15 Feb 2016

Wgtn runway extension doesn't add up - report

9:17 am on 15 February 2016

Plans to extend Wellington Airport's runway by at least 300 metres do not make economic sense, according to a new report.

Wellington airport runway.

Wellington airport runway. Photo: WIAL

The report was done by financial think tank New Zealand Institute of Economic Research (NZIER) on commission for the Board of Airline Representatives of New Zealand (BARNZ).

The airport management company wants to extend the runway 300m south, into Cook Strait, to attract long haul flights from Asia and North America.

The cost has been estimated at $300 million because of the need to reclaim land from deep ocean which is swept by waves and currents.

The price could be much more if the Airline Pilots Association wins a case for extra safety areas to be established at the end of the runway.

The airport company has released reports, notably from two consulting firms, Sapere and InterVISTAS, which argue the extension will have huge economic benefits.

But the NZIER report rebutted these findings.

It said Auckland and Christchurch already dominate international travel into New Zealand because of large population and proximity to scenic locations respectively.

It also argued Asian airlines would be unwilling to establish a new service into Wellington if it undermined its existing routes into Auckland.

NZIER quoted an InterVISTAS forecast of five potential routes to Wellington: Singapore, Hong Kong, Los Angeles, Kuala Lumpur and Bangkok.

But it argued the only only one with any prospect of being viable was Singapore.

NZIER was also sceptical about prospects for Los Angeles, arguing airlines would not want to undercut their existing or planned services into Auckland.

And if they decided on a second route, Christchurch was more plausible as a gateway to New Zealand's scenic treasures.

NZIER also faulted a report by Sapere which found the project's Benefit Cost Ratio was sufficient to justify taxpayer funding.

It said Sapere failed to add some important costs to its accounts, and it over-estimated the number of passengers who would come to Wellington.

It also ignored the fact that more New Zealanders would use the extended runway to travel abroad and spend their money there, which would diminish rather than enhance New Zealand's overall benefit from the project.

Wellington Airport is two thirds owned by the listed company Infratil and one third owned by Wellington City Council.