Option to raise stake in airport ditched

Queenstown airport. File photo / NZ Herald

An agreement giving Auckland Airport the option to raise its stake in Queenstown Airport has been ditched in light of a tight deadline and a focus on maintaining tourism after the Christchurch earthquake.

Auckland Airport paid $27.7 million for a quarter share in Queenstown Airport in July last year, in a move described as a strategic alliance that would promote tourism growth.

The transaction gave Queenstown Airport an option to issue more shares to Auckland Airport to raise its shareholding to 30-35 per cent at any time up to June 30.

But the airports said this week they were cancelling the option because of the pressure the June 30 deadline placed on the Queenstown Lakes District Council and the community.

Auckland Airport chief executive Simon Moutter said the NZX-listed company was comfortable with its existing 24.99 per cent shareholding.

"Nine months of the 12 month option period have elapsed and it's very difficult for the council to make decisions under that pressured environment and with the scrutiny of legal action going on," Moutter said.

"It should not be read as us losing interest in having a more significant stake in Queenstown Airport or a more direct role in the governance, it's just not the time to push that issue."

Air New Zealand's general counsel John Blair said the alliance, even with a shareholding at 24.99 per cent, left customers exposed to anti-competitive agreements between the two airports and "therefore we remain against it and are continuing with the application for judicial review".

The airports said the option had been the subject of considerable debate. That was a factor in the council's plans for a potentially expensive consultation process.

Queenstown Airport chairman Mark Taylor said the cancellation allowed both airports to focus on securing tourism in the region.

"Christchurch was part of the infrastructural link of how a number of people made their way to Queenstown so there's quite a bit of work to be done to ensure that tourists continue to flow to Queenstown," Taylor said. "Certainly to date the alliance agreement has been productive and we've worked well together and I don't see any reason for that to change going forward."

First NZ Capital head of research Rob Bode said the cancellation did not make much difference.

"The next step always looked like a bit of a hard one - certainly their preferred position but they don't give up much by not getting there."