• What factors influence the accessibility and efficiency of international freight transport services available to New Zealand firms?
• Are there opportunities for changes in New Zealand’s infrastructure and regulatory regimes that could increase the accessibility and efficiency of international freight transport services for New Zealand firms?

The draft report is available here.  Submissions on the draft report close on 27 February 2012.

Minister Nathan Guy’s address to the NZ Airports annual Mid-Winter Reception at Parliament:

Good evening and welcome to Parliament tonight.

Tonight I’d like to say a quick few words about the importance of airports to New Zealand, and update you on a few important issues.

Volcanic ash

Obviously it’s been a disruptive week for air travel in New Zealand with the volcanic ash from Chile affecting flights.

The Civil Aviation Authority is keeping close eye on conditions and doing a good job of monitoring the situation.

Based upon information provided by CAA and MetService, airlines are making their own decisions on how they adjust their flight routes and schedules to avoid the ash clouds.

Safety of course is the primary goal.

Unfortunately, a new ash plume is approaching from the south-east and may affect us more over the next few days. We expect the ash particles to remain in the sky for at least the next six days.

It’s a frustrating time for many travellers and operators. Sadly, as we know, Mother Nature has been making life difficult for many New Zealanders this week.

Tourist numbers

As a nation, we know that New Zealand relies on air travel to connect with the world and to make a living. 

We rely on tourism and trade, and our 31 airports around the country play a crucial role in that.

It’s been a tough few years for the aviation sector around the world but New Zealand has come through reasonably well.

Our visitor numbers have held up well. For the year ended April 2011 there were 2.5 million international visitor arrivals, up 1% or 25,273 on the previous year.

Given the circumstances, with the stuttering world economy and major earthquakes in Christchurch and Japan, this is a pretty good result. It shows just how resilient aviation and tourism has become.

As the economy improves over the next few years, I think your industry has exciting prospects.

RugbyWorld Cup 2011

Of course, this year New Zealand is hosting our biggest sporting event ever with the Rugby World Cup.

This is a huge opportunity. We’re expecting around 85,000 international visitors, many of them from Australia and the UK which are our two biggest existing overseas tourist markets.

Many tourists will be passing through our smaller regional airports, as well as the major international terminals, as they follow their teams in 13 different venues.

Convention centre

Another exciting development is the planned international convention centre in Auckland. The government is negotiating with SkyCity, and we expect this will be a major economic boost for the entire country.

Of great interest to your industry will be the increased visitor numbers, and in particular the high value business travellers coming here for conventions and conferences. This is a lucrative international market that so far we haven’t been able to fully tap into.

We expect it will attract around 33,000 new delegates a year into New Zealand, with a boost to the economy of around $90 million a year.

I know Auckland Airport are excited about this and it will have real benefits for the rest of the country too.

Trans-Tasman travel

As some of you may know, the government has been working to improve Trans-Tasman passenger processing.

Already,SmartGate kiosks are being used by Australian and New Zealand biometric passport holders arriving at Auckland, Wellington and Christchurch airports.

SmartGate has been introduced for departures at Auckland Airport, and we hope to see it in use for departures at Wellington by the end of this month and at Christchurch by the end of next month.

Risk-managed, direct exit biosecurity lanes are also in use at these airports.

Of course there is still more we can do. Australian and New Zealand officials are working together to find improvements that would mean trans-Tasman passengers enjoy an airport experience similar to domestic travellers.

A final report on potential improvements is due by the end of June 2011 and subject to Border Sector Ministers’ approval, further work could then be carried out.

I understand the Airports Association and other key stakeholders have helped officials with this concept of a “domestic-like” experience for trans-Tasman passengers, and no doubt your expertise will be called on again in the near future.

Air Services Review

At the bigger picture level, there are two important reviews happening that I’m sure you are aware of.

The Ministry of Transport has begun work on a review of New Zealand’s international air transport policy.

We want to make sure it’s supporting economic development, and that we are responsive and flexible to change.

The last time this policy was restated was in 1998, with the goal being to being to maximise economic benefits to New Zealand, including trade and tourism.

Through this policy we’ve sought to negotiate the most liberal and flexible air services arrangements possible with other countries.  A whole range of new agreements, including many open skies agreements, have been put in place over the last 15 years.

It has meant increased opportunities for airlines, more tourists into the country and has helped many New Zealanders see the world.

It’s been a dramatic few decades for the aviation industry. We’ve seen rapid growth, but we’ve also had global challenges such as terrorism, pandemics, volatile fuel prices and the worst recession in generations.

