Queenstown airport plan risk to be evaluated

A review at Air New Zealand comes at a time when the airline faces big changes at the very top....
Queenstown Airport’s drawn-out master plan has cleared its second-last hurdle, however, a Queenstown Lakes District Council committee will now examine potential financial risk, and possible mitigation, next month.

At Thursday’s full council meeting in Queenstown, councillors were asked to "endorse" the draft master plan, which builds on a 10-year strategic plan approved last year, and sets out $350 million of developments on airport land to provide options beyond 2032. If approved, it would be subject to an aeronautical study to ensure operations were as safe as possible, airport chief executive Glen Sowry said.

During lengthy discussions yesterday, Cr Niki Gladding called the master plan "one complete package ... of interdependent pieces", and questioned if the airport board had looked into Companies Act legislation, which required a special requisition of shareholders if a piece of expenditure exceeded half the value of the company’s assets.

Total assets, at June 30, were valued at $523m.

Board member Simon Flood said he would be "very happy to look at" the legislation, but noted how much money would be spent would ultimately be determined by banks, "not known for their overwhelming generosity in the face of data to the contrary".

"They will make the determination as to whether or not this stacks up, financially.

"But I can assure you, from our perspective ... not only can we afford to do this, but while we are doing this capital programme, we can also afford to maintain a dividend, which is so important to this community."

Cr Gladding was later successful in amending the motion, to direct staff to prepare a report for next month’s audit, finance and risk committee requesting consideration on the financial risk associated with the master plan, any recommendations to manage it and all revenue assumptions.

Speaking to her amendment, she said that was with a view to putting some controls in the long-term plan, and noted Auckland Council’s long-term plan set out the controls it expected to have over expenditure and referenced "major transactions" under the Companies Act.

"It’s just one of the things we could discuss [along with] other controls ... to safeguard our balance sheet and our shareholding, purely to protect the ratepayers." she said.

"We’re employed to do a job, and that is to govern.

"Part of that is to manage risk ... on behalf of ratepayers."

Meanwhile, Mr Sowry told councillors despite a strong recovery post-Covid, to 2.35 million passengers last year, he expected "flat growth" over the next two or three years.

"We’ve had very clear guidance from Air New Zealand that with their fleet challenges, capacity is going to be significantly constrained, and Queenstown experiences the result of that like everyone else.

"So, I think it’s very reasonable to assume there’ll be very limited growth over the next two years for Queenstown.

"Beyond that, it will be interesting to see what happens ... we had assumed 3.2% per annum growth out to 2034. We see nothing on the horizon, with our engagement with the airlines, that would suggest that is incorrect, or is not a sound assumption."