Into the Danger Zone – is something Very Bad about to happen with our airports?
- by Peter Newport :
- May 02,2020
For serious airport watchers, and let’s face it that is most of us considering we own 75% of Queenstown and Wanaka airports, this should be a time for extreme vigilance.
All of the warning signs are there. A Statement of Intent that everyone agrees is useless, pushed through council with a mysterious sense of urgency, in the face of a record number of public objections.
There's also an equally irrelevant $300,000 (this is our estimated cost based on previous work done by the same company for QLDC - QLDC will not release the budgeted or actual cost to Crux) Martin Jenkins airport expansion survey that is being kept away from the public eye, even though one of its main purposes was to inform our councillors’ vote on the Statement of Intent. We, the ratepayers, funded the survey.
The Queenstown Airport Corporation says it is too busy dealing with Covid-19 to write an up-to-date Statement of Intent until October 2020. Really? The airport has no planes, no passengers – nothing. The Covid-19 situation could not be more clear – commercial aviation is pretty much screwed for the foreseeable future.
So – what’s going on? Is the stage set for something that many of us have long suspected but never believed could actually happen? The danger signs are all there – and we ignore them at our peril.
Let’s look at the basics. Look at the facts.
Airport CEO Colin Keel is the highest paid person in the district, even after his voluntary pay cut (from $550,000 to $440,000). He does not run flying or aviation operations – that’s the job of the airlines, CAA, Airways and others. Colin Keel runs car parks, some shops and some very valuable land.
Colin Keel can only justify his very high salary for two possible reasons.
- Extracting unusual, extraordinary value for someone from “his” (our) car parks, shops and land.
- Charming and selling the idea to the residents of Wanaka that they want and need a big (international) airport. Ultimately this might allow for the closure/movement or role reduction for Queenstown airport that is limited by mountains, a lake and a river.
If we take the two propositions above out of the equation, then Colin Keel should really be a QLDC employee managing a medium grade airport for around $200,000 a year.
Another fact is that Queenstown Airport Corporation has around $70 million of debt. Why?
It’s a monopoly business with captive customers (airlines). It also has a licence to print money with another group of captive customers (passengers). We pay through the nose for expensive car parking, coffee and cake. It’s big easy business. How could substantial debt even come into the equation?
But not only is the airport $70 million in debt, it is about the spend the same amount again (or more – they won’t tell us the number) to buy Lot 6. This is land for airport expansion that the current Statement of Intent allows for but that they’ve “promised” not to progress. The current owner of the land, Alastair Porter, is famous for driving a hard bargain, so we can expect the airport corporation to be paying top dollar for Lot 6 after a decade long court battle to acquire it.
As councillor Niki Gladding has pointed out, this takes the airport close to its borrowing limit. This means even less contribution to the residents who own the airport via QLDC, as loan repayments and interest will consume cash. We get around $7 million a year from the airport in dividends, not enough to make a serious dent in our rates.
One of the consequences of this debt increase would be a change to the current share structure if the Queenstown Airport Corporation wanted to raise money by selling shares. Our shares. This would be a very normal way to raise money. Auckland airport has just raised 1.2 billion dollars using this sale-of-shares technique.
The QLDC ratepayers currently own 75.01% of QAC. Even people who know very little about business will know that very bad things can happen below 75%. Control of an entire business can change.
And where is that Martin Jenkins airport impact report that almost certainly helped Jim Boult secure a second term as Mayor by promising full community consultation on proposed airport expansion?
Crux has asked the council where that report is and whether it is being edited before being released to the public.
Here’s the full response to our questions from QLDC’s marketing and comms team.
Can you let us know when the Martin Jenkins airport report will be released and if QLDC or QAC has any right to review and change the document before the public sees it? Have changes been made - or will the report be 100% unseen and unedited by QLDC and QAC? Will the community get see both the original and changed documents if changes are made?
“We are currently planning on sending the report to councillors in a workshop in the second half of May (the date of the workshop is to be confirmed). We expect to release it to the public shortly after the workshop.
The report will be made public as it is delivered to QLDC. It would obviously not be appropriate for it to be edited by QLDC or QAC.”
Why is it taking so long - especially as councillors have already been asked to vote on the SOI - a vote that was supposed to be informed by the MJ report?
“The report was expected to be released earlier, but the timeline associated with the report was severely impacted by COVID-19.”
“The SOI was drafted pre-COVID; council took the pragmatic approach to adopt the SOI but recognise that it doesn’t reflect the current situation. The directive from councillors was for QAC to come back with a modified, updated SOI in October that better reflects the realities of the post-COVID-19 situation. This will give QAC a significant amount of time for their new approach to be considered.”
The answer to our question about changes to the MJ report is ambiguous, saying only that it would be inappropriate, not that it would not happen. It is important to note that QLDC “workshops” involve no minutes or records being kept. There is no public scrutiny of these workshops where a lot of council business is guided and decided.
So, if this was a residents' battle-planning meeting there would be cause for concern that something big was about to happen. Maybe something linked to the real reason that Colin Keel gets paid so much. Something that no amount of expensive videos featuring cute security puppies or “the invention of human flight by Colin Keel” will solve.
Instead – it might be something to do with shops, car parks – and land. $1.2 billion of land by some estimates. Stuff currently owned by the ratepayer.
Important, strategic and expensive stuff that we should not allow to be stolen from us..
Of course – this could all be what QLDC’s comms people would call a “conspiracy theory”. But what’s the worst that could happen from getting more transparency around our airports?
They should after all have nothing whatsoever to hide from us – their majority shareholders.