Running Kāpiti Coast Airport certainly comes with challenges, especially on the financial front, writes its chief executive Chris Simpson.
No one over the past two years since we have owned the airport has asked me this simple question: Hey, Chris why did the 52 per cent government-owned airline Air New Zealand leave Kāpiti Coast Airport?
Simple question, but no one is asking it.
Well, here's the answer.
For the Kāpiti Coast Airport to be financially sustainable you need approximately 400,000 people flying yearly – not the current 25,000 – a 1500 per cent increase. The biggest passenger plane that currently lands in Kāpiti is a 36-seater Saab. The runway is too short for an Air New Zealand ATR, which is now their smallest available plane for this route.
So, to accommodate the 400,000 passengers we would need approximately 11,000 flights yearly or 30 flights a day – not the 1-2 return flights we currently get.
Currently we get approximately 60 passengers a day – for the 400,000 we would need 1100 people a day.
The reality is that passenger numbers have dropped from a peak of some 75,500 passengers in 2016, to just 25,500 pre Covid. We aren't blaming Covid here.
However, Air Chathams, well before Covid was even heard about, had reduced their six flights a day to four, and this year to two – even though they have a contract with us for six.
Also, here's an economic reality: we only earn money for landings from Air Chathams at a maximum of $102 per landing, up to a maximum of $918 a week.
It's not their fault they reduced their flights. The demand from the Kāpiti community isn't there, even though Air Chathams have a monopoly flying into Auckland. There is no other airline knocking on our door to start up in competition against Air Chathams.
The chief executive of Kāpiti Coast District Council (KCDC) wrote papers supporting a ratepayer loan of $500,000 to Air Chathams. These papers and subsequent meetings were in secret – even we as the airport operator have no oversight of this. However, Air Chathams' chief operating officer has said in the media that ratepayer money is in their bank for a "rainy day" and is offsetting their interest costs.
We have the Kāpiti Districts Aeroclub, who by the way are really good people, paying $19,000 a year in a lease (or $365 a week) and plane owners' landing fees of $6-$12 sees us receive approximately $45,000 a year - $123 a day.
As you can see, it's not a big money spinner for us. And no blame can be laid at their door regarding the tough financials of the airport.
Another factual reality is that the runway needs to be fully resurfaced at a cost of around $5 million in the next four years. And that $5m was a figure from six years ago so needs to be updated.
We have other tenants, smaller businesses on the periphery who pay rent. So, all up, it's around $500,000 a year that we earn for the airport operations, or $1300 a day. And it costs us around $2m a year to keep the airport operating.
Another commercial reality is the airport café has closed because of a lack of flights and passengers. Instead, they now sell their Choice Pies around the region – which they make at the airport – so, we are running a bakery! Awesome pies too – Donna and Chris are incredibly hard workers.
And in our short-term carpark of 55 bays, we have on average 10 cars a day use it at $9 a day. However, the parking is now free, because the meters have broken and cost more to fix than what we receive in payments.
"But, what about Kāpiti Landing I hear you say?"
The commercial and retail area that was developed to expand airport facilities and diversify sources of income?
The gross $6m it generates does not take into account finance costs, depreciation, maintenance, etc. So what's left over, while helping to offset the losses from core airport activities, is not enough to make the overall airport operations profitable, provide a return on investment and support the upcoming capital expenditure that is required.
Then we have the Save Kāpiti Airport lobby group sprouting ideas about keeping the airport and developing around it.
Despite having tried to engage with the group multiple times to help them understand the realities of developing the land and to have our experts team up with theirs to ensure their plans are practical and feasible, they've never come back to us. And that's despite listing us – albeit at the bottom of their list – on their website as a key stakeholder.
Their website also states their guiding principles are 'partnership with key stakeholders' and 'open transparent engagement'. We'd refute that. They're talking about us, not to us.
And their rhetoric is confusing. In August last year the National Party (who, remember, sold the airport in 1995 because it was uneconomic) released a statement quoting then-candidate and spokesperson for Save Kāpiti Airport Tim Costley saying, "chopping up Kāpiti Airport for residential sections is short-sighted".
In December Tim got in touch to say their bottom line is to keep a runway and a small apron – that's not an airport.
Now their current plans contradict their spokesperson's stance with homes and commercial activities dotted around the runway. But there are very stringent safety rules and regulations about the space required around a runway to operate. It's not a simple matter of 'keep a runway and put stuff around it'. Hence our desire to engage with Save Kāpiti Airport to ensure their vision is not just a collection of nice drawings.
Another factor to consider is that the airport is in the wrong location. The runway is too short and cannot be extended for larger planes. The hills to the south create conflicts between instrument and visual approach. If an airport were truly needed, it would be better to locate it north of Te Horo.
The airport is caught between Wellington and Palmerston North airports – the local catchment is just too small to make the airport viable.
Then we have the KCDC chief executive spouting off about the council-commissioned economic assessment of the airport (it is available at https://www.kapiticoast.govt.nz/media/21839/tdb-report-airport-economic-value_20180612.pdf) that it adds economic benefit of $4.3m to the region. That's $4m return for 110 hectares of land.
However, the inconvenient truth of the report is that it was done in 2017 (when passenger numbers were higher) and the $3m of that savings was in fuel/time/vehicle wear and tear for people not driving to Wellington. Furthermore, the previous owner of the land wasn't even involved in the report.
The chief executive also commissioned a $5000 poll of 500 people asking if you think the airport should be kept – basically a question, 'do you like free icecream?'. He didn't outline alternatives, nor did he inform his own councillors – the people who employ him and who he reports to – that he was undertaking the poll.
And finally, the mayor is telling us that KCDC is expecting growth of 30,000 people here in the next few decades and he needs 15,000 houses. Well, we could do 3000 if the airport was to close on the 110 hectares. That's not high density, by the way.
For now, we continue to run an airport that the vast majority of the Kāpiti community simply doesn't use and is essentially a 9km roundabout.
So, as a ratepayer you may want to ask for the $500,000 Air Chathams loan back and suggest that KCDC consider investing it into social infrastructure like healthcare, parks, amenities for the 15,000 homes it needs over the next few decades.
And instead of asking why the government-owned and backed Air New Zealand left, a better question is: "How do we better utilise 110 hectares which helps the Kāpiti Coast become the best place to live in New Zealand?".
That's a conversation we're happy to have.