Delivering results from 1966 – 2016 Annual Information Disclosure Regulatory Performance Summary For the year ended 30 June 2016 Looking forward to EXPANDING THE INTERNATIONAL DEPARTURE AREA Auckland International Airport Limited 2 Investing to drive sustainable the next 50 years growth in New Zealand tourism Delivering a capital investment programme that responds to demand Committed to operating efficiently and effectively Meeting and exceeding customer expectations Earning a fair and reasonable return over time NEW INTERNATIONAL PASSENGER LOUNGE – OPENING MID-2018 Auckland International Airport Limited 3 Chair and Chief Executive’s report The 12 months to 30 June 2016 likely to be maintained over the the Government. Our regulatory saw another year of exceptional next five years. Never has there disclosures show that the growth right across our business, been a more important time for information disclosure regulation with a significant lift in the number Auckland Airport to be committed for airports, as set out in Part 4 of airlines and passengers using to building the airport Auckland of the Commerce Act 1986, is the airport. and New Zealand will need in the working and that it has been future. We will continue to invest effective in limiting excessive At the same time, we remained in a manner that is stageable, profits over time. In 2012, focused on providing a high- flexible, resilient and affordable – Auckland Airport’s targeted quality passenger experience for the benefit of both our airline returns were within the Commerce and increasing investment in customers and passengers. Commission’s acceptable range the aeronautical infrastructure – one that the Commission needed to accommodate growth. In 2012, following consultation assesses as limiting our ability We have also continued to invest with airlines, Auckland Airport to earn excessive profits while in route development and set its aeronautical prices for also allowing us to achieve at supporting the tourism industry the 2013–2017 financial years. least a normal financial return. in Auckland and New Zealand, At the time our pricing objective Since then, we have sought which underpins the long-term was to set modest prices for to meet or exceed our growth success of our business. airlines that would enable us targets, while at the same time to also ensure passengers had As a result of strong growth in the delivering good outcomes for high-quality experiences while global middle class, our country’s passengers, airlines and other delivering reasonable returns for reputation as a safe destination stakeholders at our airport. our investors. To help achieve this in what seems to be a less objective, we focused on growing In the coming 2017 financial year, stable world, favourable aviation passenger numbers, operating Auckland Airport will remain fundamentals such as fuel efficiencies as well as prudent and committed to servicing our costs, and our increasing role timely investment in aeronautical airline customers, passengers as an international aviation infrastructure. That strategy has and delivering for our investors, hub, Auckland Airport is well been successful. Auckland and New Zealand. positioned to continue to grow for the foreseeable future. Setting prices for a five-year period is a difficult process that It has therefore been critical in requires careful planning – it is the 2016 financial year for us “This annual disclosure process, impossible to predict everything to further increase our focus that will happen in the future. and the transparency it provides, on operational and capital Nevertheless, Auckland Airport efficiency while increasing our is important for airports, airlines is confident that it will continue to Sir Henry van der Heyden capital expenditure to meet the deliver on the aeronautical pricing Chair and passengers, as well as for current and expected growth objective committed to in 2012. the Government. in passenger numbers. Should ” growth continue, then we expect This annual disclosure process, that our current elevated level and the transparency it provides, is important for airports, airlines Adrian Littlewood ADRIAN LITTLEWOOD AND SIR HENRY VAN DER HEYDEN of investment in essential aeronautical infrastructure is and passengers, as well as for Chief Executive Auckland International Airport Limited 4 Investing to drive sustainable growth in New Zealand tourism Sustainably growing air connectivity is essential for Auckland Airport’s long-term performance and the combination of new airlines, new services and new capacity provides the growth 8 that underpins the economic success of both new airlines launched or Auckland and New Zealand. In the 2016 announced services to financial year our total number of passenger Auckland Airport movements was up 9.1% to 17.3 million. International passenger numbers (excluding transits) were up 8.1% to 8.8 million, and domestic passenger numbers were up 9.8% to 7.9 million. 9.1% increase in total Our support for the New Zealand tourism passengers industry has assisted operators to increase their awareness of market trends and helped them to develop innovative new products that appeal to international tourists. Our ongoing focus on promoting Auckland and 23 New Zealand as tourism destinations received international airlines a global award during the 2016 financial year. now operating from Auckland Airport Our continuing investment in route development contributed to eight new international airlines Passenger growth either launching or announcing new services to Auckland Airport during the 2016 financial 10 year. The 12 months to 30 June 2016 were 4.6% average annual international growth 893,314 also very successful for domestic air 8 international passengers in connectivity, with more than 630,000 seats January 2016 – a record number per month added to New Zealand’s domestic network 6 5.8% average annual into and out of Auckland, with half of the Million domestic growth new seats servicing regional New Zealand. 4 Both Jetstar and Air New Zealand have increased the size of their aircraft fleet and 2 Winner FY00 FY04 FY08 FY12 FY16 the number of flights they operate to and 2016 Routes Asia from Auckland Airport. International (excl. transit) Domestic Marketing Awards AIR NEW ZEALAND COMMENCED DIRECT FLIGHTS TO HO CHI MINH CITY IN JUNE 2016 Auckland International Airport Limited 5 Delivering a capital investment programme that responds to demand In the 2016 financial year, Auckland Airport new security processing zone, a new invested $110 million in aeronautical passenger lounge and a new shopping hub, infrastructure and our asset base will which will be delivered in three stages between continue to grow over the next 30 years. mid-2017 and mid-2018. During the 2016 This investment ensures we can accommodate financial year, we also progressed the design the ongoing growth in international and of the extension of Pier B of the international domestic passenger numbers, as well as terminal, to provide additional gate lounges the volume of airlines and aircraft that want and airbridges to accommodate the increasing to operate at the airport. number of A380 and B787 aircraft using the Consulting with our airline partners on a range airport – construction of this extension is now of investment options and responding to their underway. We also continued to prepare for priorities remain at the heart of our capital designing and building the domestic section of investment programme. To 30 June 2016, the new combined domestic and international we have invested $289 million in aeronautical terminal building. infrastructure during the 2013–2017 financial years’ pricing period. This is 20% higher than expected when prices were set – in large part 17,500m2 due to the significant increase in passenger added to the airfield and aircraft numbers since 2015. In the first half of the 2016 financial year, we completed a number of infrastructure projects Aeronautical capital expenditure to ensure that the airport could accommodate 1) Aeronautical capital expenditure additional passengers and aircraft during the 2nd 2015/2016 summer peak season. These FY13 new international projects included building an extra 17,500 baggage belt square metres of airfield to park the increasing FY14 number of international aircraft using the FY15 airport, a second new international baggage belt and two new bus lounges – one on Pier B FY16 of the international terminal and the other for Jetstar’s new domestic regional services. FY17F* 4 $50m $100m $150m $200m additional domestic In December 2015, we started construction BUILDING OUR NEW SECURITY SCREENING regional gates of a major upgrade of the international AND PROCESSING AREA – OPENING MID-2017 *FY17 forecast consistent with our most recent guidance departure area. The upgrade includes a on FY17 capital expenditure. Auckland International Airport Limited 6 Committed to operating efficiently and effectively Auckland Airport retained a strong focus on implemented with New Zealand Customs operational and capital efficiency throughout and New Zealand Aviation Security Service to the 2016 financial year. As a result of this improve the international departure emigration commitment, we have enhanced our terminals process. Improvements, such as relocating the and airfield, improved the land transport departure preparation area, helped to achieve access to the airport and assisted the aviation a 4.1% decrease in processing times – this industry to improve its efficiency in the air. was despite an