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Annual Information Disclosure Regulatory Performance Summary for the Year Ended 30 June 2018 Chief Executive’S Report

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Annual Information Disclosure Regulatory Performance Summary for the Year Ended 30 June 2018 Chief Executive’S Report Annual Information Disclosure Regulatory Performance Summary For the year ended 30 June 2018 Chief Executive’s report FY18 marked another year of Our 30 year vision includes major stakeholders confidence that we are progress in Auckland Airport’s upgrades to our terminal, airfield delivering for our customers. ambitious 30 year vision to build and ground transport infrastructure. the airport of the future. Executing Almost every part of Auckland On 1 November 2018 the this vision will see us continue as Airport’s precinct will be transformed. Commission released its Final Report guardian’s of New Zealand’s gateway Our vision is influenced by our on the pricing decision for FY18 – to the world. overarching focus on making FY22 for Auckland and Christchurch journeys better. We provide a safe, airports. The Commission’s Our ambition is to: secure and efficient airport for our summary of its review was that: • operate and invest in an airport airlines and travellers, and we strive • There is still room for that New Zealanders are proud to take care of every one of the improvement in some areas of; 30 airlines operating here, and the 55,000 travellers passing through • Transparency has improved since • grow travel, trade and tourism Auckland Airport on average the Input Methodologies Review markets that generate economic every day. growth for our regions and cities; • Targeted returns have gone down Auckland Airport is not alone in • be a good neighbour to our local undertaking significant infrastructure • It will review Wellington Airport’s communities; and development. It is taking place price setting next across the country, and evidence of • operate sustainably. • It then intends to do an overall construction is commonplace around review of performance across We are pleased to report that while Auckland city. Each development all airports. the most significant construction is programme will have its own unique due to start in 2020, we are making circumstances and challenges. In respect of Auckland the material progress and have reached Our point of difference is the need Commission did not identify some important milestones in our to continue operating a very busy concerns with the demand forecast, core aeronautical and infrastructure airport throughout the construction asset valuation, treatment of the development programme. Key phase. We are therefore conscious Moratorium and operating cost or highlights to date include: that executing our 30 year vision capital expenditure forecasts used requires smart planning and careful in pricing. While the Commission did • completing our new international sequencing as we work to replace, have remaining concerns about our Pier B extension, opening up two upgrade and build new infrastructure target return, it acknowledged the new gates for operation; across all parts of an airport that inherent uncertainty in determining never sleeps. the right return for Auckland Airport • reaching 90% completion of our and that not all of the difference multi-stage redevelopment of the We know that this journey will be between the Commission’s sector- international terminal departure challenging, for us and for our wide benchmark midpoint WACC zone – which will be largely customers. We are committed to estimate and Auckland Airport’s completed by the end of the consulting and looking after our target return should be regarded as calendar year; customers and community through excess returns. We are reviewing the this period of significant change and Commission’s findings in detail. • increasing remote stand capacity; potential disruption. and This disclosure is the first disclosure • introduction of a wide range of relating to the price setting event that new transport projects to improve applies from 1 July 2017 to 30 June the flow of traffic around the 2022 (PSE3). It is an opportunity airport precinct and to support for us to report on our performance the growth in public transport since setting these prices and Adrian Littlewood connectivity to the airport. provide information that gives our Chief Executive Auckland International Airport Limited 1 Investing in sustainable growth and trade In the 52 years since Auckland Airport opened, development of new routes also facilitates the the airport has evolved and grown from several movement of freight. Opening up new markets hundred thousand travellers in 1966 to over 20 to New Zealand exporters and providing million in 2018. By 2040 we predict traveller New Zealand consumers with more important numbers to increase to approximately 40 choices. million per year. We have also continued to actively support the Auckland Airport is also New Zealand’s second New Zealand tourism and export industries. largest cargo port by value, handling $12 billion Each year we offer a $100,000 grant to of imports and $7 billion of exports and a total New Zealand-based tourism operators and of 240,000 tonnes of