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Home / Business / Companies / Tourism

How military technology helped fuel NZ's tourism boom

Grant Bradley
By Grant Bradley
Deputy Editor - Business·NZ Herald·
30 Apr, 2017 04:00 AM5 mins to read

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Chief Executive of Auckland Airport, Adrian Littlewood, discusses Auckland Airport's rapid growth.

New Zealand's current tourism boom can in part be traced to aerospace technology dating back to the late 1950s.

The use of lightweight and very strong carbon fibre began as United States missile nozzles and heat shields before being adapted for military planes and then extensively used in new generation civil aircraft.

More than 50 per cent of a Boeing 787 Dreamliner is carbon composite, a material that is up to 20 per cent lighter than the alloys and metals it replaces, making New Zealand a more viable destination for airlines which try to cut weight to save on fuel.

Auckland Airport handles more than 70 per cent of arriving visitors and its chief executive Adrian Littlewood says the new lightweight, fuel efficient planes made by Boeing, and Airbus - with its A350 - were perfectly suited to the ultra-long distances that airlines must fly to New Zealand.

''The planes that are now rolling out into the market are far more efficient and more capable of getting to New Zealand than we've seen before,'' he said.

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''For airlines they are relatively easy to fill and able to serve long thin routes so they can penetrate into many more cities in the world at a lower cost on a normalised basis.''

Fuel prices had been relatively low for the past two years and this had helped lead to 11 new carriers come to Auckland since the middle of 2015.

''It's fantastic and that's been the fuel for the tourism boom we've seen over the last couple of years,'' said Littlewood.

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Wealthier populations and a rapidly growing middle class in emerging economies in the Pacific Rim was also fuelling the boom.

''Travel is one of the first discretionary activities consumers go for once they've got the basics sorted out - China has been a really great example of this.''
India, the Philippines and Indonesia were emerging also.

Listed tourism businesses have prospered, Auckland Airport's share price hit a record high of $7.62 in September, Air New Zealand reported a record full year result last year and Tourism Holdings has over the last 18 months several times upgraded earnings' outlooks.

Littlewood, whose company is New Zealand's biggest by market capitalisation, said this country's tourism industry had got itself sorted out.

''It's got organised and is focusing on growth, it's co-ordinated its work with the government which has been very supportive.''

New Zealand was also appealing to what visitors increasingly wanted.

''Tourists are starting to look at the things that New Zealand has to offer - a shift away from material activities around shopping or activities such as theme parks to experiences - that's what New Zealand does tremendously well.''

Auckland Airport has been under pressure over the last year to build infrastructure to keep up with the influx of tourists and strong domestic growth which had boosted numbers through the airport to around 16.6 million a year.

The airport was spending $1m every week day on new gates, aircraft stands and extensive remodelling of its international terminal departure area.

Road traffic congestion around the airport is also a problem prompting temporary vehicle control measures to be imposed over summer.

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The planes that are now rolling out into the market are far more efficient and more capable of getting to New Zealand than we've seen before.

Adrian Littlewood, Auckland Airport chief executive

''It doesn't take a long time for an airline to make a decision to send an aircraft to New Zealand - passengers immediately turn up. It takes a lot longer to build infrastructure to support that - right through from facilities and services to support the aircraft through to accommodation through to sites around the country.''

This has prompted a debate on how to fund infrastructure in other parts of the country. The airport along with Air New Zealand, Tourism Holdings and Christchurch Airport commissioned consultants McKinsey to investigate funding.

The report suggested a bed tax and a $5 increase in the border levy to fund facilities and infrastructure growth.

A $130 million annual fund would be half met by the Government.

The report proposed a National Tourism Infrastructure Levy, made up of a 2 per cent national bed levy across the accommodation sector and a $5 increase to the border levy, to raise $65m a year.

The government is not keen on raising taxes though and Littlewood says there is no simple solution.

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''I don't think that's (the report) meant to be an answer to many different problems - it was done as a way to provoke the government into thinking about whether there are different ways to solve it.''

He said well-intentioned funds could result in distortions.

''You've got to be careful we don't try to repurpose it for other things. Look across the Tasman and see it hasn't worked as well, the passenger movement charge is now A$55 a passenger which includes a Sydney Olympics charge and Queensland flood relief charge,'' said Littlewood.

''I am hopeful the Government does have some strong answers coming up in the budget this year. I think tourism is earning its way and justifies additional support from the government.''

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