Retail and car parking shine as Auckland Airport posts strong profits progress

NEW ZEALAND. Auckland International Airport Limited has posted a solid +15.1% increase in underlying profit to NZ$120.87 million (US$100 million) for the 2011 financial year ended 30 June 2011, with commercial revenues to the fore. The results were also notable for the growth in traffic from China, very important from a travel retail perspective.

Total income grew +9.5% to NZ$397.72 million (US$328.97 million). Two of the key drivers of this revenue growth were “better than expected” retail results in the new departures area and a stronger yield in car parking, particularly through the new online booking channel.

Retail income was NZ$111.15 million (US$91.94 million), an increase of +16.0% over 2010. Retail income per international passenger (including transits and transfers) was NZ$14.28 (US$11.81) in 2011, compared with NZ$12.92 (US$10.69) in 2010.

The landside and airside construction in the departures area of the international terminal building, which was completed in December 2010, has resulted in an improved passenger experience and better retail offerings, the company said. This has contributed to passengers’ willingness to spend, it noted.

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“Despite the destructive natural events and the challenges that have buffeted travel and tourism this year, it has been an excellent 12 months for Auckland Airport,” said Auckland Airport Chair Joan Withers, who added that the increase is a breakthrough in “a period of relatively flat profitability”.

At 30 June 2011, the company had parking facilities for 7,988 cars, the same as the prior year. Despite no change in the number of spaces available, car park income increased +7.7% to NZ$33.437 million (US$27.66 million). This growth has been driven by continued promotional activity, a refinement of product offerings, including a valet car cleaning service, a full year of online booking capability and passenger growth.

Passenger volume growth across all four airports had been “pleasing”, with particularly strong growth from Asia, as well as from outbound New Zealand and Australian travellers.

At Auckland, international passenger numbers grew +4.9% to 7.78 million and domestic passenger volumes held firm with 6.04 million. In North Queensland, Australia, published growth targets were surpassed with international passengers through Cairns rising +20.7% to 0.75 million and domestic passengers growing +6.1% to 3.18 million.

Domestic traffic at Mackay, also in Australia, increased over +14.3% to 1.04 million. At Queenstown in New Zealand’s South Island, international passenger growth was a solid +49.7% to 0.16 million and domestic numbers grew +8.4% to 0.76 million.

Auckland Airport Chief Executive Simon Moutter said that passenger numbers continue to reflect dramatic shifts in the global architecture of trade and economic relationships. “Asia and in particular China is now driving much of the growth in global travel demand. Other powerhouse economies such as India and Brazil are making their presence increasingly felt internationally.

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“The shifting global trade and tourism markets are also changing airline dynamics,” Moutter added. “This means we need to focus on the key markets and the carriers with the available aircraft to connect us with them. Put simply, we need to “˜sell’ New Zealand as a route destination to those airline customers who are in a position to “˜buy’. The New Zealand government understands these dynamics and is working positively with the industry to remove barriers to travel.”

For example, recent improvements to visa processing in China have successfully removed one of the barriers to visitor growth from this key market. This is supporting the new China Southern Airlines route and the increase in Air New Zealand’s services to China.

In addition, the Ministry of Transport has begun reviewing air services agreements with China, Brazil and up to eight other countries in East Asia and South America, with a view to removing impediments to growth. The Ministry is also undertaking a review of all air-service arrangements, which is expected to help uncap significantly more growth potential for the visitor industry.

“That strong government support has been very influential in the growth of air-services with key markets over the financial year,” said Moutter. “This is all great news for the industry and for the New Zealand economy.”

Moutter continued: “Our expanded airport footprint in Auckland, Queenstown and Queensland also gives us more options when talking to airlines. We’re now seeing the results. Air-service capacity in all the airports in which we have an ownership interest has grown, with over 1.2 million additional international seats committed in the last two years. What’s more, our industry partnerships and promotional activities are helping to fill those additional seats and make routes more sustainable.”

One of the major challenges for Auckland Airport is getting the timing and solution right for an eventual new passenger terminal facility to be integrated with the international terminal and for the recommencement of the second runway construction.

“We are working hard and constructively towards a solution with our airline partners. The key is to balance shorter term operational and passenger service requirements with a longer-term plan for a new integrated terminal,” said Moutter.

For the 2012 financial year, Auckland Airport is expecting net profit after tax (excluding any fair value changes and other one-off items) to be in the region of NZ$130 million.

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