In 1998 Infratil acquired 66% of Wellington Airport from the New Zealand Government with the remaining stake owned by Wellington City Council. Wellington Airport has a 110-hectare freehold site, 8kms from the centre of Wellington City.

Overview

Wellington Airport currently handles 6 million passengers per year predominantly on domestic and Tasman services. The Airport's relatively short (2,081 metre) runway has impeded the Airport from accommodating long-haul air services. The Airport’s cost per passenger and charges per passenger are the lowest of any international airport in Australasia.

  • Over the 19 years since privatisation the Airport has invested approximately $550 million in its facilities and paid a similar amount to its shareholders

  • Wellington Airport's EBITDA has grown from $14 million in FY1998 to $90 million in FY2017. Annual passenger numbers have risen from 3.4 million to 6.0 million


Investment rationale and strategy

Following the Australian lead, the New Zealand Government sold most of its stakes in the nation’s airports in the late 1990s. This enabled Morrison & Co to arrange the acquisition of the Crown's 66% interest in Wellington Airport in 1998. Subsequently Infratil and the Wellington City Council (which owns 34%) have built a strong high-trust relationship based on prioritisation of the Airport's crucial role in region’s transport infrastructure.

The Airport's returns to shareholders have been derived from steadily rising traffic, excellent facilities and low operating costs. The Airport's main challenges have been its small site, close proximity to surrounding suburbs, and the length of its runway. At 2,081 metres the runway restricts the Airport to predominantly domestic/Tasman services, although in 2016 Singapore Airways instituted the "Capital Express" linking Wellington-Canberra-Singapore with B777-200. After only two months this was achieving average loads of 80%.

However, with the huge expansion of Asia-New Zealand travel largely bypassing central New Zealand, Wellington City Council and the Airport established a joint venture to extend the Airport’s runway to accommodate direct long haul services. This initiative is currently progressing regulatory approvals (which has taken four years to date). Analysis by route consultants InterVistas indicate significant latent demand for direct services to Asia and the USA.

The operational goals of the Airport are to provide excellent and pleasant facilities for its users, and an efficient airfield and terminal for its airlines. The key challenge on both fronts has been its small site which has required innovation and excellent planning. At present the Airport is part way through a $250 million expansion of terminal and land transport facilities. In addition it is building a $50 million 4.5 star hotel which will be accessible directly from the terminal.

The extension of the Airport’s runway continues to face complex and difficult regulatory hurdles, if these are surmounted it is expected to cost about $300 million and could be available in 2020. Over time it would attract a significant increase in traffic and diversify the Airport’s air links.

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