Auckland International Airport Limited · NZX:AIA
Auckland International Airport — Investor Day (June 2011)
97 slides from Auckland International Airport's investor day presentation, Jun 16, 2011
Slide 1: Investor Day presentation market release
For personal use only Market Release | 16 June 2011 Investor Day presentation Auckland Airport held an Investor Day presentation on 16 June 2011 at Novotel Auckland Airport with a focus on a strategic overview, as well as updates on retail, property and aeronautical business development. See attache
Slide 2: Auckland International Airport Investor Day June 2011
Auckland For personal use only International Airport Limited Investor Day 16 June 2011
Slide 3: Agenda
Agenda For personal use only 9.00am Introductions 9.05am Continuing the growth trajectory (Simon Moutter & Simon Robertson) 10.00am Break 10.30am Shaping markets for faster growth (Glenn Wedlock) 11.30am Sustaining our retail growth trajectory (Adrian Littlewood) 12.00pm Lunch 1.00pm P
Slide 4: Continuing the growth trajectory
Auckland For personal use only International Airport Limited Investor Day 16 June 2011 Continuing the growth trajectory
Slide 5: Our vision is clear
Our vision is clear For personal use only To build a great New Zealand business recognised as a world leader in creating value from modern airports Our vision is clear and focussed on our core competencies Our skill in managing the large scale movement of people in an Airport Our highly effectiv
Slide 6: Strategy evolves as business grows
Strategy evolves as business grows For personal use only Two years of directional clarity, boldness and strong execution is paying off We have closed the capability gaps in our transformation from an infrastructure builder to a sales-led driver of growth Six years of flat underlying profitability of
Slide 7: Outline of June 2011 business strategy
Outline of June 2011 business strategy For personal use only Strategic Themes Negotiate Win Win Commercial Fuel growth through aeronautical commercial arrangements which deliver long-term Frameworks superior value to regulated posted-terms Drive Growth in Tourism and Drive a sustainable upward shift
Slide 8: Negotiate win-win commercial frameworks
Negotiate win-win commercial frameworks For personal use only Not all airlines have the same growth ambitions, risk appetite or business model A one size fits all approach to commercial arrangements limits how our airline partnerships can be grown Auckland Airport will engage with any airline that h
Slide 9: Negotiate win-win commercial frameworks - regulatory
Negotiate win-win commercial frameworks - regulatory For personal use only Auckland Airport is investing in changes to systems and reports in preparation for the first information disclosure reporting in May 2012 Also underway is a revaluation of land as at 30 June 2009 and 30 June 2011 in accordanc
Slide 10: Driving growth in tourism and trade
Driving growth in tourism and trade For personal use only We know that international passenger volumes are a significant value driver for Auckland Airport 2009 International passengers (excl. transits) Our 2009 aspirational goal to grow international planning assumptions per financial year (000's) p
Slide 11: Sustaining our retail growth trajectory
Sustaining our retail growth trajectory For personal use only Strong retail growth in the current year driven significantly by the new passenger experience in international departures Strong car parking growth in current year driven significantly by online booking channel increasing utilisation and
Slide 12: Sustaining our property growth trajectory
Sustaining our property growth trajectory For personal use only Our property growth strategy is to have a clear property proposition, increase amenity and gain critical mass to leverage opportunities between each property precinct We have developments underway or just finished in accommodation, indu
Slide 13: Deliver a smarter airport experience
Deliver a smarter airport experience For personal use only This new strategic theme ensures that our short- term and long-term airport infrastructure provides the quality experience demanded by passengers Links to changing technologies and innovation to improve departures, arrivals and border initia
Slide 14: Why masterplanning is a key component of strategy
Why masterplanning is a key component of strategy For personal use only A320-200 fleet up gauge impact on the DTB will be significant Between FY 11–16, Air NZ will take delivery of 14 Airbus 320-200 jets, each configured 1,500 to seat 171 passengers 1,450 This compares with the 133 seat 1,400 config
Slide 15: Impact of pax growth on DTB service experience
Impact of pax growth on DTB service experience For personal use only The domestic terminal is currently ~27% undersize for its peak busy throughput, based on IATA standard C (represented by the shaded green area). Absent any intervention, the service experience will continue to slide to the bottom o
Slide 16: Together with airlines we will find the path
