AIA strategy pays dividends

When Auckland International Airport (AIA) announced in 2010 it planned to buy a stake in Queenstown Airport, there was a sense of scepticism from some of the local community.

There were fears Auckland would try to dominate the local company, raising landing charges and scalping any profit made by the Queenstown company.

There was active opposition to the purchase, which saw AIA take a 24.9% stake from owner Queenstown District Lakes Council through the issue of four million new shares for $27.7 million. The acquisition followed Auckland's initial step-out purchase of 24.55% stake in North Queensland airports in January 2010.

Auckland noted its strategic rationale for the Queenstown alliance was to co-ordinate destination promotion and route development discussions with airlines, as part of its strategy to lift international passenger numbers - a key value driver - above organic growth rates.

The Auckland airport is the primary gateway for international arrivals and New Zealand remains a great place to visit, with leisure arrivals making up around 70% of the market. Queenstown remains New Zealand's primary leisure destination.

Figures out last week showed Queenstown Airport was a star performer in November, with international passengers up 17.5% on November last year. The increase was driven by 32 additional international flights. Domestic passenger numbers were up 18.4%.

The figures show 12,194 international passengers passed through the airport compared with 10,376 in November last year. In the financial year then to date, 116,821 passengers had gone through the airport, up nearly 12% on the previous corresponding period.

There were 100 international aircraft movements in November, up 28.2% on November last year. In the financial year then to date, there were 916 international movements, up 12%. Domestically, there were 77,176 passengers, up 18.4%. There were 838 domestic aircraft movements in November, up 8.3% on the previous period, and in the then year to date there were 4903 movements, up 13.3%.

International passenger movements through Auckland International Airport were up only 1.9% in November but there was strong growth in November on China, transtasman and Pacific Island routes. China was up 8.4% on November last year. Auckland airport's figures showed it was pushing the increase in Chinese visitors south, to Queenstown.

A 38% rise in the annual number of Chinese touching down in New Zealand has seen the world's most populous nation topple the United Kingdom as New Zealand's second-biggest pool for visitors. There were some 194,752 short-term Chinese arrivals in the 12 months ended November, up from 141,289 a year earlier, according to Statistics New Zealand. That trumped the 191,360 British short-term visitors, which fell an annual 17%. Both sets of figures are, however, dwarfed by the number of Australian visitors: 1.16 million.

The rising number of Chinese visitors comes as New Zealand draws closer with the rising economic powerhouse, with local businesses looking to do more in the world's second-biggest economy and the Government beginning to reap the benefits from signing a free-trade agreement with China in 2008. Dunedin City Council officials last week expressed optimism about potentially lucrative trade deals with China being just months away.

About 71% of Chinese visitors in the November year came for a holiday, with 12% visiting friends or family, and 10% coming to do business. While there are some questions about why Auckland airport took the stakes in Queenstown, Cairns and Mackay airports, the strategy has so far proved sound. Auckland airport has been instrumental in smoothing the way for global airline companies, particularly those from Asia, to increase their flights to New Zealand.

Once those leisure visitors arrive in Auckland, they are encouraged to fly to Queenstown. The parties benefiting from Auckland's investment strategy include the company itself, Queenstown Airport, airlines flying in and out of Queenstown and the resort's tourism operators. In retrospect, the policy instigated nearly two years ago by Auckland airport seems well implemented.