Crown jewel

Nestled between sawtooth mountains on the edge of Lake Wakatipu in the lower half of New Zealand’s South Island, the resort town and surrounds is a jewel in New Zealand’s tourism crown.

Tourists flock for skiing in winter and for scenery, adrenaline-inducing adventure and gourmet, wine and cultural experiences in summer. New Zealanders visit year-round.

But there is only so much a small town, stretched by physical boundaries, can handle. The working population, largely servicing tourism, is grappling with an accommodation shortage. House ownership and rents are expensive. Hotel accommodation and infrastructure are also under pressure, especially in peak seasons. Traffic gridlock and a dearth of car park spaces also test drivers’ patience.

The issue is to make sure overcrowding does not diminish the resort’s allure – or as one Queenstown local body member summed it up recently – not to cook the goose that lays the golden egg.
Queenstown Airport chief executive, Colin Keel who has been in the job since June 2016 is acutely aware of the situation.

Thirty-year plan

The airport has begun planning for its future 30 years out with knowledge that in less than half that time passenger movements will likely reach a point when the airport can no longer sustainably handle them.

In the meantime Keel said everything is about collaboration, citing the creation of a new transport governance group in Queenstown 18 months ago made up of representatives from the local and regional councils, airport, the transport authority and tourism groups. They work together on plans for new roads, parking, on transport flows and infrastructure. Since its formation a road around the back of the airport has been fast-tracked to relieve a traffic bottleneck, public transport has expanded and a park-and-ride service has been added to at the northern end of the airport boundary.

The Queenstown Lakes District Council owns 75.01 per cent of Queenstown Airport with the balance held by Auckland International Airport.

When Keel replaced an interim manager after the previous chief executive Scott Paterson died in September 2015, the airport was already the fastest growing aerodrome in Australasia and New Zealand’s fourth busiest airport in terms of passenger movements.

There has been no let up. In the year to August passenger numbers reached 1.94 million, 15 per cent higher than the previous corresponding period.

In the month of August alone 189,040 passenger movements were 12 per cent higher than the same month last year. Newly introduced night flights accounted for 11 per cent of that total.

Passenger movements are forecast by 2035 to increase to six million annually and to 7.12 million buy 2045. In the corresponding years aircraft movements are forecast to rise from 47,000 to 55,000.
During his three years at the helm Paterson instigated a two-year programme to standardise and refresh the airport’s technology infrastructure, upgrade all applications as undertake terminal upgrades. A $17 million international terminal opened in June 2015.

Night flights

He also secured New Zealand Civil Aviation Authority approval to extend the 6 pm curfew to 10 pm for after-dark flights. To accommodate these flights and to meet forecast growth expectations the airport spent $19.5 million in 2016 on approach lights, widening the main runway from 30 to 45 metres, adding an apron overlay, parallel taxiway and more aircraft parking stands. It enlarged the size of the car park and did further terminal work. Split shifts created by the night flights added another 115 staff to the team.

Work at the airport has been ongoing on many fronts, from protracted negotiating with landowners for more land on the southern boundary to Customs expanding biometric automated passenger processing to more nationalities
at E-gates. The airport is also collaborating with New Zealand Airways Corporation to address the rising risk of unmanned aerial vehicle (drones) to historic aviation activities with new technology.

Work at the airport has been ongoing on many fronts.

Contractors worked at breakneck speed, mainly at night, to complete the airfield upgrades for the first Air New Zealand evening after-dark service from Auckland on May 23 last year.

Jetstar followed on June 24 with evening flights from Melbourne through to August for the ski market.

Australians under 35 years of age accounted for 49 per account of all passenger traffic into Queenstown during the winter period from June to August last year and figures are expected to be higher this year after a bumper snow season.

Virgin Australia and Qantas also started night flights with some aircraft staying overnight to fit with schedules.

The four airlines provide all of Queenstown’s scheduled commercial flights through domestic and trans-Tasman ports.

The airport is also a busy hub for tourist operators flying fixed wing aircraft and helicopters and for the private jet market.

Biz jet popularity

Air Center One operates Queenstown Corporate Jet Services. It opened a dedicated terminal for business jets in 2014, but demand has been so high plans are now in tow to double the size of the terminal in the next year at a new location on the southern side side of the airfield. This will leave its existing site next to the main terminal free for expansion.

Corporate Jet Services manager, Robin Leach says there were days when he had to turn private jets away because of a lack of apron space. The airport can presently accommodate up to eight of the larger private jet models such as Gulfstream and Global Express. They make up the bulk of Queenstown’s private jet traffic.

Leach said the jets belonged to wealthy families and individuals who came to the region mainly for holidays. Queenstown was also a favourite celebrity haunt. Actors Tom Cruise and Oprah Winfrey flew their private jets to Queenstown with their entourages to star this year in movies set against the region’s spectacular scenery.

American-born Keel, like Paterson came to the job from Australia where he had advised international pension and superannuation funds on major infrastructure investments. He has held senior management roles at American Airlines, Qantas and Aurizon.

Queenstown was not unfamiliar as he and his wife had made it their second home several years ago and visited often and built a house in the town.

Ever visit is “a memorable experience”,” said Keel.

A memorable passenger experience is one of the four pillars of the airport’s future planning, alongside sustainability, adaptability and affordability.

After “memorable” Keel enthuses about the smell of the place.

“You get unbelievably pure oxygen here. It is unlike no other experience.”

Keel’s role at the airport has been full on from day one.