We’ve also seen continuing expansion of global airline alliances, and a trend towards regional, rather than bilateral, air services agreements between governments.

Given all this, we think the time is right for a review of the current policy.

CAA funding review

The Civil Aviation Authority is also carrying out an important funding review. It’s looking at how the Authority has been funded for the past 15 years, and developing a set of options for the future.

The CAA needs to keep up to date on developments in aviation technology and become a more risk-focused regulator.

Submissions closed in November last year, and these will be considered in detail by the CAA before a final recommendation is made to the Minister of Transport.

Conclusion

Finally, thank you for the good work done by the Airports Association. Your industry is very important to New Zealand and it’s important we have your involvement in developing policy and strategies.

Thank you for coming and enjoy the rest of the evening.

The NIP builds on the first plan released in March last year, by outlining the government’s vision for New Zealand’s infrastructure and the role infrastructure will play in supporting our economic growth. The overall purpose of this version of the Plan is to improve investment certainty for businesses by giving confidence over current and future infrastructure provision.

As transport stakeholders, NZ Airports was asked to provide input to assist in the drafting of the transport chapter.  You can read our response here

Response from Avsec to NZ Airports Submission – 24 May 2011

The aim of the Bill as introduced is to enable the Crown to recover the costs of aviation security, biosecurity, and customs traveller processing from the operators of international airports in relation to:

• scheduled international flights arriving at, or departing from, new or re-established international airports; and
• International flights, where, on request, travellers are processed in a non-routine manner at any international airport.

NZ Airports together with other airports made a submission to the Select Committee.  You can read the full submission here

 “…..Airports are significant infrastructure providers and work under the Resource Management

Act (RMA) on a regular basis. As indicated above, the ability of airports to keep abreast of

rapid changes in air transport demand, safety and security requirements, and technological

change is very important to the New Zealand economy.”  [See full submission here]

As part of this project the key features of the operating environment of the New Zealand aviation sector and the drivers of strategic choices made by airlines have been analysed and described. Many aspects of the aviation environment discussed in this project involve airports.

The detailed interim handbook “The New Zealand Aviation Operational Environment: A Guide for the Tourism Sector” containing data, results, and findings of the first year of the project has been published.

The project team has also released a summary report summarising their findings to date, where the objective was to understand the aviation operational environment and identify implications for the tourism sector. In future years the project will consider the aviation regulatory environment.

The main objectives of the work to date were to explain the drivers of four key aviation market outcomes:

1. The routes that airlines choose to fly
2. The capacity they provide on these routes
3. The prices that airlines charge
4. The passenger and freight traffic that is carried

Ultimately, market outcomes depend on the strategic choices of airlines. These strategies are driven and constrained by four major external forces:

1. Demand
2.  Technology
3. Costs
4. Government regulation and intervention

The report summarises the findings in terms of specific implications for tourism under the following headings:

1. Individual routes must be examined as part of a network
2. Many potential international routes to New Zealand are currently not viable
3. Technology is a key constraint on airline operations and economics
4. A few international routes provide the majority of international connectivity
5. The mix of international visitors matters and is changing
6. Some New Zealand international routes are not highly competitive
7. International visitors are only one source of demand for air services
8. Many visitors view Australia and New Zealand as complementary destinations
9. New Zealand outbound travel offsets the seasonality of inbound travel, leading to relatively stable air capacity levels throughout the year
10. Most regional airports in New Zealand have not been successful at sustaining international services
11. Airlines segment the market to maximise their own revenue

Other outputs from the project are available on the University of Otago project website.

In NZ Airports’ view, there are real and substantial benefits to the flying public from promoting greater competition in the trans-Tasman air passenger services market.  Where there is real competition on a trans-Tasman route, passengers have benefited from lower fares and more convenient services.  That competitive dynamic should continue.

It is the experience of our international airport members that increased competition in the trans-Tasman market leads to increased passenger numbers, lower fares and improved services.  In particular, the existence of an independent operator can be critical to the provision of competitively-priced trans-Tasman services.

The proposed alliance will inevitably reduce or eliminate that hard-won competition on the trans-Tasman services flying into and out of New Zealand’s airports.  Market power will enable price to be increased, demand will therefore decrease and capacity will reduce.  Without competitive choice, incumbents can route passengers through other ports, reducing the service levels offered to passengers.

The NZ Airports submission contains clear examples of the risks to passengers and the NZ economy.