Profits linked to landing tax

ALAN WOOD
Last updated 11:14 08/04/2014
Christchurch airport
Kirk Hargreaves/Fairfax NZ

NUMBERS GAME: Passengers arriving at Christchurch Airport, which is forecasting its profit to more than double by 2017.

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Christchurch Airport is forecasting its profit will more than double by 2017, mainly through a controversial increase in landing charges to airlines that are passed on to passengers.

The airport reported a net profit of $18.4 million in the year to June 2013 but says it will grow to $39.6m by the June 2017 year.

The profit forecasts are contained in a draft "statement of intent" for the airport's owners.

Their release comes after the Commerce Commission in February said Christchurch Airport would make excessive profits from the fees it plans to charge, particularly those from 2017 until 2032.

Airport chief executive Malcolm Johns said the Commerce Commission had said the pricing through to 2017, as included in the draft statement of intent, was acceptable.

The airport had committed to further consultation on pricing beyond 2017 as the Commerce Commission had expressed some concerns about forecast pricing increase in this later period.

The airport is 75 per cent owned by Christchurch City Council and 25 per cent by the Crown.

The airport reported a net profit of $18.4 million in the year to June 30, 2013.

While the transport hub is predicting a fall in the bottom line to $14.6m in the 12 months to June 30, 2014, in subsequent years the profit will sharply increase.

In 2015 it will increase to $26.6m, then to $36.4m in 2016 and $39.6m in 2017.

Christchurch Airport chief executive Malcolm Johns said the airport had worked with airline partners on the new charges that would be phased in over a number of years.

The SOI forecasts the aeronautical revenue per passenger is due to grow from $8.41 in 2014 to $11.50 in 2015 and $12.89 in 2016.

Asked if the extra aeronautical charges were fair on passengers, Johns said: "Well it's airlines (that are charged) of course, and we haven't detected any major change in airfares.

"But at the end of the day if you spend $240 million on a new terminal, you're just not going to be able to avoid passing that on in some way, shape or form . . . The pleasing thing is that passenger numbers are also continuing to rise."

Board of Airline Representatives NZ executive director John Beckett said while airlines acknowledged that it had been necessary for Christchurch Airport to increase charges as the new terminal was completed, the additional increases in charges in 2015 and 2016 were substantially in excess of what was required.

"It was these further increases that form the basis of the Commerce Commission's conclusion that Christchurch Airport is targeting excessive profits over its 20 year pricing model," Beckett said.

The Commerce Commission deputy chair Sue Begg was not available yesterday to comment on the profits outlined by the SOI.

The draft SOI said the airport was missing out on the growth in tourist numbers seen elsewhere in New Zealand.

"The delay in the timing of the Christchurch city redevelopment is still resulting in Christchurch not experiencing the level of international passenger growth experienced by other major New Zealand tourist destinations," the statement said.

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However, Johns said the latest statistics showed that international passenger numbers for November through February were up about 6 per cent from the prior corresponding months in 2012-13.

Domestic numbers were up 3.5 per cent in the same period, Johns said.

On the downside, the numbers of people arriving for convention business had dropped significantly following the damaging earthquakes of 2011.

The airport is forecasting that total passenger numbers will increase to 5.68 million in the June 2014 year, then to 5.80 million in 2015, 5.92 million in 2016 before crossing the 6 million barrier in 2017. Passenger numbers peaked at just over 6 million in the June 2010 year before the earthquakes.

Total operating revenues will grow from $118.5m in 2013 to a forecast $131.8m in the June 2014 financial year. They will then climb to $158.5m in 2015 and $174.9m in the 2016 financial year.

- BusinessDay

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