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Airline lobby dismisses Wellington airport extension plans

08 Apr 15

New Zealand's airline lobby has opposed plans for the Wellington International Airport extension, saying the $350 million estimated cost may fall on the region's ratepayers, who are unlikely to see any benefit from a runway extension.

The Board of Airline Representatives New Zealand said economic modelling by accounting firm EY is "inadequate" without a cost-benefit analysis for the proposal. The extension would allow modern, long range jets to use the runway, which straddles an isthmus in the city's southern suburbs and would involve reclamation into the Cook Strait.

The EY report published last September concentrated instead on a net present value calculation of the benefits to the region on low, medium and high scenarios for the level of additional economic activity, both by diverting travelers who would use other airports and stimulating new travel.

BARNZ commissioned an independent review from the New Zealand Institute of Economic Research on EY's economic assessment, which it said was "heavily laden with caveats, which need to be clearly understood". It said none of its 20 airline members, which include Air NZ, Qantas, Jetstar, Virgin Australia, and Singapore Airlines, have expressed any intention to fly long haul into the airport if it had an extension, and urged Wellington City Council to fund its own independent cost-benefit analysis before fast-tracking resource consent for the extension.

"The ultimate failure would be that the cost of the extension would either fall on ratepayers, or in higher costs for people flying into and out of Wellington Airport on all services," BARNZ executive director John Beckett said in a statement. "It is not a matter of the airlines being against the extension, or wanting to consolidate long-haul flights in Auckland, but rather that people in Wellington, Carterton, Hutt City, Kapiti Coast, Masterton, Porirua, South Wairarapa, Upper Hutt City may end up paying one way or another for something that doesn't achieve the purpose for which it was built."

Airports, which are regulated by the Commerce Commission, charge airlines landing fees and are restricted to making annual returns of up to 8 percent. Wellington Airport, which is two thirds owned by Infratil with the remainder controlled by Wellington City Council, has previously been accused of price gouging in the setting of its air service charges, with national carrier Air New Zealand flagging a $200 million lift in landing fees over the coming five years.

According to the EY report, on the low growth scenario, a total of 16 extra return flights a week - 10 to Asia and six to North America - might be expected 40 years after the extension opened in 2020, when it anticipates seven weekly flights would be running.

Under the high growth scenario, a total of 33 additional return flights might be expected by 2060, 15 to Asian destinations, eight to North America, and 10 to Australia. In 2020, the date the study presumes the extension would be ready to use, the report assumes a total of seven additional weekly flights on the low growth scenario and 16 under high growth estimates by 2060.

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