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Infratil Email Update

16 Dec 2008

NZ Bus Overview - November 2008

November 2008 patronage for the Northern Region was 6.4% higher than for November 2007. If adjusted to reflect the different number of work/school days in the two periods this was an increase of 14.9%, the equivalent of 259 additional bus loads of passengers per day!

Passengers per trip grew on nearly all corridors in Auckland, in particular Crosstown (12.4% growth), South Auckland (10.1% growth) and Western Bays (9.4% growth).

November patronage for the Southern Region was 4.2% below the same month in 2007. However, adjusting for differences in workdays gives an increase of 5.3 %, or approximately 51 additional bus loads of passengers per day.

While many factors contributed to the growth, the success of Government’s SuperGold Card initiative was notable. In the North, SuperGold travel in November 2008 was more than double the number of Senior Fare trips taken in November 2007. In the Southern Region SuperGold trips were approximately 50% higher than the comparative Senior Fare rides of a year previous. This Government initiative is having a positive impact on the lives of many people who are taking advantage of low-cost off-peak public transport. Feedback from SuperGold users is very positive.

Victoria Electricity

Victoria Electricity had 380,000 billable customers at the end of November. Growth efforts remain focused on Victoria which is the most mature market in Australia, with more moderate increases in customer numbers expected in coming months compared to the first half of the financial year. Price caps will be removed in Victoria in January and most companies have posted significant increases in prices for the new year. In gas, price increases partly reflect the less mature nature of risk management in the Victorian gas market. On 22 November, gas prices hit the market price cap due to a number of supply outages again demonstrating that the market price cap is too high for this stage of market development. While Infratil was affected, the impact on other market participants was far greater and there is likely to be pressure for market rule changes.

In other markets, the Queensland Competition Authority has recommended a 13.6% increase in retail prices from July next year, but that has been the subject of political debate in Parliament and the media. There is some prospect of New South Wales becoming a favourable market for competition in 2009 as the Government seeks to sell its retailers, generation development sites and generation trading rights. This is only likely to succeed if the artificially low prices in NSW are revisited prior to sale.

Wellington Airport Monthly Overview - November 2008

Bond Issue
To repay bank facilities, Wellington Airport launched an issue of 5 year 7.5% coupon bonds to raise $50 million (with the potential for over-subscriptions of a further $50 million). The issue is being well supported by banks, brokers and local investors. Details and documentation are available on the Airport's website http://www.wellingtonairport.co.nz/html/business/bond-offer.php

Domestic
Domestic monthly growth comparisons now reflect that Pacific Blue has now been operating for a year, but this predictable flattening of growth was exacerbated by generally weak demand with domestic passenger numbers for November 2008 down 4.4% compared to November 2007, with capacity remaining relatively flat overall. Regional and trunk services had similar percentage reductions in passengers. As Pacific Blue commenced midway through November 2007, the underlying softness on the trunk may be greater than indicated by comparing the two Novembers. December will be the first full month with three airlines flying on the trunk and we expect this, along with a reduction of Qantas flights to Auckland, will mean a weak December. Year to date, passenger numbers remain 13% above the previous year.

International
There was a pleasing increase of 3.1% in international passenger numbers in November 2008 versus November 2007. However, this reflected weak results on Sydney and Melbourne offset by a large increase in capacity and passenger numbers to Queensland (Brisbane and Coolangatta). Most of this increase has come from the additional Pacific Blue services to Brisbane, although Air New Zealand and Qantas both added services from the previous November. Year to date, international passenger remain marginally negative (-0.4%) on the prior corresponding period on an increase in capacity of almost 4%.

Infrastructure and services
New self-service check-in and boarding facilities have been installed for Air New Zealand’s domestic services. The terminal retail has been further enhanced with a Mojo café and a Beach Culture outlet now open. While the economic downturn is impacting on passenger numbers and revenue, the Airport is committed to continue its investment in the infrastructure necessary for long term growth. Construction of The Rock is on schedule and the runway overlay and strengthening will commence in January 2009.

Infratil Airports Europe Monthly Overview - November 2008

Glasgow Prestwick Airport
Glasgow Prestwick handled 154,006 passengers in November, down 6% on November 2007. The number of passengers using scheduled services fell against the prior year for the first time in more than six months, with a total of 153,560 representing a 4% fall against last year.

Many UK airports have recorded similar or worse results due to the current economic conditions, with drops of more than 10% not uncommon in recent months. Glasgow Abbotsinch, for example, handled 16% less passengers in November compared with 2007, while the average shortfall across BAA’s UK airports was 9%.

The November result results in the year-to-date passenger total of 1,738,634 being slightly behind the same period in 2007.

Three charter operators have announced holiday flights from Glasgow Prestwick for summer 2009. Scottravel Holidays will continue their summer operations to Dalaman in Turkey; Balkan Holidays will fly to the Bulgarian Black Sea resort of Bourgas; and Holidays 4U will serve Dalaman also. While positive, these are relatively low volume operations and will not replace the loss of the previous charter services from Seguro.

Glasgow Prestwick handled 1,300 tonnes of freight during the month, down 57% on last November. The loss of the Atlas/Polar business remains the dominant factor.

The year-to-date freight volume of 14,350 tonnes is 33% down on the same period in 2007.

Kent International Airport
Kent International handled 2,727 tonnes of freight in November – more than double the October tonnage. Strong growth in services from Cargolux, and a return of several movements by MK Airlines, contributed to the growth.

The November result was still 27% behind the 3,757 tonnes in November 2007 when MK Airlines was operating daily scheduled 747 freight flights. Year to date freight tonnage remains 26% behind the prior year.

Flybe, Europe’s largest regional airline, has announced it will operate a scheduled service from Kent International to Jersey next summer.

Lübeck Airport
Lübeck Airport handled 38,401 passengers in November, up 22% on November 2007.
This result is driven mainly by additional capacity on Ryanair’s new daily domestic service to Frankfurt Hahn, and additional Dublin services.

The year-to-date passenger total of 381,263 is down 12% on the same period in 2007.

Infratil has reached agreement with the City of Lübeck to extend to January 2010 the period within which it can exercise its right to ‘put’ its stake in the Airport back to the City. Under the agreement with the City to acquire the 90% stake, Infratil has a right to put the stake back to the City if certain planning and passenger thresholds are not met. The passenger threshold has not been met. That right, which would involve a return of the purchase price, loans and certain capital and operating costs, may have expired in January 2009 if this extension had not been agreed.
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