Chch Airport profit jumps as Australia trumps Auckland for international transit

Tuesday 28th August 2018

Christchurch International Airport lifted profit 37 percent in 2018 and will pay more than $40 million to its Crown and council shareholders as more international visitors landed on the South Island via Australia.

The South Island's major aerial gateway increased net profit to $88.7 million in the year ended June 30, from $64.6 million in 2017, it said in a statement. Earnings before interest, tax, depreciation and amortisation increased 6.4 percent to $115.7 million on a 3 percent gain in revenue to $182.6 million.

Operating expenses fell 2.3 percent to $67 million in the year, although the airport didn't provide details, and passenger numbers rose to a new high of 6.87 million, up from 6.57 million in 2017.

The airport saw an 8.5 percent increase in international visitor arrivals in the year, and chief executive Malcolm Johns said more overseas travellers have been coming to the South Island via Australian airports in Sydney, Melbourne and Brisbane, taking market share away from Auckland International Airport.

"Australian hubs have more connections and more competition for traffic. This is leading to many markets finding it more economic and more convenient to hub via Australia into and out of the South Island," Johns said. "Singapore is a great example - more than 70 percent of the FY18 growth in international visitor arrivals between Singapore and Christchurch (19 percent) has come from Singaporeans transiting through Australia to get to/from the South Island."

Auckland International Airport reported its annual earnings last week. In that, its underlying profit rose 6.2 percent to $263.1 million, on an 8.7 percent lift in revenue to $683.9 million. Its international passenger numbers rose 4.1 percent in 2018 to 11.2 million, while domestic passengers increased 7.7 percent to 9.3 million.

Christchurch Airport will pay $40.4 million in dividends for the year ended June 30, up from $38.3 million in 2017. Christchurch City Council owns 75 percent of the airport and central government 25 percent.

Property income accounted for 19 percent of the airport's total revenue in 2018, or about $17 million. It spent $85 million on new land and buildings in the year, and Johns said developing vacant land for services near the airport to build shareholder returns has been a key focus since the company undertook a strategy reset in 2014.

Christchurch Airport said average airline charges per passenger fell 8.4 percent to $11.11 in 2018. The profits airports make has been the focus of regulator attention recently, with the Commerce Commission publishing an initial finding in July that the 7.87 percent return that Christchurch Airport is targeting for a group of its services over five years - which can include terminal lounges, facilities and services for customs, immigration, quarantine, security and police, aircraft refuelling and freight storage - may be excessive.

Still, the regulator said the return the airport is targeting for the majority of its services, such as the use of airfield runways and taxiways, air-bridges and baggage handling services, is satisfactory. The commission is also determining how much Auckland International Airport can charge, with its initial findings released in April saying that AIA is planning to make excessive profits on its regulated assets. It will publish a final decision on both airports in October.

(BusinessDesk)

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