15 Mar 2007
February demonstrated solid growth for both domestic and international passengers. Domestic passengers grew 4.2% for the month (0.8% YTD), and international passengers grew 8.8% for the month (1.1% YTD). The international growth figure for February is tempered somewhat by the fall in international passengers that occurred in February 2006.
The passenger growth is encouraging, but the real story is in the imbalance between demand and supply. Passenger growth for both domestic and international traffic occurred in spite of very limited growth in seats offered. Domestic seats in February grew by only 0.6% on last year, and international seats grew by only 0.9% overall. Some airlines experienced growth in passengers despite significant reductions in seats. Overall load factors for February were high at 77% for domestic and 78% for international. Those load factors are well up on the previous year (74% and 71% respectively). At this stage, WIAL expects that lack of capacity growth (and in some cases capacity cuts) will result in high load factors and will constrain buoyant demand for passenger travel over the next twelve months.
Wellington's experience is a small part of a much larger picture. There is an airline boom underway supported by high demand, constrained supply and, not surprisingly under those circumstances, significant increases in average fares. That has been confirmed in the share prices and results announcements of a number of airlines in recent months, including Air New Zealand's interim results announcement in February.
Wellington Airport submitted a new pricing proposal to airlines in early February, dropping its proposed airline landing charge increases from 3% per annum over the next five years to 2.85% per annum. WIAL proposes to hold the international departure fee constant over that period at $25, so average international charges would in fact increase by only 1.4% per annum, despite a significant investment programme in terminal expansions, additional gates, replacement of aerobridges and runway extensions (RESAs). The next stage of the terminal expansion (including an extra aerobridge gate) will commence over the next month, and the southern RESA is expected to be completed on-time and on-budget in the next few months.
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