens, on environmental considerations, and for the peace and quiet desired by the residents of our Eastern Suburbs.

     
  30. Troy H, 28. May 2017, 16:13

    A small seasonal drop, happens every winter.
    No need for an extension as the record number of tourists are not coming to Wellington to see the airport runway.

     
  31. Andrew, 29. May 2017, 9:08

    Planespotter: following that logic, Milford Sound would not get many visitors.

     
  32. Planespotter, 29. May 2017, 19:43

    Andrew: and it doesn’t get as many as it could/should. The 8 hours return drive puts off many visitors which is why they are looking at putting in a new road. Recognising it (for better or worse) would significantly increase visitors.

     
  33. Andrew, 23. June 2017, 18:28

    Well, Jetstar couldn’t make Queenstown-Wellington or Melbourne-Wellington work, even with subsidies. Try flying regularly to Melbourne and you’ll appreciate that even on that route, the demand is not there.

     
  34. Michael, 24. June 2017, 14:27

    Let’s face it, apart from the “well off”, the rest of the country looks for the best deal when going overseas, and where are the best deals = Auckland! Even with a runway extension, Wellington is never going to have a huge range of international airway companies operating out of it, competing for business and offering deals. Do we really need to spend enormous amounts of money on a runway extension while water still leaks out into the road in Lambton Quay, and other infrastructure starts to wear out?

     

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