Air New Zealand should disclose details

Published  4 Feb 2016 

The Air New Zealand PR machine wound up again last week during a parliamentary select committee hearing. In response to Napier MP Stuart Nash telling airline boss Christopher Luxon that “the biggest barrier to doing business in Hawke’s Bay was the price of airfares”, Mr Luxon responded by claiming the airline was adding an additional 29 500 seats to Hawke’s Bay services this year. This is less than a 5% increase or just one daily return service using the airlines smallest aircraft the Bombardier Q300 or just five return flights a week on the larger ATR 72. Interestingly at the same time the airline announced an additional 100 000 seats between Auckland and Queenstown.   

He did not reveal the division of the extra seats over the 3 existing Hawke’s Bay destinations so it is unclear how exactly these extra seats will be provided and whether there will be any improvement on Wellington or especially Christchurch services where prices still seem very high and ground alternatives unappealing. Probably few people realise that 29 500 seats is actually less than one quarter the135 000 additional seats now being provided by Jetstar’s 4 daily return flights between Napier and Auckland. Air New Zealand may have the lions share of local passengers but it is Jetstar who are providing most of the growth. 

Checking Air New Zealand’s forward schedule reveal no significant change in either the frequency or the mix of aircraft on Hawke’s Bay services for the rest of the year. Perhaps the increase has already been implemented as a result of the change from 50 seat Q300 aircraft to the larger 68 seat ATR 72 on most Auckland flights. The airline should now be required to specify exactly how these extra seats will be provided if only to ensure services are improved. 

Thank you Stuart Nash for bringing this issue up in the formal environment of a parliamentary select committee. 

Published HBT 23 April 2016

After a decade of near stagnation passenger numbers through Hawke’s Bay Airport for the 6 months to December 31 increased by 13.5%, (HBT 5/04/2015) possibly the most significant performance improvement in the entire history of the airport. 

Whilst this included just one month of Jetstar operations their pending arrival in provincial New Zealand had been announced way back in June, so Air New Zealand had plenty of time to take action to preempt the increased competition. 

It seems certain passenger numbers will exceed half a million by the end of this financial year, (June 30) and as most of the 135 000 additional Jetstar seats between Napier and Auckland will only become available in the second half of the financial year, it seems likely passenger numbers could reach 600 000 by Christmas this year, at least 3 years ahead of the airports own projections.  

Whilst it’s great the airport is financially viable thereby lessoning the risk of needing council and crown support, the primary purpose of the airport is not to make money but to facilitate essential air links with the rest of New Zealand and the rest of the world. Without these links our businesses would be seriously disadvantaged, our visitor industry much reduced, and Hawke’s Bay would be a much less desirable place in which to live, as has been the case for far too long. 

Airport management tells us business travellers make up an astonishing half of all passengers, proof if any is needed that we have been subject to some very unreasonable treatment from the national carrier. Antidotal evidence suggests there has now been a significant correction since Jetstar arrived on the scene.  For far too long those visiting friends and family and tourists have been deterred from coming here by excessive airfares. Suddenly these people can afford to fly, often for the first time in their lives.  Businesses are also able to visit their clients and suppliers more often and more affordably.  

Yes Hawke’s Bay is on a roll and the increase in passenger numbers through the airport is evidence we may have turned a corner. However the reality is we could have been in this situation many years ago had our MP’s, Mayors, Councillors and the Airport Board committed to getting competition and better air services rather than just paying lip service. It needs to be said our leaders did nothing to get Jetstar here, despite their endless efforts to gain a share of the glory. Perhaps if they had declined a few Air New Zealand lunches and had instead tackled the airline’s management over their service levels things might have been different. 

For years these naysayers claimed it would require over $10 million of runway and terminal  improvements to get another airline. Strangely the Napier council was quite happy to spend $18 million on the museum upgrade catering for fewer than 40 000 paying visitors plus $2 million for a couple of reconditioned buses that managed just one passenger per trip. Hastings also had a $15 million spend up on the Opera House that attracted just 60 000 customers, and now needs a further $10 million for earthquake strengthening.  At the same time the the airport board spent $5 million developing a business park which attracted just one tenant and has already taken a near million dollar impairment charge.

Now Napier plans to spend a further $15 million on a velodrome whilst Hastings intends spending untold millions on Civic Square, a hotel and other projects, none of which will provide any significant economic benefit, or provide for more than a tiny fraction of the 600 000 people expected to pass through the airport this year. Additionally these dreams all require substantial ongoing ratepayer support, unlike the airport which actually makes money and plays the council owners a dividend.    

