Friday, 28 July 2017

Announcement

GENERAL: AIA: New aeronautical prices and $1.8b infrastructure investment

08 Jun 2017 08:44NZX
Media Release  8 June 2017

Auckland Airport announces new aeronautical prices for next five years and
$1.8 billion infrastructure investment to support the continued growth of New
Zealand travel and tourism

o Strong growth - passengers up 26% since early 2014 and the number of
international airlines up 61% in past 22 months

o Strong investment - currently investing $1 million in aeronautical
infrastructure every working day. Now announcing a $1.8 billion aeronautical
capital expenditure programme for the next five years

o Reasonable prices - in real terms, over the next five years average
annual international passenger charges will reduce by 1.7% and domestic
passenger charges will increase by 0.8%. A runway land charge of $1.19
(excluding GST) per passenger from the start of the 2021 financial year once
construction of the second runway is confirmed

"In the 50 years since Auckland Airport opened, how New Zealanders travel and
where we travel to has changed significantly. At the same time Auckland''s
airport has evolved and grown from only several hundred thousand passengers
in 1966 to over 18.7 million this year," says Auckland Airport Chief
Executive, Adrian Littlewood.

"Much of that growth has happened in only the last few years, with our
passengers growing 26% since early 2014. At the same time the number of
international airlines has grown significantly, with a 61% increase in only
the last 22 months."

"This passenger and airline growth has helped to fuel New Zealand''s recent
tourism boom and bring real economic growth to our cities and regions. It has
also helped to make travel much more affordable and provided more travel
options for Kiwis."

"At Auckland Airport, we are responding to that growth by currently investing
over $1 million in aeronautical infrastructure every working day. To continue
the transformation of our airport, today we are announcing a plan to invest
around $1.8 billion in aeronautical infrastructure by 2022."

"Today''s announcement is the result of a 17-month consultation with airlines
and the airport community on the form and function of our future aeronautical
infrastructure. It is also the result of a parallel year-long consultation
process with airlines on investment plans, operations and pricing."

Some of the key infrastructure projects planned for delivery at Auckland
Airport between 2018 and 2022, include:

o expanding and upgrading the international departure experience;
o providing three more contact gates for international aircraft, such
as the A380 and B787;
o building a new domestic jet terminal joined onto the existing
international terminal;
o improving the international arrival experience by expanding the
border processing area and public arrivals space;
o upgrading the international check-in area; and
o investments in public transport, roading and walking projects.

"As a result of this significant investment in infrastructure over the next
five years, there will be better and faster passenger journeys through and
around our airport. The experience within the terminals will be more
intuitive and relaxing, and transferring between domestic jet and
international flights will be faster and more efficient."

"Setting aeronautical prices for a five-year period is a complex process
involving a range of specific charges. We believe that the prices we have
announced today balance different views and are in the best interests of
travellers and New Zealand."

"For the next five years, in real terms, our average international passenger
charges will reduce by 1.7% each year and domestic passenger charges will
only increase by 0.8% per annum. Given the scale of the planned investment
this is a great outcome for travellers."

"We believe Aucklanders and New Zealanders recognise the need for long-term
planning and development of critical aviation infrastructure. In the next
five years, we will take significant steps on the path to opening our second
runway which we currently expect to be required in 2028. We will also be
working hard with Airways New Zealand and the airlines to increase the
capacity and productivity of our existing runway and will also be designing
and securing the required planning permissions.  Based on an opening date of
2028 we expect earthworks to start around 2020 or 2021. If the construction
of the second runway is confirmed, we will introduce a runway land charge of
$1.19 (excluding GST) per passenger at that time."

"Auckland Airport''s new prices for the 2018-2022 financial years will target
a return on investment of 6.99%. In setting our new prices we are conscious
of the needs of our customers as well as our regulatory and investor
responsibilities and the formal Commerce Commission review which now occurs
as a matter of process. We believe our new prices are fair and reasonable
given the significant investment we are making in long-term infrastructure,
and our charges remain only a small fraction of the overall cost of travel.
The average domestic charge will be well below average for Australasian
airports and our international charge will continue to be middle of the pack
compared with other airports around the world served from Auckland Airport."

"As we continue to build the airport of the future over the next five years,
it is critical that all the agencies and organisations operating at Auckland
Airport cooperate to ensure customers continue to have a great experience
while development takes place. As part of our aeronautical pricing
consultation, the airlines and Auckland Airport have also agreed to work
together on looking for ways to continuously lift service standards and on
managing the ongoing planning and delivery of infrastructure."

"Our five-year pricing and infrastructure plan announced today balances the
needs of passengers, the airport community, the tourism industry, our
investors and the airlines. Implementation of Auckland Airport''s 30-year
vision is now well underway - providing thousands of jobs and driving
economic growth. It will ensure that the airport continues to connect
Auckland with New Zealand and New Zealand with the world," concludes Mr
Littlewood.

Ends

For further information, please contact:

Investors:
Suzannah Steele
+64 9 257 7043
+64 27  203 2822
suzannah.steele@aucklandairport.co.nz

Media:
Simon Lambourne
+64 9 255 9089
+64 27 477 6120
simon.lambourne@aucklandairport.co.nz
End CA:00302288 For:AIA    Type:GENERAL    Time:2017-06-08 08:44:20
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