Wellington Airport Assumptions

November 27th, 2015 at 3:00 pm by David Farrar

Have been reading the business case for the proposed Wellington runway extension.

As a frequent traveler I’d love to be able to fly from Wellington to North America, Asia etc.

However I’m sceptical that extending the runway will lead to a huge increase in international connections.

The business case in section 3.4 assumes the following additional flights:

  • South-East Asia 4/week
  • USA 3/week
  • China 4/week
  • 3rd Asian 4/week
  • 4th Asian 3/week

Now it is very difficult to know the future. But for me a conservative approach is to look at comparable other airports.

Christchurch Airport services a larger population base than Wellington. It also is a hub for the entire South Island. And its runway is over three kms long – much longer than even an extended Wellington.

I’ve just checked their weekly flight schedule. The only additional flights they have beyond Australia and the Pacific (which Wellington already does) is a daily to and from Singapore.

So as much as I’d like to think a longer runway to Wellington will get us flights to four different Asian cities and to the US, I ask why would we get these, when Christchurch doesn’t?

In terms of investing in a runway extension, I think there is obviously a level of investment which would be beneficial to the airport owners. But this appears to be far less than the estimated $300 million cost.

I also accept there is a case for some ratepayer investment, on the basis that there is an economic gain to Wellington. The level is another thing.

But the case for taxpayer investment I remain sceptical of.  You need to be convinced that this extension will result in significantly more people flying to New Zealand.

UPDATE: Former Reverve Bank economist Michael Reddell blogs on this also. He notes:

One of the puzzling – or perhaps not so puzzling –  aspects of the report is the complete absence of any analysis of Christchurch airport’s experience with long haul flights.

The traffic forecasts, prepared by InterVISTAS, involve a central scenario in which in thirty years time there would be 56 long haul departures a week from Wellington (eight per day on average).   This is defended with the observation that “Wellington in 30 years time. (FY 2045) will have less than half the number of average weekly frequencies on long haul services as Auckland has now.”  And this was supposed to reassure me?  In addition to having almost four times the population of slowly-growing Wellington (and a larger hinterland), Auckland is inevitably a more natural gateway to New Zealand than Wellington is.  The authors go on to defend their assumptions with the observation that Adelaide has 44 weekly long haul departures (their forecast for Wellington in 2035).  But Adelaide is a city of 1.3 million people.

And still no mention of Christchurch.  Christchurch has about the same population as Wellington.  And if Auckland is one natural gateway to New Zealand, Christchurch is the other, given the much greater tourist appeal of the South Island (and the impossibility of long haul flights into Queenstown).  I couldn’t find an easy reference to how many direct long haul flights there are out of Christchurch at present, but there seem to five weekly flights to Singapore.  A new service to Guangzhou is also starting this month, so perhaps that is another five flights a week.  Other wide-bodied aircraft use Christchurch airport, but to get beyond Australia you still have to stop in Australia.

And it is not as if long haul international flights from Christchurch are relentlessly increasing.  I have distant memories of flying direct into Christchurch from Los Angeles, but that was 10 years ago, and the service is long gone.  AirAsia’s direct flights from Malaysia to Christchurch didn’t last long either.

Surely it is such an obvious comparator that the Christchurch experience really should have been addressed directly? 

I agree. Now there may be good reasons why a longer runway in Wellington may mean we’d get far more flights than Christchurch. Their airport might be run rather badly, and Wellington is not. But to convince sceptics, one really needs to do the direct comparison with Christchurch.

Michael makes many other useful points also – read his post in full if you have the time.


Sense from a Green Councillor

November 3rd, 2015 at 3:00 pm by David Farrar

Green City Councillor David Lee writes:

As Wellington International Airport Limited (WIAL) prepares to lodge its application for resource consent for a runway extension, it’s important Wellingtonians are aware of the full facts – because, if the scheme goes ahead, a vast amount of ratepayers’ money will be pouring into it.

The plan has its supporters.

Wellington City Council (WCC) supports committing $90m towards the estimated $350m cost.

That $90 million would come from basically 75,000 households so is around $1,200 a household!!

As a resident, planner and Wellington City councillor, I am passionately committed to investment to promote a strong local economy and vibrant compact city – but it has to be the right kind of development.

