Annual Information Disclosure Regulatory Performance Summary for the Year Ended 30 June 2017 Chair and Chief Executive’S Report
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Annual Information Disclosure Regulatory Performance Summary For the year ended 30 June 2017 Chair and Chief Executive’s report In 2012, Auckland Airport set its expenditure over the five financial Implementation of our 30-year aeronautical prices for the 2013- years to 2022. vision to build the “airport of the 2017 financial years (“PSE2”) future” is now well underway. It’s following consultation with airlines. Providing quality services to our creating jobs, boosting tourism and Our aim was to set moderate prices passengers and airlines is a key lifting our regional economy. We for airlines that would enable us to objective for Auckland Airport, are playing our part to maintain deliver quality experiences for our and we maintained our customer New Zealand’s reputation as one of passengers and fair returns for focus over the past five years. We the world’s great travel destinations, our investors. acknowledge that the combination and we look forward to continuing of growth, ageing assets, and major to work towards our vision in the Since then, we have sought to construction works put pressure coming 2018 financial year. meet or exceed our growth targets on our facilities at times over PSE2. while delivering good outcomes Faced with these challenges, we for passengers, airlines and worked hard to address issues other stakeholders at our airport. that arose, ensure that passenger Auckland Airport is confident that journeys through the airport were as we have delivered on the objectives fast and efficient as possible, and to we committed to in 2012. minimise disruption for passengers and airlines associated with our Over the past five years, we have ongoing construction programme. Sir Henry van der Heyden seen unprecedented growth in Chair connectivity to, from and through Going forward, our significant Auckland Airport, evidenced by a commitment to infrastructure 36% increase in total passengers investment will ensure that we over that time. There are now 30 can provide great quality services international airlines operating here, for passengers and airlines well up from 18 airlines in 2012, with into the future. We recognise that Adrian Littlewood strong growth in the number of the transition may not always be Chief Executive flights and seats connecting New smooth, but we are committed to Zealand’s domestic destinations. providing the best possible service We have worked hard to respond to our customers as we undertake to this significant upsurge in growth this major evolution of our facilities. – investing 80% more than forecast for the past five years on our core Auckland Airport’s regulatory aeronautical infrastructure. disclosures show that the information disclosure regime To help accommodate the ongoing for airports, under Part 4 of the increase in passengers and aircraft Commerce Act 1986, is working. using Auckland Airport, we are We are focused on providing now spending more than $1 million great outcomes for consumers, every working day on our core and ensuring that our disclosures airport infrastructure. During the provide an accurate and meaningful 2017 financial year we progressed summary of Auckland Airport’s the upgrade of our international performance over time. This terminal, further developed our disclosure – the final disclosure airfield, and prioritised transport for the 2013-2017 pricing period improvements around the airport – demonstrates that we aim to precinct. We also made significant deliver real benefits for our airline progress on our medium-term customers, passengers, investors, planning in consultation with the Auckland and New Zealand through aviation industry, and released proactively seeking improvements our plan to invest around another over time and responding to $2 billion in aeronautical capital changing market conditions. Auckland International Airport Limited 1 Investing in sustainable growth in New Zealand tourism Auckland Airport plays an active role in growing industry leaders to encourage the Government connectivity within and to New Zealand. We to develop new and innovative ways to upgrade believe that sustainably growing air connectivity tourism infrastructure. is a key part of operating a modern airport, and contributes to improved short and long-term Auckland Airport expects capacity growth to outcomes for consumers. continue into the future, albeit at a slower rate than we have seen over the past few years. We have continued to sustainably grow travel markets to increase our air connectivity, which is essential for a city and country reliant on tourism and trade for its economic prosperity. Although travel demand was relatively quiet at the time we set prices in 2012, Auckland Airport has experienced a period of unforeseen and rapid growth since 2015. This growth continued in the year to 30 June 2017, with the total number of passengers using our airport increasing by 10.2% to 19 million. Domestic passengers were up 8.9% to 8.6 million, international passengers (excluding transit passengers) were up 11% to 9.7 million and 30 international transit passengers were up 16.8% international airlines to 0.7 million. now operating into Auckland Airport – Building on the capacity growth in recent years, up from 18 in 2012 the 12 months to 30 June 2017 saw strong growth in domestic connectivity, which included Air New Zealand and Jetstar adding another 330,000 regional seats over the year. This Passenger growth FY13 – FY17 financial year also saw the launch of eight new Price Setting Event 2 FY13-FY17 (“PSE2”) international routes, seven new international airlines and a 14.5% increase in international seat 20 46 capacity. 