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.
Infratil owns two-thirds of the airport, with the rest owned by Wellington City Council.
Wellington Airport is only prepared to pick up a third of the construction costs because it says the project does not stack up on a purely user-pays basis.
Rough estimates suggest a longer runway would bring in only $2.6m in aviation fees a year, based on 2500 passengers a week paying landing charges of $20.
On those estimates, it would take the airport 115 years to recoup its investment without extra funding.
Infratil has a strong focus on returning money to shareholders with a target of giving back 20 per cent after tax.
For the last financial year, its bottom-line profit was $3.4 million but its earnings before interest, tax, depreciation, amortisation and fair value adjustments were $527.6m.
Infratil could also soon be sitting on an extra $450 million cash after listing a chunk of fuel retailer Z Energy on the stock exchange later this month.
To date, $1m of Wellington City ratepayer money has been set aside to fund half of the consenting process with the airport still assessing whether to extend the runway north into Evans Bay or south into Cook Strait.
City councillor Jo Coughlan, who looks after the economic portfolio, stressed a decision on more ratepayer funding would not be made until after resource consent was granted, which could take up to two years. "[The decision will be] tempered with the reality of how we are going to pay for it and the benefits it can bring."
Raewyn Bleakley, head of the Wellington Chamber of Commerce, said she would be advocating for a taxpayer contribution.
The economic upsides of the new runway, estimated by the airport at $44m a year, would undoubtedly spill over into the regional economy, she said.
But central government's appetite for the deal is still unclear.
A spokesman for Transport Minister Gerry Brownlee said the matter had yet to be formally broached.
Mr Bogoievski said the opportunity to connect Wellington directly to Asia was potentially a lucrative one.
"The reason we're all interested in this is we know there are 430,000 passengers per annum who initiate a journey in Wellington who either hub through Christchurch or Auckland to go on to further international travel that could just travel straight down to Wellington in future."
Tim Brown, an executive at Infratil's manager Morrison & Co and who also sits on the airport company's board, said there were other important considerations that needed to be considered, such as finding an airline to operate the route.
As it stands, Air New Zealand and partner Virgin prefer Auckland as their international hub, while Qantas and Emirates use Christchurch.
Additionally, it was important to keep track of emerging technologies because "you [could] build a new runway and find in five years' time there's an airplane that can land on the [original one] anyway," he said.
Wellington City Council has cited the addition of a long-haul carrier as a key part of its regional development strategy.
If the project does get the thumbs up, it could be several years before the first sod is turned, and at least seven years before the first Asia-bound carrier sets down on the Wellington tarmac.
- © Fairfax NZ News
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