As a professional planner – I spent 10 years as an airport and land-use planner with the Royal New Zealand Air Force and several years planning major road projects for New Zealand Transport Agency – I am seriously worried about this proposal.

Let’s look at the facts.

Undoubtedly the airport is a valuable strategic asset for the city and the region. Good air connectivity is essential for commerce, trade, resilience and social wellbeing.

But it is concerning that the private company that owns the airport is proposing to contribute just $40-$50m of the proposed costs. Other councils in the region have been asked to contribute $60m, so the residents of Hutt, Kapiti and the Wairarapa are contributing more than the private owner of the airport will.

This is key. We have an owner who is putting up just one seventh of the cost. They’re asking for the following:

  • Airport Owner $40 million
  • Wellington City ratepayers $90 million
  • Greater Wellington ratepayers $60 million
  • Taxpayers $160 million

Does that seem fair? To me it is more like corporate welfare.

Air New Zealand and none of the other 19 airlines BARNZ represents are interested in flying long-haul into Wellington. None of the economic benefits of a runway can be realised if no airline is prepared to use it. 

On that evidence, the airport would struggle to achieve much more than an infrequent service to a single destination in Asia – perhaps Southern China, hardly connectivity to a major hub. And the Council’s own analysis discounts the chance of North American links. . 

There is a real risk that $350m-plus could be spent, with huge cost to Wellington ratepayers, for a couple of flights to China a week.  

Not a single airline has said they’ll put extra flights on. At best we may get a couple of flights a week from Wellington to Guangzhou and return.

I am urging that before WCC invests any further money in this application, that an independent, rigorous and robust business case is completed and the community is given the opportunity to assess whether the promised ‘benefits’ stand up to scrutiny and this very considerable investment is warranted.

I’m open to persuasion if some airlines commit to a significant number of extra destinations due to an extended runway. But without that commitment, it is just corporate welfare and a “Build it and they will come” hope mentality.

Good to see a Councillor willing to show caution with this huge amount of money.

UPDATE: A response from Infratil that they posted to the wrong thread:

David Lee’s article in today’s Dominion Post and the commentary attached to quotes from the article in the whaleoil blog are a mixture of platitudes, inaccuracies and comments that can only cause concern about the writers’ credulity
Lets start with the inaccuracies.
At present the Airport and the City are jointly funding a review of the project. This will address the business case and seek consents.
Once this exercise is concluded the various parties that have been identified as potential capital providers (Airport, Council, Government) will be approached to provide the construction funding.
Does anyone in their right mind believe that sums like $300 million get invested without comprehensive due diligence and analysis?
As to how much funding will be sought from the likely providers, absolutely nothing has yet been identified. Initial construction cost estimates have arrived at $300 million, but this can only be provisional until consents are received and final design work completed. The Airport has indicated that it expects to contribute a sum to reflect the commercial value of the extra services/traffic generated by the extension. Amounts of $50-100 million have been mentioned as the likely range for this value, but until the business case is fully formed and modelled, no one knows. What is known now is that the figures and analysis will be public and transparent once they have been identified.
The assertion that the runway could be extended and then not used or only used to fly to somewhere obscure in China is counter to any logic. In the first place, there will be a substantial commercial investment in the project, an investment that could only pay off if the extension is actually used. Secondly all capital providers will have ample opportunity to reach their own conclusions on the “will they come?” issue. Third, perhaps the Councillor missed the presentation made last week on the topic of likely routes. The key point of the presentation from InterVistas (the world’s leading experts on airline route economics and demand) was that long-haul routes to Wellington will link Wellington to a hub; Singapore, KL, HK, LA, one of the Emirates. Another point in that presentation which seems to have been missed is that several routes appear viable to InterVistas.
Such gems of insightfulness provided as comments on the Councillor’s article “Good to see a Councillor willing to show caution with this huge amount of money” Hello? Really? What matters for Wellington is the quality of governance and oversight provided by its councillors. Caution is not a virtue on its own. This project is complex and the final decision will be based on a lot of information and analysis. As a ratepayer I’m not looking for caution so much as diligence, analytical capability and judgement.
The article quotes at length representatives of the current airline users of the Airport who are opposed to its extension. Ask yourself, is their opposition to the extension (and their funding of opposition initiatives) based on their generous concern about Wellington or a desire to limit competition?
This project is a long long away from its final form. It can only happen if it gets the backing of private and public capital providers. This is uncommon in New Zealand and clearly there is plenty of discomfort with the prospect of “socialise costs, privatise profits”. But for Wellington what matters is that the right decision is made.
That means investing if the investment has a strong case that it will generate community wealth and not to invest otherwise.
But the worst decision that can be made is to not invest when the project would have generate community wealth.
Saying “no” can be as wrong as or worse than saying “yes”, it depends on the facts, and at present no one has those facts.