Together with airlines we will find the path for a better solution For personal use only We are working towards identifying the best solution with our domestic airlines. Options include investing in the current DTB location - lower initial cost - probably a medium-term solution Or investing in a new
Slide 17: Maximising beneficial airport partnerships
Maximising beneficial airport partnerships For personal use only Driving value from our positions in NQA and Queenstown enables Auckland Airport to share in the growth of fast growing airports NQA improvement milestones for FY11 are on track to be surpassed Queenstown legal position behind us and ac
Slide 18: Providing outcome focused leadership
Providing outcome focused leadership For personal use only We know that strong internal leadership qualities will transfer into higher value creation We are a leading company in supporting, promoting and building New Zealand tourism Strong internal and tourism leadership will lead to heightened grow
Slide 19: Our growth is supported by a strong balance sheet
Our growth is supported by a strong balance sheet For personal use only Our debt levels have remained constant FFO To Total Debt since 2008 18.00% A A- 17.00% Gross interest costs (excluding 16.00% capitalised interest) has been falling from 15.00% 2009 while cash flow has been increasing 14.00% Jun
Slide 20: Our big targets
Our big targets For personal use only Our aspirations for growth are strong. We are excited by the growth potential of the business and continue to challenge our people, the markets and our investments in assets to deliver results beyond planning assumptions We are having success on the path to our
Slide 21: Our big targets
Our big targets For personal use only Our aim is to grow international passenger numbers (excluding transits) by 2 million movements by FY14 We believe that the greatest opportunity for passenger movement growth in the medium and long-term is from Asia. Therefore we will focus our efforts to capital
Slide 22: Impact of natural events/disasters
Impact of natural events/disasters For personal use only Long-term impact of Christchurch, Japan, and Chile ash cloud events still not yet known Has been some short-term and modest impact on traffic flows to NQA, ZQN and Auckland Impact of Japan on Cairns likely to slow the very strong growth moment
Slide 23: The case for investment
The case for investment For personal use only Low risk exposure to Asia–Pacific growth story Ownership position in four airports all with considerable upside potential Growth strategies succeeding in growing passenger volumes, aero revenues, retail yields and property rents and plenty more to come S
Slide 24: Questions
For personal use only Questions 23
Slide 25: Shaping markets for faster growth
Shaping markets for faster growth For personal use only NZ determination
Slide 26: Shaping markets for faster growth
Shaping markets for faster growth For personal use only We aim to influence the shape of travel market to open opportunities faster than they would otherwise occur We focus on where we believe the opportunities are the greatest We will work with multiple parties to maximize opportunities, open new m
Slide 27: Market structure as a driver of growth
Market structure as a driver of growth For personal use only To drive our business value we must drive growth and residual value. Given capital intensity we need to develop the right market structure and our competitive position. Market Growth Market Structure Market Position Business Value 26
Slide 28: Market structure as a driver of growth
Market structure as a driver of growth For personal use only Primary benefit is a platform we call convenience. To understand the market structure we question aspects of the market eg: • Where are the players positioned? • What is the shape and size of the market and is this desirable? • What are th
Slide 29: Market structure as a driver of growth
Market structure as a driver of growth For personal use only We then consider a possible future view and then question: • Is it desirable? • What are the implications for customers? • How do we shape the market? • Product implications? • What is the risk? Source: SABRE ADI 28
Slide 30: Where can we build utilisation and connection
Where can we build utilisation and connection For personal use only To grow markets we need to ensure we have the capacity to capture opportunities. Long haul flights build utilisation across the day to build into hub waves. Thursday 1600 1400 1200 Pax Number 1000 800 Arr 60 Min 600 400 200 0 Time o
Slide 31: Population size of countries accessed by direct flight
Population size of countries accessed by direct flight is important to understand market opportunities For personal use only Source: ASPERION 30
Slide 32: Understanding population wealth characteristics
As is understanding population wealth characteristics For personal use only 31
Slide 33: Freight volumes provide a market opportunity
Freight volumes provide a market opportunity For personal use only Organic growth forecasts of 3.2%. For 12 months ending April total airfreight volumes increased by 2.2%. April month was up 12.5%. Source: EAGLE I 32
Slide 34: Some routes are constrained for freight
