Auckland International Airport Limited · NZX:AIA
Auckland International Airport — Investor Presentation (July 2017)
32 slides from Auckland International Airport's investor presentation, July 2017
Slide 1: Aeronautical pricing July 2017 – June 2022
Aeronautical pricing July 2017 – June 2022 Adrian Littlewood Chief Executive Philip Neutze Chief Financial Officer
Slide 2: New pricing summary
New pricing summary 2017 Aeronautical pricing Reasonable price path and strong infrastructure investment New Pricing • 30-year Master Plan launched in 2014. Auckland Airport has experienced much stronger growth than expected in 2014 with the number of airlines using Auckland Airport up 61% in the pa
Slide 3: Auckland Airport development history
Auckland Airport development history 2017 Aeronautical pricing Development timeline New Pricing Auckland Airport International International 30 year Departures Work begins on: officially opened terminal nearly terminal vision expansion begins doubled in size expansion launched New domestic jet facil
Slide 4: Strong passenger growth
Strong passenger growth 2017 Aeronautical pricing 20 year passenger growth trend New Pricing 10,500,000 It took 48 years from 9,500,000 1966 to 2014 to reach Assumptions 15 million passengers 8,500,000 7,500,000 Comparison Peer 6,500,000 In just three years from 4.0% CAGR 2014 to 2017 total 5,500,00
Slide 5: Key tariff structure changes
Key tariff structure changes 2017 Aeronautical pricing Degree of Key changes: change: New Pricing • No major change L Landing Charges • MCTOW charges cover all direct airfield costs Assumptions • RLC introduced once construction based triggers are met, no earlier than Runway Land Charge New FY21 (RL
Slide 6: Pricing volume assumptions
Pricing volume assumptions* 2017 Aeronautical pricing Financial year ending 30 June Metric FY18 FY19 FY20 FY21 FY22 New Pricing Aircraft Volumes Aircraft less than 6 tonnes Landings 4,024 4,085 4,134 4,177 4,218 Assumptions Aircraft greater than 6 tonnes but less Tonnes (000’s) 603 623 639 654 670 t
Slide 7: Five year pricing path flat in real terms
Five year pricing path flat in real terms 2017 Aeronautical pricing Aeronautical pricing effective revenues per passenger New Pricing CAGR CAGR Average revenue on per Estimate FY17-18 FY18 FY19 FY20 FY21 FY22 FY17-22 FY17-22 passenger basis* (Nominal) FY17 (Nominal) (Nominal) (Real) International Pa
Slide 8: Runway land charge
Runway land charge 2017 Aeronautical pricing RLC structure and rationale New Pricing • RLC implemented to recover a portion of land holding costs and help reduce second runway landing charges when it is commissioned Assumptions • RLC of $1.19 per passenger introduced once the trigger is met, but no
Slide 9: Capital expenditure and aero asset base
Capital expenditure and aero asset base 2017 Aeronautical pricing PSE3 Priced capex waterfall (2017 $) Forecast priced aero asset base (Nominal $) New Pricing Real priced capex plus escalation and holding costs PSE2 2.5 2.5 1.42 0.42 Assumptions ** 2.19 2.0 2.0 Comparison 0.20 1.80 Peer 1.5 0.47 1.5
Slide 10: Significant projects
Significant projects 2017 Aeronautical pricing Phase 6 Arrivals and MPI expansion, check-in Phase 4 expansion Second runway Pier B extension, Progressing planning 17-19 contact stands and earthworks Taxiways & stands Code F taxiways, Roading stands and aprons Road infrastructure Phase 3 Transport Ex
Slide 11: Five year capital expenditure material elements
5 year capital expenditure material elements 2017 Aeronautical pricing Allocated capex (2017 $) New Pricing Domestic jet terminal (Phase 5) 401.5 Code C/E taxiway, stands and aprons (Phase 5) 215.2 Second runway 202.4 Assumptions Code F taxiway, stands and aprons 161.1 $0.6b uncommissioned capex wit
Slide 12: Capital expenditure by year
Capital expenditure by year 2017 Aeronautical pricing Cost in 2017 NZD (millions) FY18 FY19 FY20 FY21 FY22 Total New Pricing Airfield Code C/E taxiway, stands and aprons (Phase 5) 5.1 58.4 72.6 79.1 - 215.2 Code F taxiway, stands and aprons 10.2 5.0 2.1 50.2 93.6 161.1 Assumptions Terminal Airside e
Slide 13: Capital expenditure by year (cont'd)
Capital expenditure by year (cont’d) 2017 Aeronautical pricing Cost in 2017 NZD (millions) FY18 FY19 FY20 FY21 FY22 Total New Pricing Other Utilities 3.4 9.4 8.6 5.5 2.0 28.9 BAU Aero 13.5 10.1 10.5 10.0 9.4 53.5 Assumptions Runway slab replacement & airbridge works 9.7 9.7 9.7 9.7 9.7 48.5 Other 21
Slide 14: Domestic jet terminal
Domestic jet terminal 2017 Aeronautical pricing New domestic jet terminal joined onto the international terminal New Pricing • First phase of the new combined domestic and international terminal commissioned at the end of PSE3, but only impacts prices from PSE4 Assumptions • Existing facilities will
Slide 15: Core international terminal
Core international terminal 2017 Aeronautical pricing Improving the international arrival and departures experience New Pricing • Completion of international terminal level one emigration, dwell and retail expansion (Phase 3) Assumptions • Expansion of border processing (MPI) area to provide extra c