Tags: ,

Danger Will Robinson Danger

October 23rd, 2015 at 1:00 pm by David Farrar

Stuff reports:

Direct flights to Singapore, Hong Kong and Dubai could be on the cards for the capital if an extension to Wellington Airport’s runway goes ahead, the council has heard.

Note the weasel words of “could be”. Not will be, probably will be, or should be but could be.

A torrid affair with Angelina Jolie might be on the cards for me, if ratepayers give me $300 million.

But any decision to proceed with the $300 million move will have to be made without an airline being locked-in to start operating the long-haul flights.

No, no, no no.

That is build it and they will come thinking. Or in this case build it and they could come.

If one or more airlines made a firm commitment to fly to Wellington if the runway was extended, then it could be worth pursuing. But with no commitment from any airline, this could be a huge white elephant.

Wellington City councillors were told on Thursday that the city would have to show its hand first when it came to the proposed 300-metre extension because it was unlikely a long-haul airline would put serious consideration into adding the capital as a destination until the longer runway was a certainty.

Buy me a $300 million chicken and I could lay an egg.


Airport extension benefits critiqued

April 11th, 2015 at 8:50 am by David Farrar

Stuff reports:

The airline industry is criticising plans to extend Wellington Airport’s runway, saying there are better ways to spend $300 million.

In a submission that went to the Wellington City Council last night, the Board of Airline Representatives New Zealand (Barnz) raises serious concerns about the claimed economic benefits, and fears airlines will be left to pick up the bill.

The board represents 20 airlines that fly into and around New Zealand, including Air New Zealand.


Airlines will of course pass on extra costs to travelers.

I’d love to be able to fly to countries outside Australia and the Pacific from Wellington. But not at any cost.

But Barnz says the methodology used to work out the supposed economic benefits is flawed. It commissioned a peer review which states that the economic impact assessment “overstates the benefits while overlooking costs”.

Many of the assumptions used are unsound, the report says. That includes the idea that people would wait 48 hours to catch a direct flight rather than adding a stopover in Auckland, and that tourists would want to land in Wellington, requiring a “figure of eight” to explore the country, rather than starting at one end and going down.

A fair point. However we may get some people wanting to do a shorter trip primarily in one island only.

Given the requirement for long-haul carriers to fill 80 per cent of their seats, it was unlikely one would be willing to come to Wellington, he said.

“We’re not aware of any airline expressing an interest in flying long-haul into Wellington . . . Our concern is that there’s a potentially huge cost either to the ratepayers or to the traveller.”

This is the key. Funding should only be considered if an airline is willing to pledge it would then fly to Wellington from the US or Asia. Spending $300 million on the basis of “Build it and hope they come” is not sensible.


Smellie on airport extension

December 4th, 2014 at 5:47 am by David Farrar

Pattrick Smellie at Stuff writes:

When the canon of lost causes is examined in the future, somewhere near the top of the list for Wellington will be the local airport’s weird campaign for a longer runway. …

Despite a lot of local booster-ism to the contrary, the value of direct connections to Asia and North America from this country’s third largest city is very difficult to discern, unless you happen to be an airport shareholder. …

The most comprehensive assessment of the runway extension’s prospects was produced earlier this year, after a suspiciously long gestation period, by accounting firm EY.

The airport trumpeted the result as showing “the direct economic benefit to the Wellington region, between 2020 and 2060, will be up to $684m in today’s dollars”. 

That’s not just a rubber number. It’s meaningless.  If such flimsy analysis were produced as a business case for the Infratil board, it would either be laughed out of the room or there would be no Infratil in very short order.

Broken down into actual flight numbers, the EY report says this: a runway extension might be worth between two and five long haul flights a day in 46 years’ time.  Say what!?