Paterson had begun casting around for suitable consultants to create a 30-year master plan for the airport.

Keel wasted no time in appointing those consultants to research and meet with stakeholders.

A statement of intent (SOI) was also drawn up to cover performance targets for the 2018-2020 timeframe.
The SOI forecasts revenue will grow at an average rate of 13.6 per cent over the three-year period, rising from $30 million to $44 million.

Net profit after tax was expected to grow in the same period at a rate of 12.3 per cent, from $10.5 million to $14.8 million while interest rates would double from $2.2 million to $4.4 million as a result of doubling debt from $50.47 million to $110 million to fund infrastructure projects, including more terminal expansion.

The SOI estimated the expansion would provide economic benefits of almost $275 million a year for the community and will continue to grow.
Keel said the funding model was an important piece of the puzzle going forward and the airport’s financial performance was strong.

But above all, he said the airport’s goal was to delivery a safe, secure and efficient passenger experience through engagement and collaboration.

Keel said it had become abundantly clear the airport in its present shape was unsustainable for visitors and the community in the longer term.
But he is averse to using the term “capping” as an option to cope with future visitor numbers.

“Capping is a negative application around a lack of planning,” he said.

Capping is a negative application around a lack of planning. Colin Keel

“The guiding principal is around sustainability, safety, environment, social and community impacts and economic certainty.”

The master plan was released in August with a November 30 deadline for feedback following consultative meetings between airport staff and community, businesses and tourism groups.

The plan raises key issues about how much growth is sustainable, whether the airport should be moved, and the impact of growth on the community and region.

Options galore

Plenty of options are on the drawing board, including a new terminal at either the northern or southern end of the airfield or maintaining and expanding the present terminal.
The airport will need more aircraft stands, a new taxiway extension, parking (including expansion of the recently introduced park and ride service), and compulsory acquisition of land from five different landowners. One sizeable block on the southern boundary is still embroiled in protracted legal action between the airport and its owners.

What are not negotiable in the 30-year plan are the airport hours of 6 am to 10pm. Neither would the runway be extended to cater for wide-bodied jets. Noise mitigation and the prospect of a costly house acquisition and demolition process if the runway were to extend to the lake’s edge of encroach on land at the far end ruled both these out.

The master plan raised the figure of 5 million passenger movements as a level the airport could operate sustainably in harmony with the community and its growth plans.

At the present growth rate it would take less than 20 years for the airport to reach this peak.

Wanaka option

One solution, once capacity is reached at Queenstown and is not in the master plan is a dual operation with Wanaka Airport, 71km to the north Wanaka is known globally among warplane plane enthusiasts for its biennial Warbirds over Wanaka Easter Airshow and is used primarily by recreational pilots and commercial businesses. It is also a global balloon launch site for the National Aeronautics and Space Administration (NASA).

One solution, once capacity is reached, is a dual operation with Wanaka.

The airport has the advantage of being far enough away from the town’s population to be free of residential considerations such as noise and large tracts of land surround the airfield. Lake Wanaka, the township and its scenic landscape are also usually on the visitor list of visitors to Queenstown.

The popular Cardrona skifield is half way between the two towns.

The Wanaka option was not included in the Queenstown master plan because the Queenstown Lakes District Council was still negotiating Wanaka’s management lease at the time the plan was being put together.
Queenstown Airport subsequently won the Wanaka management contract. Fortuitously, during the negotiation process it bought a sizeable parcel of land adjacent to Wanaka Airport, following another recent land purchase nearby.

What mix of flights would suit a dual operation is still in the melting pot.

Australian invasion

Compared to other New Zealand airports, Queenstown attracts a higher proportion of international passengers from Australia (67 per cent vs. 21 per cent); travellers aged under 35 (49 per cent vs. 39 per cent), and holidaymakers and those visiting friends and family (90 per cent vs. 80 per cent).

Of the total number of passengers to Queenstown 28 per cent come on direct international flights from Australia, according to statistics collated for the airport in the year to July.

Seasonally, Australians make up four out of five passengers in winter. In the year to 31 July Australian passenger growth was up up 13 per cent.

New Zealanders made up 10 per cent of the market in the period (up 11 per cent growth), peaking in the school holidays; the United States, 6 per cent (a 22 per cent increase, peaking in summer), the United Kingdom, 3 per cent (23 per cent growth, peaking in summer) and China, 3 per cent (a decline of 8 per cent and peaking at Chinese New Year).

Keel said the 30-year plan meant looking into the future and considering changing technology, new aircraft that could fly longer distances and airport designs that maximise way-finding for passengers.

Right approach

“We have to take much more than a strategic approach,” he said.

“The guiding principal is being adaptable.”

“Economic fundamentals change in the world and we have to plan for it, just as we have to plan for an earthquake or natural disaster, another GFC or a fuel blip.”

Keel, said he is a person who thinks outside the square.

“I am really keen to embrace innovative thinking. It gives us opportunities beyond guiding a memorable experience.

He cited an active pop-up strategy at the airport for serving food and beverages as an example.

This will see the inside brought outside with food stands and table and chairs planned for the airport’s forecourt so visitors year-round can revel in the mountain scenery around the airport as well as soaking in the oxygen Keel revels in.

Keel said the role, as chief executive of an airport is to leave it in a better place that he found it. When he arrived he said the airport was in a really good place. His challenge is to take it to the next level.

With so much on his plate you get the feeling he is in for the long haul.