Slide 16: Code F taxiway, stands and aprons
Code F taxiway, stands and aprons 2017 Aeronautical pricing • Construction of new remote and contact New Pricing stands, modifications and extensions to taxiway and taxilanes infrastructure, and the construction of apron and associated extension Lima infrastructure Assumptions • New capacity to cate
Slide 17: Pier B extension and stands
Pier B extension and stands 2017 Aeronautical pricing Significantly increase international gate capacity New Pricing 15 • Pier B extension will add Code F capacity to the New stands international terminal, supporting expected growth 16 in passenger numbers and accommodating the Assumptions latest ge
Slide 18: Second runway
Second runway 2017 Aeronautical pricing Planning for 2028 New Pricing • Management has sought expert advice on forecast second runway timing. Based on demand forecasts, it is planned to be operational in 2028 • Runway timing will be subject to ongoing work with Airways and airlines to improve produc
Slide 19: Operational expenditure
Operational expenditure 2017 Aeronautical pricing Operating costs per passenger decrease in real terms New Pricing Nominal Real 6.00 Assumptions 5.50 5.00 Comparison Peer NZ$ 4.50 Next Steps 4.00 3.50 3.00 Estimate FY17 FY18 FY19 FY20 FY21 FY22 • Operating cost per passenger forecast to decrease 0.6
Slide 20: Target return
Target return 2017 Aeronautical pricing • After balancing all of the relevant factors (incorporating NERA’s advice on an Auckland Airport- New Pricing specific WACC estimate and undertaking cross-checks against the Commission's methodology), Auckland Airport’s target return for PSE3 is 6.99% after t
Slide 21: International charges remain competitive
International charges remain competitive 2017 Aeronautical pricing A320 turnaround costs per seat New Pricing $50 $45 Assumptions $40 $35 Comparison $30 Peer NZ$ $25 $21.69 $20 Next Steps $15.73 $15 $10 $5 $0 Airport Costs Third Party Costs Average Total Costs Average Airport Costs 21 Note: Average
Slide 22: Domestic charges remain well below average
Domestic charges remain well below average 2017 Aeronautical pricing A320 turnaround costs per seat New Pricing $20 $18 Assumptions $16 $14 $12.54 $12 $9.47 Comparison $10 Peer NZ$ $8 $6 Next Steps $4 $2 $0 Airport Costs Third Party Costs Average Airport Costs Average Total Costs • Domestic charge w
Slide 23: Annual disclosures
Annual disclosures 2017 Aeronautical pricing • The Commerce Commission completed its input New Pricing methodologies review in December 2016 • The final decision reaffirmed that the Commission does not set prices for airport services and that its Assumptions focus is on ensuring there is transparenc
Slide 24: Next steps
Next steps 2017 Aeronautical pricing 1 July 2017 • New prices become effective, except for delayed implementation of New Pricing check-in, aircraft parking and RLC Early August 2017 • Auckland Airport’s full 10 year pricing disclosure will be released. This will Assumptions include: - 10 year capex
Slide 25: Questions
Questions
Slide 26: Important Notice and Glossary
Important Notice and Glossary 2017 Aeronautical pricing Disclaimer This presentation is given on behalf of Auckland International Airport Limited. Information in this presentation: • is provided for general information purposes only, and is not an offer or invitation for subscription, purchase, or r
Slide 27: Appendix
Appendix
Slide 28: Background
Background 2017 Aeronautical pricing • Airport charges are designed to achieve a reasonable return on significant investments in essential long-term national infrastructure • All international and domestic airport charges are collected from airlines and form part of their cost of operations • Pricin
Slide 29: Information Disclosure Regime
Information Disclosure Regime 2017 Aeronautical pricing • Since 2011, NZ’s three largest airports including Auckland have been subject to Information Disclosure requirements under Part 4 of the Commerce Act • Airports disclose certain performance related information (financial, non-financial, histor
Slide 30: Our long term pricing vision – rewarding growth
Our long term pricing vision – rewarding growth 2017 Aeronautical pricing For consumers: sharing efficiencies Prudent, timely and and delivering staged capital quality services expenditure Containing For airlines: Rewarding Growth Costs reasonable price path Operating efficiencies For NZ Inc: growin
Slide 31: New pricing schedule
New pricing schedule 2017 Aeronautical pricing Prices in NZD Metric Current Final pricing decision – new pricing period FY17 FY18 FY19 FY20 FY21 FY22 Landing charges Aircraft less than 6 tonnes $ / landing 57.40 57.00 58.35 59.78 61.28 62.79 Aircraft greater than 6 tonnes $ / tonne per 9.66 9.11 8.9
Slide 32: New pricing schedule (cont'd)
New pricing schedule (cont’d) 2017 Aeronautical pricing Prices in NZD Metric Current Final pricing decision – new pricing period FY17 FY18 FY19 FY20 FY21 FY22 International check-in standard allocation package charges Traditional counter $ / counter / hr 16.50 17.50 25.00 27.50 30.25 33.28 $ / custo
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