Good times never last forever and we need to be proactive in seeking ways to sustain the growth we are now experiencing.  We have finally got competition and look at the difference it is making. We now need Jetstar to start flying south to Wellington and/or Christchurch. We need larger more traveller attractive A320 pure jets linking us with Auckland, and we need to get direct flights to Australia. All of which we might have achieved years ago if those charged with making a difference had actually made a difference. 

Our so called leaders have been too willing to accept Air New Zealand claims they were meeting our needs. The 135 000 additional seats now being provided by Jetstar, (plus another 29 500 from Air New Zealand) in the space of just one year is clear proof of  how seriously wrong they have been all along. It is time to replace the negative thinkers who seem control so much of Hawke’s Bay with people of vision, appropriate expertise and proven performance. 

The folly of a council funded hotel

Published HBT 2 Feb 2016

Since 1989 I have been under the mistaken illusion that Havelock North was part of Hastings. I now discover that the proposer of one amalgamated council thinks otherwise. Mayor Yule claims (HBT 30/01/15) “we are the only city in New Zealand without a hotel” yet in the same paragraph acknowledges the new $20 million hotel being built in Havelock North. 

Apparently he has been in China again pitching the idea of a CBD hotel to potential investors with the added incentive of $5 million of risk reducing council funding, a trip incidentally the majority of HDC councillors were unaware of. This begs the question of what has happened to the earlier local investor? 

I also believe the council is attempting to coattail the hotel development onto the Opera House strengthening knowing there is significant community support for the latter and serious opposition to both the hotel and Civic Square projects. Creating the $50 million Tihei Heretaunga extravaganza is simply creating complication to help push unpopular ideas through.   

Whilst the HDC is implying that the $20 million currently included in the long term plan means it will not cost ratepayers or that it must be spent is quite misleading. There will be substantial interest, loan repayment and long term operating costs attached to each, and there is nothing to stop them being  abandoned. 

Like it or not  the new Porters Hotel will strengthen the Havelock North accommodation and restaurant hub and committing insane amounts of ratepayers money to overturn what the market is dictating will be futile and wasteful. 

Funding Tourism Promotion

Published HBT 27 Jan 1016  

The heading in HBT Tourism Big drain on Ratepayers  was somewhat misleading as the item was about  the funding of tourism promotion . This is the unedited version. 

We expect our councils to spend ratepayers’ money wisely.

In late 2014 Hastings District Councillors were asked by Tourism Hawke’s Bay to support its submission to the Regional Council requesting a $900 000 a year increase in funding. The request was made during an unexpected appearance by Tourism Chair, George Hickson and GM Annie Dundas. No information was supplied in advance, minimal details were provided on how the money would be spent and nothing useful was provided  to help councillors with any subsequent deliberations.  Plus there was no consultation between Hastings councillors and staff, despite an assurance from the Mayor on 18 Feb 2015 that the proposal would be subject to scrutiny.  

On 28th May 2015, councillors were surprised to learn staff had already made a supporting submission to the HBRC and were given the options of withdrawing the submission, making clear it was a staff, not councillor submission or accepting the submission without an in-depth examination. The last option was approved by 7 votes to 6 and effectively supported a $450 000 a year Regional Council rates increase for those in the Hastings District. This is equivalent to a 0.75% increase in Hastings rates. Subsequently the Regional Council decided to stage the increase over 3 years. 

The Regional council’s involvement goes back to 2004 when former Napier Mayor Barbara Arnott and current Hastings Mayor Lawrence Yule seemed quite willing to hand over responsibility for the management of the regional development agency Vision 20/20 despite being at odds over the direction and worth of the organisation. 

However the Regional Council’s lack of involvement in tourism, plus an absence of staff or elected councillors with relevant expertise in the visitor industry soon showed up with increasing dissatisfaction from tourism providers. On taking over in September 2004, a new organisation Hawke’s Bay Inc was created with farmer and former Regional Council chairman Ross Bramwell at the helm. Disasters piled up. The first CEO  left after just 10 months in the job and the second lasted only a year. The organisation’s accounts were subsequently described as a “dogs breakfast”(HBT 27 April 2007).  In March 2008 a 3rd CEO took office, and  on 1 July 2009 the organisation was renamed Venture Hawke’s Bay. In May 2010 the 3rd CEO departed following revelation of a $250 000 unfunded expenditure blowout for the 2009/10 financial year. 

