Whangārei Airport is set to lose $900,000 over the next three years largely as a result of Covid-19 restrictions. Photo /Michael Cunningham
Whangārei Airport is set to lose $900,000 over the next three years largely as a result of Covid-19 restrictions. Photo /Michael Cunningham
Whangārei Airport is forecast to lose more than $900,000 over the next three years, with Covid-19 travel restrictions to blame.
"As a result of Covid-19, the airport will run a deficit for the next three years and will require a capital injection from council," Mike Hibbert, Whangārei District Council (WDC) commercial property portfolio manager said.
The $915,364 loss is from the start of this month to June 2024 and includes depreciation.
"Unfortunately, the impact of the global pandemic has seen an unprecedented decline in the ability of the aviation industry to operate," Hibbert said.
The Covid-19 hit on the airport's situation has forced WDC to, for the first time, write a letter of support for auditors confirming council financial backing if necessary for the airport it runs as a council-controlled organisation (CCO).
Alan Adcock, general manager corporate, said the letter effectively shows the CCO is a going concern which can leave its doors open for business.
The airport is forecast to make a $408,924 loss including depreciation this financial year. Operating costs are forecast to be 45 per cent more than income - creating a $187,300 operating cash loss.
Cash reserves are being used for financial support over the next three years. The airport may also need to go into overdraft at times to help with cash flow timing.
Hibbert said the situation was forecast to gradually improve over the next three years, returning to making a cash profit in 2022/23.
"Passenger numbers and aviation traffic have seen more than 90 per cent pre-Covid-19 reductions."
Plane landing fee income was down by half. The start of lockdown saw the prevailing daily four planes, six days a week evaporate.
An aerial view of Whangārei Airport, at Onerahi, which has been hit hard by Covid-19 devastating the aviation industry.
"No planes mean no revenue, no passengers, no parking and no rental cars," Hibbert said. Flights restarted with just one plane daily three days a week. Now, in July, flights are averaging three daily, seven days a week.
About 9500 passengers usually go through the airport at Onerahi monthly from March to June. This year's March numbers were down to 6500, April zero and May 400. June saw about 2200 passengers, which was better than expected, but still lower than normal.
Carpark income was down, too. Average monthly carpark income is $11,500. March's income dropped from $18,000 to nothing for April. Carpark gates were left open until Whangārei's Air New Zealand flights started again in May – that month's income just $212. June's was $3290.
There was also less income because of rent relief to the airport's Covid-19-affected tenants for the first part of the year. Rents were unlikely to rise after that.
The airport is seeking $1.285 million from the council and joint venture partner the Ministry of Transport – half from each organisation - mostly for airport infrastructure maintenance and expansion projects.
"The bids for each will be presented to both parties for consideration as part of the long-term plan process later this year," Hibbert said.
The funding sought is for a forecast $1.324m of infrastructure work over 2021/2022 and 2022/2023.
A major Covid-19 project rejig means a $26,000 rental car compound extension is the only infrastructure work scheduled this year.
Work beyond this year is subject to the airport's long-term future. The airport has 10 to 15 years of life left in it, but its runway cannot be extended nor expanded and WDC is looking for a site for a new airport.
"Projects beyond 2021 will be reviewed subject to the future operation of the airport at Onerahi," Hibbert said.
The 2021/2022 plan is for five projects worth $379,000 - including $100,000 on upgrading lighting and navigational aids to meet compliance requirements and a $90,000 airport carpark extension.
A $500,000 runway reseal's scheduled for the following year - the seal is predicted to reach the end of its life by 2023/24. The spend's just over half 2022/2023's $945,000 allocation, also including runway apron extension and taxiing area seal recoating.
"With the depletion of cash reserves, each project is expected to be funded 50:50 by both council and the Ministry of Transport as joint venture parties," Hibbert said.
