Auckland Airport H1 revenues fall; new hotel project is revealed

NEW ZEALAND. Auckland International Airport Limited (AIAL) today reported a -0.6% decline in half-year revenues to NZ$182.9 million (US$127 million) for the period to 31 December, with a dip in retail income blamed for the slight fall in overall revenues year-on-year.

Retail revenue fell from NZ$50.1 million (US$34.7 million) a year ago to NZ$48.5 million (US$33.6 million) in H1 2009/2010. AIAL said: “Total retail earnings were impacted by the reversion to a dual operator model for the duty free business and the disruption due to the construction work in the departures area.”

However, it said that the performance of JR Duty Free, as the airport’s second duty free concessionaire, had “exceeded expectations” since its opening in August 2009. AIAL Chief Executive Simon Moutter said: “JR Duty Free – our second duty-free operator, which commenced business in August 2009 – has hit the ground running and alongside DFS forms part of what we believe is a world-class airport duty free offering.”

He added: “The major redevelopment of our departures area is on target, with the first stage involving a refreshed dining area and new shopping options now complete and already having a positive impact.”

For the full year AIAL said it was projecting retail revenues between NZ$92 million and NZ$95 million (US$64-66 million), and for financial year 2011 it is forecasting NZ$105 million (US$73 million) from the sector.

JR Duty Free has “exceeded expectations since opening in 2009, said Auckland Airport

Operating earnings before interest, tax and depreciation (Operating EBITDA) were flat at NZ$138.8 million (US$96.3 million). Surplus after tax, excluding an investment property devaluation from the prior period, was strong, up +4.7% to NZ$54 million (US$37.4 million).

In the six months ended 31 December 2009, total passenger volumes rose +2.3% to 6,782,242, driven by increases on trans-Tasman routes and growth in domestic travel passenger numbers.

International passenger numbers (excluding transits) were up +1.4% in the six months ended 31 December,with the growth reflecting competitive airfares and increased availability of seats. Trans-Tasman growth has been offset by the pressure on long-haul travel, which was affected by the global economic downturn and the legacy of pandemic (swine flu) concerns earlier in 2009.

Moutter said: “We have seen signs of a recovery in travel demand, with our October-December quarter in particular showing consistent growth in the Auckland Airport monthly passenger numbers on the back of increased tourism industry activity. As a result, we believe stability and confidence is slowly but surely returning to the New Zealand travel market.”

He added: “We believe that even in difficult times, growth is an essential airport focus. Growth is about creating value by building stronger air services connections, growing passenger volume, gaining exposure to higher growth markets and influencing travel and customer behaviour. International passenger volume is by far our most important value driver and with each international traveller spending an average of NZ$2,500 during their visit to New Zealand, more volume is good for our shareholders and good for the broader New Zealand economy.”

Driving more travel demand from Asia will crucial to the future growth of both Auckland Airport and New Zealand tourism, AIAL noted. The primary focus of air service development remains on direct Asian connections with Auckland, it said, and an important supporting strategy is to strengthen connections with other strategically located airports.

New developments

AIAL is also involved in several major property development projects, including a four-star plus Novotel Hotel at the International Terminal in partnership with Tainui Group Holdings and Accor, plus it has also just announced the development of a two-star Formule 1 Hotel at the airport.

Moutter said: “We are also pleased to announce that an agreement has been formed with Accor for the development and operation of a new 125-room Formule 1 Hotel to be built at Auckland Airport in time for the Rugby World Cup in 2011, which will appeal to the budget traveller market and provide more choice to travellers.”

An artist’s impression of the new Formule 1 Hotel, which will open in time for the 2011 Rugby World Cup

Auckland Airport General Manager Peter Alexander added: “This new Formule 1 hotel will offer budget-conscious travellers simple and functional comfort at Auckland Airport. And it will beautifully complement our four-star-plus Novotel Auckland Airport, which is already well underway to also be ready in time for the World Cup.

“With a Formule 1 and a Novotel in our Auckland Airport accommodation portfolio, both run by a world-class operator in Accor, we will soon be able to meet two very different market segment needs, and we are determined to ensure that in time we can serve all other travellers’ short-stay accommodation requirements. If the demand is there we intend to meet it, right here in the airport grounds.”


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