NZPropCo bought the Kāpiti Coast Airport in December 2019 as part of a portfolio of properties it acquired from Todd Property Group. Kāpiti Coast Airport was approximately 5% of the portfolio.
NZPropCo is owned by Templeton Group (49.9%), Tailorspace (27.1%), and Alvarium RE Ltd (23%).
Templeton is the delivery arm of NZPropCo and manages all the day-to-day operational aspects of Kāpiti Coast Airport.
The airport is losing approximately $815,000 a year.
Earlier this year, Templeton Group commissioned Castalia to write a report pre-Covid to understand the economics of the airport regarding its use by visitors/tourists and we found that the airport provides a very poor return to the Kāpiti economy of less than $120,000 per annum. The total spending from visitors travelling through the Kāpiti airport each year in Kāpiti is $465,204 ($206,844 from day trips plus $258,360 from overnight trips). Of this spending, it is estimated that 25 percent is retained in the Kāpiti region. This leads to an annual benefit to the Kāpiti region of $116,301.
Covid-19 has dramatically reduced the number of flights in New Zealand and this has forced further challenges the airport faces. Airways’ notice to cease provision of airfield flight information services to Kāpiti, a CAA mandated requirement, has further compounded the challenges.
The NZ Airline Pilots Association also completed an assessment of serious safety concerns about Airways’ proposal. Airways’ proposed withdrawal creates additional cost to engage in CAA regulatory process, and there is considerable uncertainty on what future air traffic services and flight operations will look like following that process. However, given Templeton Group would not compromise on safety, likely outcomes would be financially adverse to KCA:
Airways has indicated that if current services are retained then it will be on different commercial terms – i.e. will cost more;
If an air traffic service is not provided then a feasible outcome is that for safety reasons, KCA would need to reduce operations (e.g. no scheduled 30+ seats) with consequential negative economic impacts (bearing in mind considerable growth would be required to make KCA economically viable going forward).
Pre-Covid, Air Chathams initially promised to have scheduled 34 return flights per week on a 30-seater aircraft. That provides seat capacity for up to 1020 people per week. Unfortunately, Air Chathams are now only providing 16 return flights per week with capacity for 480 passengers per week, but currently only approximately 360 passengers per week are catching flights. This is less than 50% of the numbers indicated when the airport signed up with Air Chathams. As well, Air New Zealand has indicated it will not be returning to the airport.
In 2015, Beca completed an analysis of the runway condition and maintenance noting the runway needs significant work to maintain required operating standards at a cost of approximately $4.6m. While the runway has been maintained to required safety standards, it is a composite of underlying sections of varying quality. Careful monitoring along with some necessary maintenance has enabled much of Beca’s 2015 10-year programme to be deferred with only $180k spent to date; with some $4.6m spend now expected in the next several years.
Palmerston North and Wellington airports are 70 minutes and 55 minutes respectively from Kāpiti. Those airports’ size and growth compared to Kāpiti Coast Airport means the competition to Kāpiti is strong.