airfreight each year. organisations who identify strategies to stimulate year-round visitation to New Zealand. Our strategy is to support growth and drive In 2018 we awarded two grants of $50,000 positive travel, trade and tourism outcomes for each to Eat NZ and Haka Tours. We supported our company, our city, and our country. the ExportNZ awards, and we organised and FY18: We work actively with our airline customers sponsored a business-to-business seminar and industry partners to grow travel markets to grow the New Zealand – Philippines cargo by improving the number of destinations, market, with the support of Philippine Airlines +5.7% frequency and price competitiveness of travel and New Zealand Trade and Enterprise. total passengers to travellers. In FY18 we made significant Auckland Airport’s vision is to continue to (from FY17 to 20.5m efforts to develop routes and facilitate the support initiatives that contribute towards total passengers) movement of freight. New Zealand’s wellbeing, through our In the 2018 financial year we announced a direct initiatives and by supporting our wider +6% number of new routes and new opportunities community to do the same. These initiatives will build on the value provided to our country and international cargo with our airline partners, including the volumes introduction of: community from our airport operations. For example, the next ten years of our activity is • a new Chicago direct route, which is estimated to result in the following: forecast to inject $70m into the New 30 Zealand economy annually; • direct economic benefits to New Zealand international airlines from airport activity: • new non-stop flights between Auckland and Taipei, with the addition of 4368 tonnes - $31.6 billion in GDP; 46 of air cargo capacity; - 22,750 FTEs; and international destinations • daily direct flights to Bali and Dubai; - $14.2 billion in household income; • enhanced services from Auckland to • together with related business activity, total 1,000 new wide body Singapore (from two flights daily to three); regional economic benefit: operations into • daily flights from Bangkok to Auckland; - $51.8 billion in GDP; Auckland Airport in FY18 (worth $450m to • the first Auckland to Manila direct service; - 40,000 FTEs; and and the country annually) - $22.8 billion in household income. • daily services between Apia and Auckland. For further information, refer to Section 16. As well as the clear benefits to travellers, the 75% share of all international arrivals to New Zealand Auckland International Airport Limited 2 Planning, building and delivering a world class airport experience In FY18 we made significant progress in the delivery of Auckland Airport seeks to deliver has also been a year dominated continues to put pressure on the our 30 year vision: an affordable and high quality by planning - the lead up toward city’s transport infrastructure, experience for airline customers construction and delivery. Given including around Auckland Airport. Completed and travellers. In mid-2017 the scale of investment, the scope We expect the number of trips to • 12,755m2 addition to the airfield, we announced a circa $2 of infrastructure affected and the and from the airport to increase a Code F Mars Remote Stand billion aeronautical investment number of stakeholders involved, from 90,000 per day in 2018 to (Stand 75 & Stand 19) programme, to take place over the this phase is important. All parties more than 127,000 per day in next five years. Our infrastructure are mindful of the significant 2044. Currently, the majority of • $120m extension of the plan was the result of a 17 month legacy this development will leave these trips are in private cars. We international terminal Pier B consultation with airlines. The for future generations. have made significant progress programme is unprecedented for on our roading and rapid transit • Airfield slab replacement Auckland Airport and marks the We are designing infrastructure network planning and continue to programme beginning of a new investment era for a future where aviation work with the NZTA and AT journeys can be expected to • New guest lift in international which will shape the legacy which on public transport options to is left for future generations. be fundamentally different from the airport. terminal departures today. Through innovation some • New 6,000m2 MPI building This next stage in the delivery existing processes will become FY18 was an important year of our 30 year vision will unfold more streamlined (such as check for the delivery of significant • 10 new fuel-efficient airside buses in three key phases (with in), whilst others will remain improvements to the international some crossover): subject to continuous change and terminal experience. Key projects • 2 new mobile aircraft ramps improvement (such as security included the completion of the 1. Design, Plan and Prepare • New lounge (Strata Lounge) processes). We continue to Pier B extension and opening a (2014-2019): detailed design, facilitate regular consultation with significant proportion of a new • Introduction of High Occupancy logistical planning, and airlines, and to engage with NZTA, airside departure and dwell area.
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