If the shareholders of the airport company want to invest $300 million into the airport extension, they should go for it.

There is an arguable case for a modest contribution from the City Council on the basis of increased economic activity in Wellington.

There is no real case for a contribution from the Government, as I can’t see an extension leading to extra flights to NZ – just that some will come direct to Wellington instead of Auckland and Christchurch.

Tags: ,

Can Wellington Airport be moved?

February 10th, 2014 at 9:00 am by David Farrar

The Dom Post reports:

A proposal to relocate Wellington Airport to a site on the hills north of Newlands is worth investigating, Greater Wellington Regional Council chairwoman Fran Wilde says.

The relocation, which has been labelled an “exciting” idea by Transport Minister Gerry Brownlee, has been proposed by Wellington property investor Richard Burrell, who said a completely new airport with a longer runway would have major economic advantages for the region.

It would take a lot of pressure off Wellington City’s roading network and do away with the need for expensive roadworks, including a second Mt Victoria tunnel and more than $300 million that is needed to extend the current airport’s runway.

Mr Burrell said surveyors and engineers had assessed a proposal to put an airport with a 2.4 kilometre runway – able to handle long-haul flights – on farmland at Hunters Hill, between Newlands and Grenada North.

The costings for a new 120ha airport came to about $750 million, far less than the estimated $1.1 billion needed to improve road links to Wellington Airport and to extend the runway.

When I saw the headline, I thought moving the airport is nuts. But if a new airport would cost less than extending the current runway, worth looking at.

If the current Wellington Airport was closed, the land could be sold off for housing and the net effect would be that Wellington would get a better airport with an all-up capital saving of around $500m, Mr Burrell said.

Would be good to be able to get into Wellington from the airport without going through the Mt Vic tunnel.

Mr Brownlee gave his qualified support. “It’s very exciting that someone has had an idea for a new airport, especially as when the private sector comes up with plans of this nature they tend to be fully funded.

However, “the Government has no intention of helping fund a new airport on the hills above Newlands”.

Hopefully that also means the Government won’t help fund extending the runway either.


Airport car parking

October 11th, 2013 at 11:00 am by David Farrar

Tessa Johnstone at Dom Post reports:

The new car park layout at Wellington Airport may be drawing condemnation online, but only nine people have bothered to complain officially.

Wellington City Council candidate Sarah Free called the redesigned car park, which opened on October 1, a “slalom course”, claiming it took 30 minutes for her to pick someone up and cost $7.

“I spent a totally frustrating, and dangerous, 10 minutes circling narrow laneways, fruitlessly looking for a car park, witnessing near collisions as cars tried to turn into blind corners, and finally finding a car park at the remotest end of the upper level,” she said online.

Ms Free said that although the situation was improving as the project was being finished, she still had concerns about the visibility of signs and a lack of parking and pay stations.

Transport planner Neil Douglas also complained online, claiming the new layout was leading to delays with taxis and shuttles. He and about 25 other passengers had to wait about 20 minutes for a taxi after they came off midnight flights from Australia last week, he said.

Wellington Airport has followed Auckland Airport in designing a transport pick up and drop off system that fucks over the passengers as much as possible.

At Auckland you now have to walk for long distances in the rain to get to the taxi stand, and in Wellington you now risk getting charged just for dropping someone off.

Airports are near-monopolies, and good customer experience seems to rank near bottom of their criteria for decision making.

Tags: ,

Yay – no taxpayer money for Wellington Airport

August 28th, 2013 at 11:00 am by David Farrar

Stuff reports:

Wellington Mayor Celia Wade-Brown is confident the Government will rethink helping pay for an airport runway extension.

I’m confident they won’t.

That’s despite Economic Development Minister Steven Joyce quashing any hopes the Government might put its weight behind the plans.

But Ms Wade-Brown this morning said a business case and resource consent were being worked through. When the business case was complete, the Government would ‘‘keep an open mind’’, she said.

Infratil say the new runway will cost $300 million and they want taxpayers and/or ratepayers to fork up $200 million of it. Outrageous.

In any case, taxpayer funding would not necessarily be needed, she said.

So Celia wants ratepayers to fork up the entire $200 million?

