HomeInfratil News2008Infratil Email Update

‹ Back to All Infratil News

Infratil Email Update

21 Oct 2008

Infratil Email Updates are sent to interested shareholders, analysts, brokers and other parties who have registered their interest on http://www.infratil.com

NZ Bus Overview - September 2008

For the six months, NZ Bus’ Auckland patronage was up 7% to almost 20 million trips while Wellington patronage rose 4% to 10.6 million trips. Whangarei services continue to beat expectations as the city now has one of NZ’s best public transport services outside of a major metropolitan area.

The increases reflect both work undertaken to improve services by NZ Bus and its regional council partners and the higher cost of private motoring encouraging people to use the bus and ferry.

In September the drivers' strike adversely impacted Wellington City patronage, but this was a one-off and the ongoing improvement to the quality of the GO Wellington services is expected to result in patronage growth resuming.

Parliament's passage of the Public Transport Management Act under urgency, with a slew of drastic last-minute amendments, was a blow to all private providers of public transport, but set against that the NZ First initiative to have those with Super Gold Cards travel free in off-peak times is already showing that quick positive results are possible from good policy measures.

In Wellington the roll out of Snapper has far exceeded expectations. Over 30,000 cards have been issued and Snapper is already more popular than the 10-trip ticket it is replacing. Work is underway to introduce school fares using Snapper and roll out Snapper in the Hutt Valley.

Auckland passengers
Year to 31 March 6 months to 30 Sept 2008
2007 37,210,897
18,638,872
2008 36,648,393 19,956,312
Change (1.5%) 7.1%
Wellington passengers
   
2007 20,276,179
10,206,281
2008 19,723,961
10,601,150
Change (2.7%) 3.9%

Victoria Electricity

Victoria Electricity had 370,000 customers at the end of September, a 30% net gain since the commencement of the financial year. Most of this gain came from growth in Queensland. However, the growth also includes a 12% gain in Victorian customers since the commencement of the financial year, and Victoria accounted for a little over one third of overall growth. Growth continues to be focused in Victoria, albeit at a slower rate than in earlier periods.

The Victorian Government will remove price caps for residential customers on 1 January 2009 – the first time in Australia and a positive sign for future retail competition. Victoria Electricity has also begun offering telco products to existing customers in Victoria as a value add to their energy accounts.

As previously advised, growth has ceased in Queensland pending a better commercial environment. This could eventuate from success of incumbent retailers to overturn previous retail price reset decisions, a more favourable price reset approach in 2009 (which has already commenced), a favourable move in wholesale prices or a combination of those factors. Of most note in wholesale hedging, the market is becoming more comfortable on the range of possible prices for carbon pricing and 2011 futures contracts with firm prices and no carbon price adjustments have begun to trade.

Wellington Airport Monthly Overview - September 2008

The underlying demand for air travel appears to have eased in recent months, perhaps by around 5% versus the previous year. Wellington Airport, however, continues to grow strongly in the domestic market and has been less impacted than the trend in international, due to additional competition and capacity from Pacific Blue.

Domestic
September passenger numbers increased10% above the previous period. A decrease in average seat load in September to 71% from the previous year's 75.9% followed a substantial increase in seat capacity of 18%. Year to date domestic passenger volume for the five months ended is at 15.9% above the previous year following a 19.4% increase in seat capacity. It is noted that, based on current trends, monthly comparables are likely to become flat or negative after the mid-November anniversary of Pacific Blue's entry.

International
International passengers in September were 3% below those of the previous year, following a 4% increase in capacity. Again, a lower underlying demand was offset by passenger numbers on the Brisbane service which continued to benefit from the two additional Pacific Blue services commenced in July. An average load factor remains relatively healthy at 74%, although this is down from the previous year's 79.3%. Year to date passengers are 1.1% below the previous year with seat capacity increased by 2%.

Comment
The recent announcement by low cost carrier Jetstar to add trans-Tasman services from Auckland is a welcome addition to the New Zealand international market. The Wellington market, while obviously being smaller than Auckland, is well placed to receive further international growth. Wellington has a very attractive market for airlines and competition is currently limited, particularly to Sydney and Melbourne.