In 2014  the tourism and economic development functions of the Regional Council were split up again, leading to the creation of Tourism Hawke’s Bay which combined the ratepayer funded tourism operations of Venture Hawke’s Bay with the member funded Wine Country Tourism Association. Whilst Tourism Hawke’s Bay initially received both private and ratepayer funding private funding contributions now seems to have ceased. 

It is far from clear just how much impact Tourism Hawke’s Bay is having on our visitor industry. Both the Hastings and Napier councils have invested heavily in creating attractions including Splash Planet, the Regional Sports Park, the Museum, Aquarium, and Kennedy Park plus they fund and operate many non-commercial sporting and recreational facilities. In addition the two councils also engage in their own promotional and advertising activities.  

Napier is the driver of tourism in Hawke’s Bay, provides some 2/3rds of regional commercial accommodation and has a long history of successfully managing its tourism destiny. Whilst giving lip service to the co-operation between the City Council and Tourism Hawke’s Bay in reality the city seems to be forging ahead on its own. In the past year Napier has ramped up support for major spectator sports events including the Waikato Hawkes Bay Ranfurly Shield match, Melbourne Storm vs Dragons league match, All Blacks vs Argentina Rugby test and the recent Elite Road National Championships. 

There are also a great many non-council created events including Art Deco, Horse of the Year Show, the Mission and other concerts plus the Woman’s International Hockey Festival now in its 3rd year. 

Whilst Tourism Hawke’s Bay has bought us the  “Big Easy”  weekend with about 1500 cyclists and the high end food extravaganza “FAWC" with about 4000 ticket sales, these are actually small numbers. 

There seems to be a reluctance to challenge the role and performance of Tourism Hawke’s Bay but this hands off approach means that those who are actually providing the facilities and events have no say. Perhaps this is because Tourism Hawke’s Bay presentations are very slick and carefully stage-managed to prevent meaningful examination of the information provided. 

That tourism is a vital part of our economy is not in doubt but doubling the ratepayers’ contribution for visitor promotion and events creation to almost $2 million justifies a robust examination of the organisation, their performance, and plans. 

This whole saga shows contempt for those who have no say in whether they pay or not and Hastings councillors should have done more to protect their interests.

The pretendors

The clammer for unearned credit - blog published only 

We have now been experiencing the benefits of aviation competition in Hawke's Bay for nearly two months and although it’s early days it seems there has been a leap in the number of people travelling by air as well as a significant reduction in airfares.  Jetstar have alrady added 150 additional seats a day each way between Napier and Auckland (from February this will increase by a further further 50 seats each way.) More Air New Zealand “grab a seat” deals are appearing on my phone than ever before and for travel only days, not months away.   

For over 10 years I campaigned for competition. For all this time these efforts were frustrated and blunted by the Mayor of Hastings and former Mayor of Napier Barbara Arnott. All sorts of other so called Hawke’s Bay leaders have been conspicuous for their lack of support rather than action. Now however that Jetstar has arrived these very same people are trying to claim they have also been trying to get competition for years. Of course in the public domain there are records that suggest otherwise. For instance Napier’s new Mayor Bill Dalton  famously said:

- to Hawke’s Bay Today June 19th 2013, “ Air New Zealand were not price gouging on Hawke’s Bay services”. 

- and to Radio New Zealand Sept 5 2014   “Jetstar could damage Hawke’s Bay” 

Flying to Auckland a few of weeks ago I discovered a statement from Bill Dalton in the Jetstar inflight magazine claiming “We have been trying to get competition into the Hawke’s Bay skies for years.  it’s going to make Napier a much more affordable place to visit.”  

This is a graphic demonstration of just how disingenuous these people can be. I always felt Mrs Arnott was especially determined to achieve nothing and wondered if she was trying to mollify the Clarke/ Cullen government who were clearly opposed to the runway extension, at a time when the Napier Council were trying to obtain significant Government funding for the museum extension. Around this time  Hastings Mayor Lawrence Yule was also seeking government contributions first for the Opera House upgrade, then subsequently the velodrome project. Perhaps he was also compromised by his role as president of Local Government New Zealand

Hastings Mayor Lawrence Yule is another trying to gain undeserved credit for himself. Following the launch of the new Jetstar service he was reported as being a long time proponent of getting competition into the regions airways (HBT 2 Dec 2015 )  and claimed “As a region we have worked for this for four years”  adding “so many people had worked hard with undaunted determination to get another regional airline into Hawke’s Bay”. In my view he clearly was not talking about himself. He also clearly did his best to make sure I was not involved in any official effort. 

