Editorial: Rich irony in airport's step into Australia

Two years ago, Auckland International Airport was the hunted. Today, it is an acquirer, having bought a strategic 24.55 per cent in North Queensland's Cairns and Mackay airports.

The irony in the $166 million investment is rich. It also says something about the mixture of misguided thinking and xenophobia that deprived Auckland International Airport of a strong cornerstone shareholder in 2008.

At that time, two suitors, Dubai Aerospace and the Canadian Pension Plan Investment Board, sought stakes in the airport. Both were rejected, the latter the victim of an on-the-hoof decree by the previous Government to maintain New Zealand control of what it deemed to be strategically important infrastructure. Auckland International Airport was left to soldier on alone without a controlling shareholder and with the biggest stakes held by the Auckland and Manukau City Councils.

Dubai Aerospace, in particular, had shaped as an excellent stakeholder. Its industry expertise could have delivered significant benefits to the airport and to tourism.

Now, it will be Auckland bringing its know-how and experience in airport operations to Cairns and Mackay. The 49.9 per cent shareholder in the two airports is an infrastructure investment fund, while Hastings Funds Management, a specialist airport investor, holds 20.12 per cent. Pointedly, Auckland International Airport's acquisition has created none of the trepidation that surrounded the Dubai and Canadian bids for it.

Cairns and Mackay are, of course, far smaller than Auckland, but they are, nonetheless, pivotal to their local economies. There has, however, been no talk of Australian interests being compromised.

Indeed, the fact that the two airports were privatised by the Queensland State Government about a year ago suggests a more realistic assessment of the limits of foreign control of such assets. Auckland's presence is not about to raise airport security concerns, undermine development, or impose an inappropriate, perhaps asset-stripping, management style.

That is not to say the stake, which will guarantee a board presence and veto rights on major decisions, will not be used to direct some development, particularly at Cairns. Auckland International Airport will try to use the Australian airports to improve international connections, thus pulling more tourists from Asia through Auckland and increasing New Zealand travel to Australia's tropical far north.

Central to the first plank will be persuading more international airlines to fly on from Australia's east coast to Auckland. The acquisition comes at a time when Cairns can expect a resurgence in arrivals from Asia following the recession and when a terminal upgrade leaves room to expand without great financial outlay.

Auckland International Airport's enterprise is both welcome and worthy of reward. It could have sat back, enjoying the calm following the failure of Dubai and Canadian bids. Most potential overseas investors have surely been dissuaded by the treatment meted out to those suitors.

But maintaining a holding pattern would have offered no answer to a recent pattern of flat profitability, passenger growth below international trends, and sluggish retail and property development activity.

Instead, it has embarked on what the chief executive, Simon Moutter, described last March as "step-out" opportunities.

The investment is not huge. It represents only about 5 per cent of Auckland International Airport's total assets. But it is an important statement of the airport's willingness to pursue growth opportunities, notably by boosting international passenger volumes. Both it and the New Zealand economy stand to benefit.