Airport rebounds from Covid hit
A mix of good board governance, management, and a supportive ownership structure has placed Waikato Regional Airport Ltd in a strong position to move forward as the Covid-19 emergency wanes, said chief executive Mark Morgan.
The airport company was established in 1989 when a consortium of local authorities, including Hamilton City Council and Waipa, Waikato, MatamataPiako and Otorohanga district councils acquired the former Rukuhia aerodrome from the Government.
A surrounding 133ha of land came with the airport terminal and runway, and over the following years the airport company established the 75ha Titanium Park, an industrial and commercial development in four precincts on the airport perimeter.
This year Covid-19 threw a big spanner in the works. As April’s national lockdown bit, airport passenger numbers – and the income that came with them – collapsed from around 35,000 in April 2019, to just four in April 2020.
A multi-million dollar upgrade of the airport’s terminal building and car park, planned to begin in early 2020, was put on hold, and the company’s newly-upgraded Hamilton Airport Jet Park Hotel ceased trading as air travel came to a halt. A series of buyers of land in Titanium Park backed out of their deals as the business environment became uncertain.
Things were looking grim. According to Morgan though, a number of factors came to the rescue. First, the Government took over the hotel to use as a Managed Isolation Facility, contracted to April 30, 2021 with a further extension possible.
A strong crop harvest from the airport-owned farm contributed, as did increases in land values around the airport.
Airside, passenger numbers returned to almost pre-Covid levels with projections for a 7 per cent increase in seat capacity from March 2021, and even stronger passenger growth expected in 2022.
Land sales at Titanium Park are a key part of the company’s future, and the land is highly competitive with comparable industrial and commercial offerings in the north of Te Rapa, and there are no development contributions required.
Morgan said the property situation had gone full circle with new land buyers coming forward, mostly local interests, but also large businesses including farm machinery supplier Landpower and tyre distributors TyreLine.
‘‘We have run out of land in Stage 4 and in the Central Precinct and the Southern Precinct now has only two lots left. We are about to start construction on 5ha in Stage 5 of the Central Precinct, with lots ranging from 3500 to about 8000 square metres.’’
Earth works begin in February 2021, and titles will be available later in the year. Stage 5 will take it through to the boundary of Pacific Aerospace property and provide several years of land supply.
‘‘Over the past six months things have recovered far quicker than we expected,’’ Morgan said.
‘‘Investors are looking for places to park money and people are chasing assets, so land is welcomed as a home for liquidity. ‘‘We took a strategic decision a few years ago to become a net acquirer of land, so we only sell land which is not required for our air operations and recycle capital into other assets, including the hotel and farm. We recently purchased a lifestyle block adjacent to our Northern Precinct, which will allow us to take advantage of the future Southern Links roading connection.
‘‘Sale proceeds are intended to provide long-term capital for the airport company, and this has put us in a far better position than many other regional airports which have relied entirely on their air operations. Our forecast company debt levels over the next 12 months will be amongst the lowest in the last decade.’’
Real estate company NAI Harcourts has been busy selling industrial and commercial land at Titanium Park, and sales and leasing agent Sean Stephens said there was now a waiting list of businesses and investors keen to access the next stages of development.
‘‘We have been mightily surprised at the level of demand and enquiry for the airport land. Demand has been so high the (Airport) board has decided to go ahead with Stage 5 and a scheme plan is expected early next year, ahead of their previous business plan.
‘‘We are seeing owneroccupiers, people coming from Auckland wanting to move to Hamilton. Land prices at the airport have risen $70 to $80 a square metre in the past 12 months,’’ Stephens said.