As some routes are constrained for freight For personal use only Target 29 weekly 777-200 to meet organic growth with North Asia begin identified as constrained Source: EAGLE I 33
Slide 35: Growing markets will get our attention
Growing markets will get our attention For personal use only 120,000,000 Outbound Trips from China 100,000,000 80,000,000 60,000,000 2010 Forecast 2011 40,000,000 Forecast 2020 20,000,000 0 2010 Forecast 2011 Forecast 2020 Source: WTO, BCG 34
Slide 36: China is volume and massive wealth
China is volume and massive wealth! For personal use only • 1.34 billion people • China replaced the United States as NZ's second-largest export market at US$2.66 billion • 57 million outbound trips in 2010 • NZ currently 0.2% of market • One in every 175 people in Shanghai has personal wealth of US
Slide 37: Development of high value travel from China
Development of high value travel from China For personal use only Source: BCG 36
Slide 38: Routes – Competition for aircraft is fierce
Routes – Competition for aircraft is fierce For personal use only Facts • 2 Days • 350 Airlines • 750 Airports • 2300 Attendees • 28,000 Meetings 37
Slide 39: The Development Playbook
The Development Playbook! For personal use only •Easy- Air rights, Visas, Distribution, Network fit •Strategic Imperative: create case, resolve issues, buy in from partners, building influence, creating opportunity cost, regional/alliance strategy link •Great value & result: Comparative advantage, g
Slide 40: Market Development Loop
Market Development Loop For personal use only Learning from results to improve our knowledge and develop sustainable Target growth market market structure segments through considered and detailed Market analysis of markets Development Securing capacity growth Model & is a fundamental outcome of the
Slide 41: Need to stand out from the crowd
Need to stand out from the crowd For personal use only 40
Slide 42: As opposed to hiding in the detail
As opposed to hiding in the detail For personal use only In Guangzhou there was previously limited promotion as less capacity available to potential customers 41
Slide 43: To create greater awareness
To create greater awareness For personal use only Guangzhou Daily Travel session: 4th Jan 2011 GZL & AIAL JV adverts about CNY and high season products 42
Slide 44: To further develop greater connections and more capacity
To further develop greater connections and more capacity For personal use only 43
Slide 45: We are connected well to the World
We are connected well to the World For personal use only 44
Slide 46: Commitments for in excess of 1.3m international seats
And we have gained commitments for in excess of 1.3m international seats in the last 2 years For personal use only 45
Slide 47: Asia is NZ Tourism's growth engine
Asia is NZ Tourism‟s growth engine For personal use only NZ Arrivals Growth as at YE March 2011 60,000 40,000 20,000 0 Asia Africa and the Americas Oceania Europe Middle East -20,000 -40,000 -60,000 Source: IVA 46
Slide 48: Building alliances can stimulate markets
Building alliances can stimulate markets For personal use only 47
Slide 49: Recognising a problem when you see one
Recognising a problem when you see one For personal use only 48
Slide 50: Our leading value growth markets are Korea and China
Our leading value growth markets are Korea and China For personal use only Markets by Tourism Export Value NZD Million YE March 09 YE March 10 YE March 11 1,768 1,616 1,639 916 729 599 612 531 458 448 360 392 348 308 295 268 277 269 248 207 186 Australia UK USA China Japan South Korea Germany Source
Slide 51: Change needed to get parity with Australian industry value
However, we need to change to get parity with Australian industry value For personal use only Tourism Expenditure Value NZ v Aus YE Dec 2010 AUS NZD YE Dec 10 NZ NZD YE Dec 11 $3,364 $2,437 $2,093 $1,497 $1,624 $1,291 $1,264 $987 $668 $362 $465 $321 $218 $261 Source: IVS, Tourism Australia 50
Slide 52: Competing with Australia – International Arrival Forecasts
Completing with Australia – International Arrival Forecasts For personal use only Source: Tourism NZ, Tourism Australia 51
Slide 53: First & Business Class demand generates 42% premium loading
Auckland‟s existing First & Business Class demand generates a 42% loading in Premium seats For personal use only 52
Slide 54: Premium seats at AKL expected to rise
Over the coming year, premium seats at AKL are expected to rise by 113k, or 11% For personal use only 53
Slide 55: Premium Cabin Yields: North East Asia
Premium Cabin Yields: North East Asia (excluding Mainland China) For personal use only 54
Slide 56: Yield is also an issue for air freight exports
Yield is also an issue for air freight exports For personal use only Source: EAGLE I 55
Slide 57: 1.2m O/D passengers between Asia & Latin America
There are 1.2m O/D passengers per year between Asia & Latin America For personal use only 56
Slide 58: Auckland ideally located for Latin America-Asia traffic
Auckland is ideally located to capture Latin America-Asia traffic For personal use only 57
Slide 59: What could it look like?