5-year actual CAGR 6.3% international destinations now We have maintained our support for the New 15 serviced from Auckland Airport Zealand tourism industry in the 2017 financial 5-year forecast CAGR 3.0% year, especially for the operators who provide 10 our international visitors with high-quality Pax m experiences. We continued to work alongside travel and tourism industry leaders throughout 0 the country, and we provided two grants of $50,000 to support operators who offer - 36% outstanding seasonal and regional tourism 2013 2014 2015 2016 2017 increase in total products for visitors from China, Australia, passengers over the United States or India. We also joined with other Forecast Actual past five years Auckland International Airport Limited 2 Delivering a capital investment programme that responds to demand Auckland Airport is committed to ongoing season, and made other upgrades to our investment for the benefit of our city, country, airfield stands. customers and investors. In the 12 months to 30 June 2017, we also Over the past five years, we have responded to progressed the design and planning approvals the unforeseen increase in aeronautical demand needed to build our second runway, and have at Auckland Airport by accelerating our core advanced the concept planning of the new airport infrastructure investment programme. We domestic jet terminal. have invested $522 million in capital investment projects over this period, an 80% increase on Improving travel times and flows around the the forecast of $290 million when prices were airport precinct has also been a priority for set and the demand environment was more the company in the 2017 financial year. We subdued. This large step-up in infrastructure fast-tracked a number of planned roading and investment in the second half of the 2013-2017 transport upgrades on our own network in the pricing period plus the material increase forecast past 12 months, including upgrades to our over the next ten years will ensure we can major intersections to improve traffic flows and accommodate the passenger and aircraft growth access to the airport. We also developed new over the next 30 years, as well as the increasing traffic management plans for use when the traffic volumes around, to and from the airport. airport roading network is particularly busy, and continued to work closely with the New Zealand In the 12 months to 30 June 2017, Auckland Transport Agency and Auckland Transport to Airport undertook its most significant advance roading and public transport solutions $522m infrastructure upgrade programme ever, playing for South Auckland and the airport precinct. invested in capital our part in support of strong and ongoing growth expenditure projects in New Zealand tourism. We progressed the over the last 5 years major upgrade of our international departure area, opening the new security screening space in late June 2017. We also commenced Aeronautical capital construction of the international terminal’s expenditure FY13 – FY17 Pier B extension, which will provide two more gate lounges and additional airbridges to accommodate the increasing number of FY13 international aircraft using our airport. The first June 2017 new gate lounge and its airbridges will open on opened new security FY14 screening space as first Pier B prior to the 2017/18 summer stage of international peak season. departure upgrade We have also significantly expanded our airfield FY15 infrastructure to better service international aircraft during our busiest months. We built a FY16 new taxiway and completed the construction of a new international airfield stand, fully serviced FY17 +80,000m2 with fuel and other utilities. We progressed the construction of a second, fully serviced $50m $100m $150m $200m $250m added to the airfield over international airfield stand, scheduled for the last five years completion prior to the 2017/18 summer peak Forecast Actual Auckland International Airport Limited 3 Committed to operating efficiently and effectively Auckland Airport is focused on operational We remained focused on the importance of and capital efficiency in all aspects of our biosecurity screening to New Zealand in the performance. We continue to enhance our past 12 months. We worked with the Ministry terminals, airfield and the wider airport precinct to for Primary Industries (MPI) to improve its create better and faster passenger journeys, and international arrival process, by introducing an to facilitate efficiencies for the benefit of additional baggage X-ray machine, new detector our customers.