Wellington Airport Results for Year Ended 31 March 2013
Since 1998, when Infratil acquired an interest in Wellington Airport, over $300 million has been invested in terminals, runway upgrades, passenger facilities and property development. This investment in travel and tourism infrastructure for Wellington has enabled the airport to cater for passenger growth from 9,600 a day in 1998 to 15,000 a day in 2013 and become one of the highest rated for service quality in Australasia.
Growth and returns for investors, ratepayers and the region
With underlying earnings (EBITDAF) of $82.9m, Wellington Airport produced another strong year. The result reflects good growth in revenue and a continued focus on efficiency that maintains the airport’s position as the most cost efficient Australasia. The result is a $7.4m or 9.8% increase over the previous year. The 2013 dividend for Wellington City Council equates to around $120 per ratepayer and the airport’s total economic contribution to the region was $1.5b, sustaining 10,000 jobs.
We value Air New Zealand’s continued investment as our largest customer, providing 75% of domestic and international capacity. Strong demand in the domestic market saw Wellington’s capacity on main trunk routes increase by 5.7%, driven by a 34% increase in Jetstar capacity for the year and a competitive response from Air New Zealand. With an additional 500,000 seats from the introduction of their ninth aircraft, Jetstar flew 20% of Wellington’s domestic capacity. International passengers were up 1.2% with the market consolidating following two years of significant growth that included the RWC 2011.
Five year plan of $200m for travel & tourism infrastructure
Travel and tourism infrastructure investment for the next five years is forecast to be $200m, which includes the 6,000sqm expansion of the Main Terminal to the south, improving transport and access to the drop-off area, two new fire engines and enhancements to the baggage handling system. Wellington Airport invested $12m in infrastructure over the last 12 months to ensure the highest level of service and promote growth for the Wellington region, which has seen passenger numbers increase to 5.4m.
Wellington Airport’s service quality ranked third in Australasia
The airport’s service quality rankings place Wellington as the third best in Australasia. We aim to deliver a vibrant retail offering and present a comprehensive range to meet all visitors’ tastes and budgets. Travellers have more choice than ever with the introduction of Subway, Witchery, Antipodes and a Burger King outlet attached to a new Z Energy site. By the end of this year the original 1930’s terminal building will be transformed into a beachfront café with stunning views over Lyall Bay and the touchdown zone. Catering to the different passengers’ needs delivered an increase in passenger services income of 3.8%.
Current returns well below Commerce Commission’s benchmark
The Commerce Commission’s report on the effectiveness of the information disclosure regime was issued in February 2013. The report recognised the airport’s transparent and consultative approach to price setting, innovation and operational efficiency, and high quality passenger experience with prudent capital investment. The report also concluded that information disclosure, as a regulatory regime was not able to impact the airport’s profits in the future.
Wellington Airport’s current and historic returns are well below the Commission’s benchmark. Also, the airport’s per passenger charges are in the lower range of airports in Australasia and worldwide. These are both key indicators of actual and future performance, but were not reviewed by the Commission as it mainly focused on future returns that might not eventuate. New Zealand’s airport prices are low when compared with airports worldwide. This, coupled with good investment, innovation and strong incentives to drive travel and tourism growth, demonstrates the current regulatory regime and market is functioning well.
Supporting the region and the Middle of Middle-earth
Few cities in the world benefit from an airport as conveniently located as Wellington. This accessibility also means that the effects of airport noise on the local community are carefully managed and monitored. While the number of travellers has increased over the last 20 years, the overall noise generated has significantly declined. In early 2014 the airport and Air Noise Management Committee are due to implement the plans announced last year to further protect the community against airport noise with a noise mitigation package for all dwellings, schools and early childhood centres within the air noise boundary.
The Hobbit: An Unexpected Journey placed Wellington on the world stage and it was a privilege to able to support the premiere and welcome visitors with a 13 metre long sculpture of Gollum in the main terminal. The sculpture, developed by Weta Workshop, was broadcast around the world and was viewed 1.85b times online. The airport was also renamed, The Middle of Middle-earth for the duration of the trilogy.
This year marks the 10th anniversary of the Wellington Airport Regional Community Awards and we are looking forward to supporting and recognising the volunteer organisations that contribute so much to the Wellington Region.
The team at the airport has delivered an outstanding result and the Board has every confidence in their ability to retain Wellington Airport’s position as one of the top Australasian airports with strong earnings growth.
