Auckland Airport won't be reviving construction of its second runway until it's more confident about shareholder returns from the investment.Earthworks began on a second runway at the country's largest airport in 2007, but construction was suspended last
Auckland Airport won’t be reviving construction of its second runway until it’s more confident about shareholder returns from the investment.
Earthworks began on a second runway at the country’s largest airport in 2007, but construction was suspended last year as air traffic subsided in the global economic downturn.
Today, the airport said it would further delay construction on the runway, to the north and parallel to the existing runway, following a review of the way it manages capacity on the existing one.
This had demonstrated more efficient use of the existing runway could accommodate growth at the airport for a few more years.
Auckland Airport chief executive, Simon Moutter, said although passenger volumes were increasing, the growth trend was still behind where it was anticipated to be when construction of the second runway began.
“A second runway has been part of the Auckland Airport master-plan since the 1960’s and will definitely be needed before too long,” he said.
“However, by working with our airline partners to improve existing runway efficiency, we can defer significant capital expenditure for a few more years.
“This will reduce cost pressures on our airline customers and on travellers using Auckland Airport. This is a sensible outcome for everyone.”
Board of Airline Representatives (BARNZ) executive director John Beckett said it was a commonsense decision.
“While we recognise that a second runway will one day be needed for Auckland, it is important that the cost of this infrastructure is not borne ahead of time by the airlines and by passengers. Auckland Airport has worked closely with us to find a solution that maximises the utilisation of the existing infrastructure.”
Auckland Airport chief operating officer Tony Gollin said the decision to further delay construction was also influenced by uncertainty relating to the future regulatory environment.
This centered on proposals in the Commerce Commission’s draft determination on a new regulatory regime for the country’s major airports.
“Investing in any large-scale, essential New Zealand tourism infrastructure requires confidence in the return. The development of a second runway is an enormous investment, which can only be justified if there is sufficient confidence that our shareholders can achieve a reasonable return on that investment.”
The Commerce Commission’s draft approach, in particular to the issue of land held for second runway use, could increase the risk that a fair return would not be commercially achievable, he said.
Mr Gollin said the runway’s construction could be accelerated fairly quickly when justified by growth, commercial returns, and economic circumstances.