Of course eventually luck was on our side. As a result of the mining slowdown in Australia and the reduction in fly- in/ fly-out  workers five Q300 aircraft became surplus to QANTAS/Jetstar requirements allowing them to be transferred to New Zealand. 

Others who seem to have forgotten how disengaged they previously were includes Chamber of Commerce head Wayne Walford. There is no evidence of Chamber involvement in getting improved air services since the departure of Murray Douglas some years ago. Tourism Hawkes’s Bay Annie Dundas is another conspicuously absent from the ranks of those calling for better air services. She has certainly been much more conspicuous since Jetstar executives first arrived back in August 2015. Perhaps its worth  mentioning it had been a priority when I was an elected board member of the privately funded  Wine Country Tourism Association prior to her arrival some five years ago.Of course  Air New Zealand had covered their base’s by having their General Manager of Online and Leisure Dave Simmonds appointed to the Tourism Hawke's Bay board.

I have always been critical of our MP’s for their lack of meaningful support. Certainly Rick Barker did nothing to help, however I have come to accept it was only after Chris Tremain and Craig Foss became our MP’s, and National the Government that the insurmountable impediments dissolved away.   

The thing to remember is whilst all these individuals try to get a share of the credit for Jetstar’s arrival the fact is that once Jetstar had decided to move into  provincial New Zealand, they were effectively committed to coming to Hawke’s Bay. Our airport was already in the top four busiest provincial airports in the country, and additionally the Auckland Hawke’s Bay route carryied more passengers than any other provincial connection. It was a no brainer.

In the event either Jetstar or Air New Zealand decide on a further upgrade of air services we at least now have a runway suitable for domestic jet services if not trans-Tasman. 

Strengthening the Opera House

Published HBT Friday 9 Dec 2015

The Hastings District Council is about to start the consulting process on the future of the Hawke’s Bay Opera House and former Municipal Buildings. These iconic Hastings structures are judged earthquake prone suggesting they could collapse with catastrophic consequences in a major shake. Initial indications suggest it will cost $10 million to fix the Opera House and $24 million for both buildings, depending partly on the extent of strengthening undertaken.  Whilst 34% of code for new structures will comply with the law, engineers regard 67% as the minimum acceptable target if strengthening work is undertaken. Nor do we want a repeat situation if standards are further enhanced. 

This is not an exact science and these are not precise figures. Different engineers have different interpretations, and in at least one other local instance a more invasive structural investigation has produced an entirely different assessment. It has also been suggested the council’s risk analysis is incorrect.

It is a great pity problems such as unreinforced brick columns were not identified when $15 million was spent on the previous major upgrade just a decade ago, even if council has been exonerated by a report it commissioned. This was the first of Mayor Yule’s think big projects and its perhaps worth remembering at the time both he and Chief executive were professional engineers.  

Clearly the softening up process has already started. The Mayor has claimed (HBT 24/11/15) that already $20 million is in the budget somehow implying there is already cash in hand. This is not true. It still has to be borrowed and Hastings debt, costs, and rates will increase as a result.  A statement “that keeping the Opera House is a no-brainer”   from internationally acclaimed urban designer and member of the independent work group, James Lunday (27/11/15) has no substance  and is simply intended to sway public opinion. The group has provided no financial estimates, no operating forecasts, no indications of proven public need, and has no councillor representation. Nor does there seem to have been any attempt to establish if the facility is still fit for purpose. For instance it appears the stage is not acceptable to either the National Orchestra or NZ Ballet company. 

Even more troubling is the apparent inclusion of the $12.5 million Civic Square upgrade that was initially put on hold following the Opera House assessment, plus additional money for a CBD hotel. Together these could easily cause council debt to increase by $40 million and the impact on rates will be profound. Once built these facilities will create even more as yet unspecified ongoing operating expenditures, and as before will likely contribute nothing towards interest costs or capital repayments.  Significantly the HDC has actually made significant savings since the Opera House doors were closed.  

With some councillors already claiming they have not heard a single voice in opposition to spending such a huge sum of ratepayers money it is clear the community needs to get involved or the decision will be foist upon them without their true involvement. People of all persuasions must make their views known if the decisions made by councillors are to reflect the communities views.

These are architecturally unique heritage buildings and visually Hastings would seem a very different place without them. However it is not entirely clear whether the enthusiasm is for the architecture or as a place of assembly. Inevitably the consultation process will be flawed because council will pitch it in a way that tilts opinion towards the outcome it wants, and most of those making submissions are likely to also be of that persuasion. We cannot listen to just the shrillest and most emotive voices.  