Tags: , ,

Wgtn Airport wants $200 million for a new runway

August 16th, 2013 at 7:00 am by David Farrar

The Dom Post reports:

Wellington ratepayers are likely to contribute a lot more than the $1 million they have already spent on the proposed airport runway extension, if it is ever built.

Infrastructure investor Infratil has confirmed it is keen to proceed with the $300 million project but only if central or local government pays most of the bill.

Speaking at the firm’s annual meeting this week, chief executive Marko Bogoievski said the runway would not become a reality unless local ratepayers and taxpayers also chipped in to the tune of $200 million.

Well that’s easy. No.


Extending Wellington Airport

May 24th, 2013 at 11:00 am by David Farrar

The Dom Post reports:

Wellington City Council is stumping up $1 million of ratepayer’s money to help Wellington Airport make it through the resource consent phase for its proposed runway extension.

The airport is considering a 300-metre extension north into Evans Bay at a projected cost of $300 million – or $1m a metre.

The extension would allow long-haul flights to and from Asia, and connections to Europe, with new-generation aircraft such as the Boeing 787 Dreamliner and the Airbus A350.

Mayor Celia Wade-Brown said the resource consent process was expected to cost $2 million and the council would vote later this month to contribute up to $1 million as a project ”kick start”.

I’m all for extending the airport, but not sure why the Council should subsidise a resource consent for it.

If Wellington Airport thinks they can make enough money from extra flights and user charges, then they should start the process.

The short and long-term benefits to Wellington of a runway extension were significant, she said.

BERL has calculated the immediate direct economic benefit to the region at more than $43 million a year with more than 300 post-construction jobs created.

Hopefully that report is more robust than the one they did on the costs of alcohol which was beyond redemption as it included costs only, and neglected to include benefits in their calculations.

Hopefully also more robust than their one claiming nationalising the power industry would create 5,000 jobs.

As I said, I think a runway extension is a good idea, and would love to be able to fly overseas (except Australia) without going through Auckland.  But the Airport is a commercial entity. It should only fund an extension if it believes it can generate enough revenues to pay for it.

Tags: , ,

Wellywood gets just 10%

November 21st, 2011 at 7:12 am by David Farrar

Thank goodness, the Wellywood option got under 10% of the vote. eye of the Taniwha got around around 35% and Wellington Blown Away got 65%.

Like many would have been happy with no sign, but at least we have a sign that won’t make us cringe and is slightly funny.

Now hopefully the airport company can go back to, well, running the aiport.

Number one priority should be to change the security check area to where the cafe is, so the Koru Club is within the security zone. In Auckland you can be on board your flight within a minute of the boarding call, while in Wellington you often need to then spend 5 – 10 minutes in a security queue before boarding.

Of course a more sensible option would to to abolish the security checks all together for domestic flights, but that is a Government decision. You have to endure them for Wellington to Auckland but not Wellington to Hamilton. Just classify all our flights as provincial.

Tags: ,

Vote for an alternative to Wellywood

October 31st, 2011 at 1:00 pm by David Farrar

You can vote at the Dom Post for one of five alternatives to Wellywood. The top two options will then go into a run-off ballot against Wellywood. That final ballot should be a ranked one, otherwise it may be seen as an attempt to have Wellywood win by splitting the vote.

My order of preference is:

  1. Te Capital
  2. Wellington’s lost umbrellas
  3. Wellington (blown away)
  4. Taniwha
  5. Eye of Taniwha Whataitai
  6. Wellywood

Make sure you vote and have you say. We all have to live with the winning option.

Tags: , ,

Wellington Airport CEO moves on

July 26th, 2011 at 2:35 pm by David Farrar

Stuff reports:

Wellington International Airport’s chief executive Steve Fitzgerald is taking up a new position with the airport’s majority shareholder, Infratil.

Fitzgerald fronted the airport’s controversial and subsequently overturned decision to erect a Wellywood sign on hillside land it owns near the Miramar Cutting.

He will take up a role in Sydney with HRL Morrison & Co, which manages Infratil, and will be responsible for airport investment.

This is no surprise. The airport company will take some time to recover from the Wellywood fiasco.