What could it look like? For personal use only Our competitive advantage – Seasonality opposite to northern hemisphere – Appealing and safe destination – Proximity to Australia – AKL is New Zealand‟s hub – Gateway Americas– Australasia – Gateway Americas–Asia 58
Slide 60: Concentrate marketing spend in Asia, Americas
To influence we will concentrate our marketing spend in Asia, Americas and supporting markets For personal use only Breakdown of Spend by Region FY 2011/12 6% 6% 9% Nth Asia/Eur Sth Asia/Eur 46% Americas 13% Emerging Australia Domestic 20% 59
Slide 61: Future story
Future story…. For personal use only • Easiest and most desired route for customers moving between Asia, Australasia & Americas • High value passenger and freight development • #1 Dynamic Capacity Development 60
Slide 62: Our conclusions
Our conclusions For personal use only Opportunities for market development include: • The fast growing markets of Asia • Lifting yield on premium to lift the airline value proposition • Ensure freight opportunities are maximised for overall airline profitability • Remove impediments to growth (air r
Slide 63: Questions
For personal use only Questions 62
Slide 64: Sustaining our retail growth trajectory
Auckland For personal use only International Airport Limited Investor Day 16 June 2011 Sustaining our retail growth trajectory
Slide 65: Summary of retail business at Auckland Airport
Summary of retail business at Auckland Airport For personal use only • 102 retail sites with 71 different concepts • 35 operators • Two full service duty free operators with total of 6 duty free stores • 18m+ combined visits a year to our two terminals 64
Slide 66: Past year focused on delivering ideal retail environment
Past year has focused on delivering ideal retail environment and reset of commercial & operational foundation For personal use only Retail Strategy shared in May 2010 1 Deliver a high quality retail experience Over past year our focus has been here 2 Set strong operational & commercial foundations 3
Slide 67: Deliver a high quality retail experience
Deliver a high quality retail experience For personal use only • Unique, award winning 1 retail environment • Strong sense of „NZ‟ in common area and retailer selection • Outcome held true to retail strategy set at start • Opportunities remain for regular retail change out to maintain shopper engage
Slide 68: Set strong operational & commercial foundation
Set strong operational & commercial foundation For personal use only • Refreshed retail mix during 2 redevelopment • Exit of 21 year old HMSHost/AIAL JV • Driven retailer consolidation to build local scale and capability • Reset of 60% of all ITB retailer commercial terms – retained excellent upside
Slide 69: Adopt whole of airport approach to drive retail
Adopt whole of airport approach to drive retail performance For personal use only 3 • On-going investment in measurement and data management tools e.g. door counters, data warehouse • Working to near real–time reporting for key retailers – allows faster decision making • Working closely with Aero te
Slide 70: Apply our scale to support retailer performance
Apply our scale to support retailer performance For personal use only 4 • Lifting marketing performance – increasingly targeting Chinese/Australians • Strong operational audit programme in place resulting in improved retailing standards • Continuing retail operational and sales training – focusing n
Slide 71: Retail performance showing significant improvement
Retail performance showing significant improvement despite on-going redevelopment For personal use only MoM Total ITB Retail Sales • Recent and consistent % Change (excl FX) improvement in sales suggests 16% new retail environment is working 14% ITB project • While FX rate changes may Change per mon
Slide 72: Summary of parking business at Auckland Airport
Summary of parking business at Auckland Airport For personal use only Car park product offering at Auckland Airport International Terminal Domestic Terminal Park & Ride Proximate short-term and Multi-level car park with Opened December 2008 long-term parking options direct connectivity into terminal
Slide 73: Parking business transformed to yield management model
Parking business has been transformed to yield management model For personal use only • Capability upgrade combined with new online booking tool enabled launch of dynamic product and price management in May 10 • Adopted best of breed hosted model rather than customised solution – helped speed to mar
Slide 74: Growth since launch has outstripped passenger growth
Growth since launch has outstripped passenger growth For personal use only • Significant growth in target segments/products over prior year: – Long term volumes +26% – Business Express occupancy +85% with limited product cannibalisation for travel of 1 day+ • ~20%+ of total transactions from online
Slide 75: Focus on maximising new yield model
