Auckland Airport’s flying circus
As apologies go, it stood out.
The boss of one of our top companies saying sorry to its customers when he didn’t really need to.
Air New Zealand CEO Christopher Luxon’s email apologising for a host of inconveniences suffered by passengers flying with the airline this year landed in thousands of inboxes a few weeks ago.
It was a PR masterstroke. Luxon laid out a list of problems, then deftly blamed them on everyone else.
There was the person who cut the pipeline from Marsden Point; Rolls Royce whose engines require extra servicing; and the country’s airports that are failing to deal with congestion.
Luxon took a big swing at Auckland Airport.
"Simply put, some airport facilities, especially in Auckland, are struggling to keep up with the surge in demand for air travel due to under-investment by the airport companies," he said in the email.
Was Luxon being a bit harsh? After all, the biggest issue with Auckland Airport in recent years has been negotiating the traffic jams on the inadequate roads that lead to it.
Turns out he was right.
I recently had to take a 7.30am flight from Auckland to Dunedin. Wary of the traffic, even at 6.30am, I’d left home early and arrived at the airport with time to spare.
Well I thought I did. Fifty metres from the security screening area I hit the queue.
People all around me were muttering that they had never seen it this bad before.
The line moved slowly, and panic rippled through hundreds waiting in the maze of lanes that lead to the scanning machines.
Security guards started letting agitated passengers whose planes were boarding through the barriers.
Some were told to go back after their boarding passes were inspected but many just stood there wondering where they could re-join the huge line.
Chaos might be too strong a word, but it came close.
Aviation Security later told Newsroom that the delayed departure of two A320 flights (the largest aircraft flying domestic routes) had exacerbated the congestion and that passenger clothing was also partly to blame.
“Auckland weather conditions were extreme with rain and 40kmh gusts. As a result many leisure travellers were wearing bulky over-clothing and took longer than usual to prepare for screening.”
Stressed passengers ran from security to the departure gates as a stream of names were being called on the PA system.
Was this an isolated incident?
Appears not. Other recent travellers say they have experienced similar problems and not just at peak times.
The people who should really be sending out “we’re sorry” letters are Adrian Littlewood, Auckland Airport’s CEO and its chairman Henry Van der Heyden.
Did they not foresee growth coming from a rapidly-growing city and tourism sector?
The company’s website makes the bold claim: “Auckland Airport’s board of directors and executive team focus on ensuring the company is managed at the highest strategic level.”
That might be true if the strategy is about maximising returns for investors, but it is certainly not about making things easy for its customers who have no other options.
If you don’t like Air New Zealand, you can fly Jetstar. Don’t like Auckland Airport? Tough luck, it’s a monopoly.
The company has made plenty of noise about its plans to invest $2 billion in infrastructure between now and 2022. These include building a new domestic terminal that will cater to passengers flying between Auckland, Wellington, Christchurch and Queenstown.
The existing terminal will handle flights to the other towns and cities.
But this is at least three years away and according to aviation security the number of passengers that will need screening by then is predicted to have grown by 15 percent.
Yes, there is a problem right now with queues, but it will become a lot worse in the next few years.
A source familiar with the company told Newsroom that in the past, institutional investors have pressured it to be conservative with capital expenditure in case passenger growth was simply “a bubble “ and wasn’t sustained.
Last year, the number of domestic passengers flying in and out of Auckland increased by nearly 8 percent to 9,263,666.
This is not a bubble, it’s a clear trend fuelled by lower airfares as the airlines compete to fill expanding fleets and bigger, more efficient aircraft.
So why has Auckland Airport failed at the “highest strategic level”?
It’s not as if the company hasn’t had the financial resources to invest in better infrastructure, earlier. Most of its healthy profits have been paid out in dividends to shareholders.
In 2016 Auckland Airport made a net profit of $247 million and paid out $243 million in dividends.
Last year its underlying profit was $263 million, and shareholders got $261 million in dividends.
The company is conservatively geared for a monopoly with a strong free cashflow. It could have taken on more debt and invested earlier, if it had wanted to.
According to one analyst Newsroom spoke to, “overwhelming growth has exceeded everyone’s expectations”.
The airport will need to do something in the interim before the new domestic terminal is built or risk serious public dissatisfaction.
Part of the answer could be found a few hundred metres away in the international terminal where the latest baggage scanners process more passengers at a faster rate.
Aviation Security says the system there has a number of benefits including larger trays, a tray return system and curved “dual tray parallel divestment” (as circle in bottom picture).
To install similar machines the airport would need to find some more room at the domestic terminal.
One option would be to get rid of a café/bar close to the existing screening area.
The building alteration costs and foregone rent would be minimal in the overall scheme of things.
Christopher Luxon could help out too, if he speeds up the construction of the new Air New Zealand regional lounge to replace the tiny one it now operates at the far end of the domestic terminal.
It’s estimated that 40 percent of regional travellers go through security, when they don’t need to, just to get to the bigger lounge upstairs.
When Newsroom approached Auckland Airport for comment on the congestion it responded quickly saying it had begun work the previous week “on a plan to tell everyone about the improvements we are going to make”.
Newsroom will have more on that this week.