Auckland Airport rolls over on Queenstown expansion bid

Auckland Airport has rolled over on its plans to grab a bigger share of Queenstown Airport.

Auckland Airport injected almost $28 million into Queenstown Airport last July by subscribing for a 24.99 percent shareholding and the deal allowed for Queenstown Lakes District Council directors to issue further shares to Auckland Airport to increase its stake to 30 percent to 35 percent up to June 30, 2011.

But the Aucklanders' plans sparked a big controversy, with some locals worried that the one-third stake would nullify local control of the asset.

Today the two airports said cancellation of the agreement for Auckland's stake to be boosted was "in the best interests of both airports, the district council and the local community".

"We recognise that the prospect of an increase in Auckland Airport's existing shareholding has been the subject of considerable debate within the community and has been a key factor in the council's plans for a potentially expensive process of community consultation," Auckland Airport said in statement.

"By taking the prospect of an increased shareholding through the exercise of this option off the table, we are removing an unnecessary distraction from the situation," it said.

Instead more attention would be given to building passenger volumes into Queenstown Airport, an issue which had taken on more importance in the wake of Canterbury earthquake: efforts are being made to build tourism in other South Island centres to attract visitors who would otherwise have gone to Christchurch.

Auckland Airport chief executive Simon Moutter said he was comfortable with the existing 24.99 percent airport shareholding.

"While we have always acknowledged that we would like a higher shareholding as this would strengthen our winning partnership with Queenstown Airport even further, we appreciate this is not the time to have that discussion," he said.

Any future shareholding increase would be done in a way acceptable to the district council as majority shareholder. Auckland Airport shares fell 1c to $2.14 yesterday and are now down 1.4 percent so far this year.

Queenstown Airport Corp Ltd chairman Mark Taylor said the cancellation of the subscription agreement took the pressure off meeting the June 30 deadline.

It allowed both shareholders to focus on securing tourism into the region as airlines as rebuilt their route networks following the Christchurch earthquake.

"It is imperative, with so many businesses relying on a strong winter season, that we maximise the capacity of the airport for this winter," said Mr Taylor.