Ideally this decision should be decided by referendum but this option will likely be ignored because it might produce an unwanted outcome in the same way the referendum on amalgamation failed to produce the desired result.  

The airport name is important

Published HBT 31Oct 2015

The Airport directors have decided to accept the name Ahuriri Airport Hawkes Bay despite significant public opposition back in May when the idea was first mooted and rejection of the idea by the Hastings District Council. Certainly Napier City Councillors did approve the proposal with just one dissenting vote but, interestingly, there were no subsequent formal discussions between the airport board and HDC and NCC councillors. It is the Board’s failure to appreciate the commercial implications that should be of greatest concern. Apparently only three of the four directors were actually present when the decision was made though it has not been revealed who was absent.  

The issue of the airport name and ownership should not be confused. The claimant group Mana Ahuriri has first right of refusal on the crown’s 50%  share of the airport business so may become the major shareholder sometime in the future. However, so far there appears to be no formal agreement with government to sell, or the claimant to purchase. Unfortunately,  Mana Ahuriri has not disclosed it’s expectations and may simply be seeking a source of income which might impede airport services. Or it may be far less of an impediment to progress than the Crown has been. 

Most New Zealand airport names are aligned with their city locations, exceptions being Hood aerodrome in Masterton  where scheduled services have ceased and Richard Pearce airport in Timaru where flights are minimal. Similarly, in Australia names such as Mascot and Eagle farm have been displaced by Sydney and Brisbane, though in the worlds largest cities with multiple airports name alignment is often impractical. Interestingly the correct names for Heathrow and Gatwick are actually London Heathrow (LHR) and London Gatwick (LGW). 

Branding is crucial in the  commercial world. Think Coca Cola, McDonalds, The Warehouse and many other well known names. Branding is recognition and reputation. Millions are spent creating brands and protecting them. It is essential Hawke’s Bay also has a strong and consistent brand. We  promote Hawke’s Bay as a visitor destination, we have a Hawke’s Bay Chamber of Commerce and a Hawke’s Bay Regional Council, and had our councils  amalgamated we would have had a Hawke’s Bay Council. Other Maori organisations elsewhere have acknowledged the importance of effective branding. Ngai Tahu has retained the name Shotover Jet in Queestown, and are a major shareholder in Whale Watch Kaikoura.  Tainui does not add their tribal name to the country’s largest shopping mall in Hamilton, which is  simply called“The Base.” 

Airports need common sense, logical names because they are the gateways to destinations, not destinations in their own right. As the names Hawke’s Bay, Napier and Hastings are the only well recognised names outside of Hawke’s Bay these are the names we should stick to.  Sensibly, the airport name was changed from Beacons aerodrome to Hawke’s Bay Airport 50 years ago. Notice Jet Star only ever mentioned Napier as it's new destination and even Air New Zealand use the destination Napier/Hastings. 

This proposed name change is simply a continuation of the board’s very narrow focus on the airport business with little apparent concern about its wider and much more important infrastructural role. In 2004 I challenged the then board’s acceptance of the infamous PWC report on direct Trans Tasman services, which I considered inaccurate and highly misleading. Even when given details  of the inappropriate assumptions and erroneous statistics, the board failed to take any corrective action.  

Only a month ago I challenged Chairman Tony Porter’s claim that airport profitability was limited by the Commerce Commission to a 6.99% weighted average cost of capital. As I was aware of this claim I had previously approached the Commission and had obtained confirmation that there was no such limit on the profitability of Hawke’s Bay Airport. Perhaps significantly Mr Porter is the last remaining director from 2004. 

Of course the name issue might not have been a problem had Napier’s former  Mayor, Barbara Arnott and, current Hastings Mayor, Lawrence Yule, not effectively boosted airport profits and therefore its attractiveness to Mana Ahuriri by agreeing to lease the council owned airport land to the airport business for just $1 a year, rather than insisting on a realistic rate of return for the council owners. This action will effectively transfer millions of ratepayers dollars to the crown, and eventually to Mana Ahuriri if ownership is transferred,.

Lets not cause unnecessary confusion because of cultural expedience. Other than Hawke’s Bay Airport the only other names that should be considered are Napier Airport or Napier/Hastings Airport, which at least would provide consistency with the 3 letter IATA code NPE used world wide to identify our airport. 

Lets not cause unnecessary confusion because of cultural expedience. Other than Hawke’s Bay Airport the only other names that should be considered are Napier Airport or Napier/Hastings Airport, which at least would provide consistency with the 3 letter IATA code NPE,  which is used world wide to identify our airport.