15 Aug 2016

Runway extension uneconomic - report

11:56 am on 15 August 2016

A new report claims there will not be enough passengers to make a runway extension at Wellington Airport economically viable.

Virgin plane landing in Wellington Airport.

Virgin plane landing in Wellington Airport. Photo: RNZ / Alexander Robertson

Wellington International Airport wants to extend the runway 355m into Cook Strait at an expected cost of $300 million.

The region's councils have provisionally agreed to pay $150m and Infratil, the airport's two-thirds owner, had signalled it might pay between $50m and $80m. They had hoped central government would fund the rest.

In the airport's own passenger forecasts prepared by InterVISTAS, it suggested six long-haul services could start between 2021 and 2034.

They included daily flights to Singapore, flights three times a week to Los Angeles, to China four times a week and to Malaysia or Bangkok three or four times a week.

However, the BARNZ-commissioned report said forecasts for high passenger numbers were based on flawed predictions.

Read the full report.

The report, carried out by Ailevon Pacific Aviation Consulting, said there was insufficient demand, including for connecting flights, to support them in a commercially viable way.

It said neither existing nor forecast demand warranted the introduction of non-stop long haul services at Wellington Airport.

Report author Oliver Lamb told Nine to Noon the evidence showed a much smaller long-haul demand, both to and from Wellington, than had been presented previously.

BARNZ executive director John Beckett said the group's members, including Singapore Airlines, wanted the InterVISTAS figures scrutinised.

"The economics go out the window," he said, "the benefits over the life of the runway would be less than the cost of extending it, therefore it's a poor investment."

"There are much better ways to spend that investment capital than pouring rocks into Cook Strait," he said.

He hoped the airport and Wellington City Council would think very carefully before responding to the report, he said.

The report's authors said InterVISTAS had overstated Wellington's demand potential by over 100 percent and relied on the "improbable assertion that Wellington Airport can capture 72 percent of New Zealand's long-haul demand outside of Auckland".

It calculated the planes on those routes would be flying unprofitably at half to two-thirds full.

In fact, Ailevon found Wellington's long-haul market growth had lagged behind the rest of the country.

"In the rapidly-growing China-New Zealand market, Wellington's demand has gone backwards over the past five years," it said.

It also pointed to the growth of Queenstown Airport which, despite constraints on its runway length, had among the highest passenger growth rates in New Zealand.

Wellington airport spokesperson Greg Thomas said in a statement, "it's clear the Airline Representatives aren't genuine about consulting, but are just using underhand tactics to gain headlines, and we won't take part in the charade.

"InterVISTAS are international leaders in route development and passenger forecasting, and these forecasts will be scrutinised during the Environment Court hearing.

"InterVISTAS are robust independent forecasters and we support their findings," the statement said.

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