Wellington Airport's team has extensive experience in dealing with low cost airlines and in commercial negotiations with airlines. Infratil Airports has experience in Europe negotiating successfully with low cost carriers in a highly competitive environment and has a team in Wellington and Europe with direct experience working within low cost carriers including easyJet and Tiger. The successful introduction of Pacific Blue into the domestic market is a recent example of success in this area. Wellington Airport also works in partnership with Wellington region business and tourism organisations on the promotion of new services.

Work on WIAL's Northern runway end safety enhancement is complete bringing Wellington Airport in line with new international aviation safety requirements. Nearing completion is construction of two new retail outlets in the main terminal, Discover New Zealand selling souvenirs, and Sunglass Hut. Both will open in November.

Infratil Airports Europe Monthly Overview - September 2008

Glasgow Prestwick Airport

Glasgow Prestwick handled 214,436 passengers in September. This brings the year-to-date passenger total to 1,372,187, slightly ahead of the equivalent period last year.

Scheduled passenger traffic showed a year-on-year increase for the fifth consecutive month, although charter traffic was down 56% against last year. This resulted in the month's passenger total falling 4% on September 2007.

During the month Glasgow Abbotsinch recorded an 11% fall in passenger numbers, with its year-to-date total down 5.4% on last year.

The drop in charter traffic was due to the unexpected suspension of flying on September 10 by Seguro, the main charter operator at Glasgow Prestwick.

Seguro's cessation of trading was brought about by the collapse of Futura Airways, which operated more than 80% of their flight schedule.

There remains a strong market for charter services out of Glasgow Prestwick and discussions are being progressed with other operators which may wish to meet this demand in summer 2009.

Despite well-documented challenges in the market Ryanair continue to expand its network. The previously announced new services to Malaga, Faro and Tenerife will commence with the winter schedule and are showing strong forward bookings.

Aer Arann will take up the Cork route at the end of October and Ryanair has announced it will serve Turin as a ski destination over the winter months, with Grenoble flights also operating for the third season in a row.

To cater for future passenger growth the Board has approved a £1.7 million development of the terminal departures lounge.

Preliminary work has commenced and major construction will take place during winter. New and expanded retail facilities, improved seating and new toilets will feature in the design.

Glasgow Prestwick handled 1,326 tonnes of freight during the month, down 47% on last September.

This is roughly in line with August's year-on-year performance, with the absence of Atlas / Polar services continuing to be responsible for the shortfall in monthly volumes.

The year-to-date freight volume of 10,277 tonnes is 23% down on the same period in 2007.

Kent International Airport

Kent International handled 1,373 tonnes of freight in September, down 24% on the prior year total but up 27% against August's performance.

Freight operators EgyptAir, Cargolux and Intavia all delivered strong year-on-year improvements of 68%, 45% and 56% respectively.

MK Airlines, the airport's previous largest customer, made eight appearances during the month although its volume of freight was down 78% against September 2007.

The year-to-date freight volume of 8,773 tonnes is 6% down on the equivalent period in 2007.

Seguro's announcement that they had ceased trading meant that the airport lost its main charter operator Kent Escapes.

While this led to a fall in year-on-year and year-to-date passenger performance, the flights that did operate during September - including the final Kent Escapes flights - achieved extremely high load factors, again demonstrating the market potential.

Lübeck Airport

Lübeck Airport handled 45,314 passengers in September, down 14% on last year and roughly in line with August's result. Capacity over the month was down 18% on September 2007.

The year-to-date passenger total of 295,023 is 14% down on the equivalent period last year, and therefore also roughly consistent with capacity.

A new daily domestic service to Frankfurt Hahn will be launched by Ryanair with the winter schedule.

Ryanair have also reduced some of their Stansted winter capacity with the result that capacity will be about 20% up on last winter, rather than the 33% increase which would have resulted from the original winter schedule.

Infratil Update - September 2008

10 weeks after its launch 30,000 Wellingtonians are making low-value payments (such as for a bus ride) with Snapper, which by this time next year may be widely available around New Zealand. The Update explains Snapper and why Infratil, a utility company, is backing a payment card.

Trustpower Wellington Airport Infratil Property NZ Bus Australian Social Infrastructure Partners Canberra Data Centres RetireAustralia Vodafone New Zealand Perth Energy Tilt Renewables Longroad