The top ten ideas for Wellington

May 18th, 2010 at 4:00 pm by David Farrar

Wellington Airport have released their list of top ten suggestions, after backing down on the proposed Wellywood sign. They are:

  • Lord of the Rings sculptures
  • Middle-earth or Frodo’s Land
  • Absolutely Positively Wellington
  • A film sculpture
  • Wetawood
  • A wind sculpture
  • A weta sculpture

The Dim Post comments:

Nothing says ‘film’, ‘global’ and ‘Wellington’ like a ‘MIRAMAR’ sign. And ‘Frodo’s Land’ made the top 10? What was number eleven? A word that burned out your retinas and made your eyeballs run down your face?

Have to agree.

My favourite is still a weta sculpture, and it even has a Facebook group in support of it, if you agree.

Of the ten suggestions, which are the better and worse ones? I’ll try and rank them in order.

  1. A weta sculpture
  2. Absolutely Positively Wellington
  3. Lord of the Rings sculptures
  4. Middle-earth or Frodo’s Land
  6. Wetawood
  7. A film sculpture
  8. A wind sculpture

What do you think?

Tags: ,

Support a Weta

March 31st, 2010 at 4:00 pm by David Farrar

Wellington Airport have not totally given up it seems on the Wellywood sign. They have said they are willing to consider alternatives that get across a message of “Wellington, “Film” and “Global”.

So unless enough people support an alternative, we may still end up with a Wellywood sign. So for those who like the idea of a giant weta, I’ve set up a Facebook page you can join to show your support.

Tags: , , ,

No Wellywood sign

March 31st, 2010 at 10:44 am by David Farrar

Yay. Wellington Airport has backed down on their plan to erect a huge Wellywood sign on nearby hills.

Good on them for listening to the community. They want alternate ideas. I still like the idea of a giant weta – unique to NZ, and is a way we can promote the creative industry that has built up around Weta.

Two anti-wellywood sign Facebook groups got over 15,000 and 4,000 members.

In a sign of Facebook’s power, the Airport is calling for ideas to be posted to their Facebook page.

Tags: ,

More on Wellywood sign

March 15th, 2010 at 12:00 pm by David Farrar

I never thought I would be thanking US entertainment IP lawyers, but hopefully they have managed to kill off the Wellywood sign planned by Wellington Airport.

The airport claims it thinks it has the legal rights, but really why on Earth would they spend their monopoly income on fighting a legal battle to erect a sign that is hated by the local population.

The anti-Wellywood sign facebook group is already over 13,000.

Danyl noted a few days ago:

Not only has everyone I’ve spoken to objected to the sign, every guy I’ve spoken to has speculated about destroying it personally. I don’t think it’s a keeper.

This has incidentally also been my experience. I was at a bbq on Sunday, and the discussion turned to how to destroy the sign, if it goes ahead.  Some of the ideas were:

  1. A small group going in at 2 am with axes.
  2. A one person assault squad with petrol and matches. Some concern over nearby bush though.
  3. Just announce on the Facebook group a date and time to demolish it, and see how many thousand people turn up. The Police won’t be able to arrest 4,000 people, and can you imagine the pressure it would put on to have the sign removed, if say 500 Police had to hold off 4,000 locals trying to destroy the sign.
  4. Get people to register for a flash mob, and then one day tell people to meet up at the sign in 45 minutes. It could spread very quickly virally.
  5. Some sort of aerial assault – maybe a hook and grapple tied to a helicopter and just pull the thing out of the ground, and dump it in the ocean.
  6. Pour acid over the foundations to weaken it, and see how many days it takes to collapse. Could possibly even get an iPredict market going to predict the day.

The best alternative suggestion I have heard, is to have a massive giant weta on the hills. Not only are Wetas endemic to New Zealand, it would be a more appropriate way of celebrating the film industry that has built up around Weta Workshop etc.

Lots of tourists would ask about the giant weta they saw flying in, and one could tell them about they can visit the Weta Cave, and how scores of the major Hollywood films have their special effects and more done here.

Frankly though, anything would be better than an imitation Hollywood sign.

Tags: ,

WCC to sell more of Wellington Airport

December 1st, 2008 at 8:52 am by David Farrar

Wellington City Council is looking to sell 8% of Wellington Airport, reducing its shareholding from 34% to 26%.

A good move, as it allows the Council to still block special resolutions, but frees up capital for debt repayment.

Tags: ,