KEY POINTS:
Deals such as that which would give Dubai Aerospace Enterprise a controlling stake in Auckland International Airport are inevitably controversial. Nobody knows that better than the Maktoum family, rulers of the oil-rich emirate. Another of its subsidiaries, Dubai Ports World, stumbled into a minefield last year when it took over the management of 22 American ports straddling the eastern seaboard and the Gulf of Mexico. The deal was approved by the White House but blocked by Congress, and the operations had finally to be sold to a United States company.
Opposition in the US was based on foreign ownership's supposed threat to national security. That argument was as flimsy as the fact that Dubai Ports World had bought the operations from P&O, a British firm, was inconvenient. The outcome spoke more of xenophobia and protectionism in the wake of September 11 than any rational assessment. Debate on Dubai Aerospace's proposal must rise above that.
There are those who maintain that an infrastructural monopoly as important as the airport should not pass into foreign or private hands at any price. They, presumably, are opposed to Wellington-based Infratil's control of airports such as Prestwick, near Glasgow, and Luebeck, in Germany. A more logical line of analysis would consider what has been delivered at Mangere and what the Dubai company is offering.
The present structure has bred an operation that earns as much from carparks and leasing retail space as it does from aviation-related activities. There are facilities for the likes of maintenance but a glaring absence of high-quality hotels or a rail link to the city. Dubai Aerospace says it is committed to enhancing the airport's existing business, and pursuing new opportunities beyond the existing site. Nothing specific has been mentioned, but it seems aircraft servicing and maintenance would be expanded, and a new contract with Boeing could be used to develop airport services. At least one international hotel could also be built, a corollary to Dubai Aerospace's wish to enhance route development and promote tourism. If so, a much-accelerated level of expansion and tapping of the airport's potential appears on the cards.
There will be much activity before this deal comes up for shareholder approval in November. Speculation about a takeover has been rife, and a Canadian pension fund had previously offered $3.10 a share to the Auckland and Manukau city councils for their combined 22.8 per cent stake. This spurred Auckland City to consult residents with options ranging from selling its shares to putting them in a restructured company. That process should continue as part of a broader debate on the best structure for the airport.
A starting point should be an acknowledgment that this country needs foreign capital, a situation due in no small part to New Zealanders' poor savings record. Regrettably, the bids for the airport have all come from overseas. The debate must also recognise that Arab countries, as well as being extremely wealthy, have made a success of many commercial enterprises. Take the Dubai-based airline, Emirates, which has taken off in a business environment often shrouded in gloom.
That wealth has now been turned to infrastructural investments. Dubai Aerospace's offer of a range of options to achieve an equivalent value of up to $3.80 a share has won a unanimous recommendation from the airport company's directors. They speak of the planned partnership company, Auckland Airport Ltd, delivering significant benefits to the airport and to tourism. Judgment should hinge on an examination of that claim, not ignorant fear.
