A couple of weeks back the New Zealand tourism industry held its annual trade show in Dunedin. The mood was positive, reflecting the dramatic change in tourism industry performance in only a few years.
There was naturally much discussion about how our country should reinvest in important infrastructure, new product and more travel options to both support the growth in visitors and to spread that growth around the whole country.
Event speakers highlighted a 2016 McKinsey study that showed New Zealand could grow GDP by $9 billion if it became one of the top 10 tourism markets alongside countries like Switzerland, Denmark and Singapore.
Our story at Auckland Airport in many ways mirrors that of New Zealand tourism and recent commentary in the Herald does not tell the full story.
We have also seen significant growth over a very short time: it took us 48 years to get to 15 million passengers and only another four years to reach 20 million passengers. We have also seen the number of international airlines grow by over 60 per cent inside 24 months. This has introduced important new competition into international and domestic routes and consumers have seen some of the best deals ever to places like Napier, Nelson and internationally to Asia and through to Europe.
No one in the industry predicted this growth and, like in the rest of New Zealand, it has at times put pressure on both our and others' infrastructure whether it be getting to the airport, walking through terminal construction zones or getting through border processes.
While the airport system is made up of many different organisations responsible for different elements – for example the airlines are responsible for baggage delivery, the border agencies for security and customs processing – we know that the core airport infrastructure system needs an upgrade and we are getting on with it.
In the five years to 2017 we spent 80 per cent more than forecast on new infrastructure despite the fact that five years earlier certain airlines lobbied hard for Auckland Airport to invest less in aeronautical infrastructure than we initially proposed in 2012.
Ultimately, because growth was so strong, we went ahead with that investment anyway and in mid-2017, after an 18 month process of consulting with airlines and other airport stakeholders, we announced our plan to spend almost $2 billion in new airport infrastructure over the next five years.
This will be the single biggest upgrade in the airport's history and will set it up for the next 30 years. It also will make us one of the largest privately funded construction projects in New Zealand – but prices for passengers will remain broadly flat in real terms over the next five years.
Some of these projects, like the new international Pier B extension, have now finished and many others are just months away from completion. The benefits of these changes are immediately obvious: the new airplane gates have dropped the proportion of international passengers being bused to a plane from 10 per cent last April to just 3 per cent this April; over 85 per cent of our toilets have already been refreshed or fully upgraded and the remainder will be completed shortly.
Other major projects are in the final planning stages and they cover almost every part of the airport system. We will soon start construction on a new international arrivals area, a new domestic jet terminal and further upgrades to transport links such as roads and mass transit lanes. We plan to spend almost $100 million on transport connectivity alone in the next five years.
We want to ensure that this significant investment programme also benefits the wider community through the thousands of new jobs that will be created. Our airport job and skills programme, Ara, has already placed over 446 people into new construction jobs, many of those on to new apprenticeship programmes, with almost 46 per cent of those employed coming directly off government benefits.
Making a change of this scale over the next five years while operating an airport is a major undertaking and we don't underestimate the challenge. There will be occasions when things don't go well for a handful of the 55,000 people who travel through the airport on average each day, but our team and all those working for organisations based at the airport will work hard to minimise any disruption and make it the best experience possible for our customers.
Progress is happening and with each day that goes by we are closer to realising our airport of the future and delivering the airport that New Zealanders want.
* Adrian Littlewood, CEO Auckland International Airport Ltd