Focus will be maximising potential of new yield model For personal use only • Continue to improve product: – Adding new/repurposing existing capacity to service higher demand from public and local staff – Improve quality of physical parking product – Improving online tool and back-end capability to
Slide 76: Questions
For personal use only Questions 75
Slide 77: Property momentum
Auckland For personal use only International Airport Limited Investor Day 16 June 2011 Property momentum
Slide 78: Canals, railroads and highways quote
For personal use only Canals, railroads and highways have, channelling the flow of the traffic, created urban alignments, hinterlands and nodal points. Now air transportation promises to become a vital factor - Edward JT 1956
Slide 79: Development of Airports and Cities
Development of Airports and Cities For personal use only 1950‟s – Airport Airport remote from City 1970‟s – Airport City Airport remote from City but self contained, City grows towards Airport Today – Airport Corridor & Aerotropolis Airport with many of the activities of a centre or suburban busines
Slide 80: Auckland Airport Business District
Auckland Airport Business District For personal use only • Flexibility • Security • Amenity
Slide 81: Market Summary
Market Summary For personal use only Market Stock Vacancy Absorption Rents Cap rates Ave Value Forecast pa $/m2 CBD Office 1,369,736 13.8% 22,158 $224 9.43% $2,375 Non CBD Office 1,531,202 13.2% 27,211 $221 8.83% $2,503 Warehouse 11,280,768 4.5% 232,679 $107 8.29% $1,291 Retail (Sub 56,085 0.1% - $9
Slide 82: AIAL Portfolio Snap Shot
AIAL Portfolio Snap Shot For personal use only
Slide 83: Portfolio Comparison
Portfolio Comparison For personal use only Occupancy WALT Market Cap Rate DNZ Property 96% 4.4 8.7% Argosy 96% 5.3 8.8% Goodman 95% 5.5 8.1% AMP NZ Office 92% 4.6 8.1% Kiwi Income 97% 4.2 8.0% PFI 99% 4.1 8.8% Industry Ave 95% 4.9 8.6% AIAL 99.5% 5.1 8.3% # Source FNZC: “NZ Property Play” (18 May 20
Slide 84: Portfolio Comparison
Portfolio Comparison For personal use only HIGH GROWTH LOCATION SINGLE LOCATION, SECTOR DVERSITY Office Industrial Retail Commercial Other DNZ Property 40% 27% 12% 21% 0% Argosy Property 29% 35% 36% 0% 0% Goodman Property 33% 29% 0% 25% 13% Auckland Airport 7% 49% 6% 11% 27% # Source: Latest listed
Slide 85: Inventory for Property Development
Inventory for Property Development For personal use only Size Ha Value $ / m2 The Quad 13.6 14.5 107 The Landing 166.7 104.9 63 Altitude 13.0 12.8 98 The Common 53.2 17.2 32 Cargo South 0 0 0 Terminal zone 0.4 1.1 254 Cargo North 7.7 18.3 239 Other 87.5 11.4 13 Total* 342.0 180.2 53 *Total excludes
Slide 86: Auckland Airport Business District: The Landing
Auckland Airport Business District For personal use only The Landing Quantum - Plan change Land available for development 120 ha approx operative Absorption Akl Forecast pa (ave 5 years) 232,679 - 4 New buildings - Warehouse (NLA) complete or Absorption Airport Mkt1 last 12 months 43,572 under Rents
Slide 87: Auckland Airport Business District: The Quad
Auckland Airport Business District For personal use only The Quad Quantum - Concept Land available for development 10 ha approx advanced Non CBD Office forecast Akl Absorption 27,211 - 3 New buildings (ave 5 years) under Absorption South Akl Mkt1 last 12 months -7,807 construction Non CBD Grade A Re
Slide 88: Auckland Airport Business District: Altitude
Auckland Airport Business District For personal use only Altitude • Strong fundamentals • Convenience centre fully leased • F1 success suggests latent demand • Concept „testing‟ modest expansion
Slide 89: For personal use only
Ae FEET EE | RARE OEE REEE ORE FRR RN
Slide 90: Over 65,000 vehicles visiting the airport every day
For personal use only Massive exposure with over 65,000 vehicles visiting the airport every day
Slide 91: New Zealanders surveyed have visited the airport
For personal use only 15° UU t of New Zealanders surveyed have visited the airport at least once in the last 12 months* *Feb 09-Feb 10 TNS Research
Slide 92: People working around Auckland Airport
FOE peTSaIa ses Oni approximately 22 y people work around Auckland Airport, that’s more than Newmarket’s workforce* *New Zealand Retail Magazine Issue 661
Slide 93: For personal use only
For personal use only
Slide 94: Fundamentals of the Airport location support Altitude
For personal use only The Fundamentals of the Airport location support a greater opportunity in the Altitude precinct
Slide 95: Auckland Airport Business District: Cargo – South and North
Auckland Airport Business District For personal use only Cargo – South and North • Demand steady • 4 Percival Gull leased • Cargo Central – From 79% to 95% occupancy – Rent roll increased 32% in 12 months
Slide 96: Auckland Airport Business District: The Common
Auckland Airport Business District For personal use only The Common • Amenity and Supportive Activity • Employees • Tourism/Visitors • Conferences • Initiatives – Abbeville Farm Estate – Campervan – Paintball – High-Ropes – Driving Range – Golf
Slide 97: Questions
For personal use only Questions 96
Auckland International Airport — Investor Day (June 2011) on 6ix