Vital volumes

The improved financial results were largely fuelled by growth in passenger numbers across our airport interests. At Auckland Airport, total international passenger movements, including transits, were up 5.1%, and total domestic passenger movements were up 3.3%. 

Passenger numbers also continued to grow at our other airport interests, with Queenstown’s international passenger movements up an excellent 21.2% and domestic passenger movements up 11.6%. At Cairns Airport, international passenger movements were up 3.5% while domestic passenger movements were up 3.2%. Mackay Airport also continued its good growth on the back of the resource sector, with passenger movements up 7.7%. 

While there are clearly more people travelling to and from New Zealand than ever before, a closer look at the statistics reveals a fundamental shift in global travel demographics. Strong growth is occurring out of Australia, China, and many other South-East Asian nations, with declining travel numbers out of the United Kingdom, Europe, Japan and the United States. 

Although some of this decline is related to air service capacity, for example on key United States routes, much of it is due to underlying global economic factors that show little sign of reversing in the near term. This reinforces the need to adapt.

The 2012 financial result offers further evidence of the merits and continued momentum of the long-term growth strategy and market focus that has driven our approach over the last few years. 

Our strategy

Looking back, we believe that our 2009 ‘Flight Path for Growth’ strategy set the right foundation from which to build our business. At that time, with the global financial crisis in full swing, we were faced with a stark choice; to either ‘hunker down’ or go for growth. We decided then that to succeed in such turbulent times, we had to strive for growth, and not be constrained by a sole focus on protection against downside risk. 

In simple terms, we shifted our focus from being an infrastructure builder to a sales-led growth engine for travel, trade and tourism. In essence, we have become a significant market development organisation. Since then, while our strategy has continued to evolve, that underlying principle of ambition for growth – even in turbulent times – has continued to fuel our success.

Today, Auckland Airport’s strategic thinking is informed by six themes that can broadly be described as; volume (growing travel, trade and tourism), yield (maximising the value of our retail and property businesses), smart (developing a ‘smart’ airport to make journeys better), relationships (with travel industry and key stakeholders), partnerships (to achieve superior growth) and leadership (that makes a difference).

Operational excellence

Over the last year, we have continued to sharpen our customer service. Alongside our airport partners, we have delivered further expansion of product and retail choices and travel-processing improvements. We also have a renewed focus on generating innovations and efficiencies in the business.

We remain single-minded about making the journeys of each of our passengers, airlines and partners better across every step of the way. We firmly believe a superior service experience differentiates our business from competing visitor destinations and helps drive repeat travel. 

The focus on, and pride in, ‘making journeys better’ was again recognised in the World Skytrax Airport Awards, with Auckland Airport awarded the best airport in Australia Pacific for the 4th year in a row, and named 2nd best in the world for airports with between 10 and 20 million passengers annually.

While airline customers, passengers and New Zealand economic interests have benefited, shareholders have also been rewarded by these efforts, with outstanding FY10, FY11 and FY12 total shareholder returns, and an increase in dividends for the past two financial years. 

Synergistic partnerships

Auckland Airport is also committed to working effectively with our airline customers to support their own growth ambitions, through air-service development and fair airport charges that align more closely on the risk and reward of passenger volume growth. We consulted extensively and constructively with airlines before fixing a new five-year pricing schedule to apply from 1 July 2012. 

We have also worked with the Government on a wide range of policy and regulatory matters, seeking to further align our business activities with the best possible outcomes for consumers and for the New Zealand economy. Government support has helped to seal the deal on air-service wins such as China Southern Airlines. 

Government has listened to our proposals on improving visa processes for key markets, and delivered on those improvements. It has negotiated a trebling of the number of potential flights with China allowed under an updated air-service arrangement. It has given us a fair hearing in government processes. All the while, it has sought to balance the economic growth that the airport can and does deliver with the interests of other parts of the economy.

We also have an important and positive relationship with Auckland Council. The Council understands the airport’s significant role in facilitating regional growth and creating more and better employment opportunities for Aucklanders, especially those living in and around South Auckland. The new Auckland Plan acknowledges that as Auckland continues to develop as a city, better infrastructure and improved transport options will be required to support predicted airport growth and the benefits it can deliver. 

Incorporating international airport growth into long-term urban city planning is not always easy. The likes of London and Sydney illustrate the consequences of planners over time allowing their city to enclose their airports and constrain their capacity for future growth. 

This approach is forcing such cities to contemplate spending many billions of ratepayer or taxpayer money on new airports to cope with the inevitable rise in travel and trade demand. For example, recent estimates suggest a proposed new Thames Estuary airport in London could cost the equivalent of NZ$100 billion. 

The economic and opportunity cost to Auckland and New Zealand would be massive if aviation capacity was constrained in the same way. 

Rugby World Cup 2011

As noted in the 2012 half-year report, the October 2011 Rugby World Cup was a major operational success at Auckland Airport. A significant amount of joint planning led by the Auckland Airport team went into this event. Additional resources were brought in to ensure visitors to New Zealand had an outstanding airport experience, and the commitment from all stakeholders on airport was exceptional.

In addition to providing a great first and last impression of New Zealand for fans, players and officials, the event also offered retailers and advertisers at the airport an attractive opportunity to display their products in innovative ways. We also took the opportunity to showcase New Zealand with a new passenger arrivals experience featuring modern sound and light components.