Airport reins in growth

Double-digit passenger growth at Auckland International Airport has come to an end with just a slight increase in numbers late last year.

Domestic traveller numbers were up just over 3 per cent during the last six months of 2005, but total passenger movements were up just 2.6 per cent from the year before.

That led to some flat half-year financial results yesterday, with after-tax profits down more than 6 per cent.

But the company's interest bill leaped more than half, thanks to extra borrowings used to fund a return to shareholders and share buyback.

If the results were adjusted for this charge and the $1.3 million earned by the sale of a radio frequency the previous year, profits would have been up 1.7 per cent.

The slowing of growth in passenger numbers has caused the company to put the brakes on some of its more aggressive expansion plans.

Development of a second pier - where planes pull up to the gates - has been put on hold, ready to be reactivated once visitor numbers increase.

Airport chief executive Don Huse said the overall rate of passenger growth had slowed, which meant cost-saving initiatives and new priorities put on capital expenditure.

Plans to improve the Air NZ domestic terminal were proceeding but negotiations were still under way.

Huse used yesterday's results announcement to give details of a plan to expand the arrivals area of the international terminal, saying there had been "significant bottlenecks" in processing arriving passengers.

It was designed for 1400 passengers an hour, but was now handling 1900. Costing $100 million, the expansion is due for completion in December next year.

This project will be mostly financed from an extra $5 in the "airport development charge" - or departure fee - that the airport now keeps.

Huse said major projects in the past year had been completed on time and on budget.

These included the new upper level on the existing pier, costing $47 million, and a $28 million investment in baggage processing.

Air New Zealand has indicated it will claim compensation from the airport company for problems caused by the new system for screening and processing baggage.

Huse said he could not comment on any such claim as no compensation request had been made by the airline.

He said an after-tax profit of about $100 million was expected for the full year; last year's profit was $105 million.

Company directors said in their results commentary that the declining rate of passenger growth had not changed the long-term outlook for the business, with demand for air travel expected to increase above the rate of GDP.

Airlines were also making significant upgrades to their fleets, which meant cost efficiencies, improvements in service and higher seat capacity.