Bay of Plenty Regional Airport Feasibility Study COMMERCIAL0IN0CONFIDENCE

196 Pages·2008·3.41 MB·English

F I N A L D R A F T R E P O R T

Bay of Plenty Regional Airport
Feasibility Study

COMMERCIAL-IN-CONFIDENCE

Prepared for
Environment Bay of Plenty

Whakatane, New Zealand

30 July 2006
43187149
Project Manager: ………………………………….. URS Australia Pty Ltd
Brian Carson Level 3, 116 Miller Street
Principal – Airports & North Sydney, NSW 2060 Australia
Infrastructure Tel: [phone]
Fax: [phone]
Project Director: …………………………………..
Ivo Favotto
Principal- Finance & Economics
Principal – Airports &
Infrastructure
Date: 30 July 2006
Reference: 43187149
Status: Draft

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Contents

Executive Summary------------------------------------------------------------------------------------------ES-1
Background 1
Current Situation 1
Benefit – Cost Process 3
Traffic Forecasting & Facility Requirements 3
Site Identification 6
Concept Development & Costing 7
Real Estate Analysis 8
Airport & Airline Operations & Cost Analysis 9
Transport Planning Analysis 10
Financial Feasibility 11
Economic Benefit Cost Analysis 12
Risk Factors 13
Conclusions 13
1 Background---------------------------------------------------------------------------------------------------1
1.1 Introduction 1
1.2 Summary of Stage 1 RASS Outcomes 2
1.3 Objectives of the Stage 2 of the RASS 3
1.4 New Airport Development Process 3
1.5 Study Process 5
2 Current Situation--------------------------------------------------------------------------------------------7
2.1 Introduction - Current Situation 7
2.2 Geography & Political Structure 7
2.3 Population & Trends 9
2.4 Existing Airports System 10
2.4.1 Tauranga 11
2.4.2 Rotorua 12
2.4.3 Whakatane 13
2.5 Transport Task 13
3 Benefit Cost Process------------------------------------------------------------------------------------15
3.1 Benefit-Cost Analysis 15
3.2 Benefit-Cost Analysis Process 15
3.3 Benefit Cost Workstreams 17
4 Traffic Forecasting & Facility Requirement Analysis -----------------------------------------22
4.1 Introduction – Traffic Forecasting 22
4.2 Traffic Growth Analysis 24
4.2.1 Historical Trend Analysis 24
4.2.2 Existing Airport Projections 29
4.2.3 Ratio Analysis/Benchmarking 32
4.2.4 Schedule Analysis 36
4.2.5 Econometric Analysis 37
4.3 Regional Airport Traffic Forecasts 42
4.4 Benefits Arising from Regional Airport Traffic Growth 45
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Contents

4.4.1 Regional Economic Impact 45
4.4.2 Regional Economic Impact – Spend Rate Sensitivity 48
4.4.3 Economic Impact Summary Results 49
4.5 Facility Requirements Analysis 50
5 Site Identification-----------------------------------------------------------------------------------------51
5.1 Introduction - Site Identification 51
5.2 Site Identification Criteria 51
5.2.1 Physical Criteria 52
5.2.2 Contextual Criteria 54
5.2.3 Manageable Criteria 55
5.3 Application of Site identification Criteria 56
5.3.1 Location Relative to Population Catchments 56
5.4 Physical Criteria 60
5.5 Alternative Site 61
5.6 Contextual Criteria 66
5.7 Manageable Criteria 66
5.8 Summary – Site Identification 67
6 Concept Development & Costings------------------------------------------------------------------68
6.1 Introduction Concept Development & Costing 68
6.2 Global, Operational & Infrastructure Assumptions 68
6.2.1 Global Assumptions 68
6.2.2 Operational Assumptions 69
6.2.3 Infrastructure Assumptions 70
6.3 Regional Airport Concept Capital Costing 75
6.4 Recurrent Capital Expenditure Estimates 78
6.4.1 Historical Cap-Ex profile of Existing Airports 78
6.4.2 Regional Airport Capital Expenditure Profile 79
7 Real Estate Analysis-------------------------------------------------------------------------------------80
7.1 Introduction - Real Estate Analysis 80
7.2 Methodology 80
7.3 Data Sources 81
7.4 Value of Existing Bay of Plenty Regional Airports Land 81
7.4.1 Rotorua 81
7.4.2 Tauranga 82
7.4.3 Whakatane 83
7.5 Value Estimates of Highest and Best Use - Existing Bay of Plenty Regional
Airports 83
7.5.1 Rotorua 83
7.5.2 Tauranga 84
7.5.3 Whakatane 85
7.6 Estimates of the Value of Regional Airport Land Requirements 87
7.6.1 Regional Airport Land Requirement Value Estimation Methodology 87
7.6.2 Paengaroa 88
7.6.3 Pyes Pa 93
7.7 Real Estate Analysis – Summary Outcomes 99
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8 Airport & Airline Operations & Costs Analysis------------------------------------------------ 101
8.1 Introduction Airport & Airline Analysis 101
8.2 Airport & Airline Analysis Methodology and Approach 101
8.2.1 Airport Analysis Methodology and Approach 102
8.2.2 Airline Analysis Methodology and Approach 102
8.2.3 General Methodology and Approach 102
8.3 Airport Operational Revenue and Cost 102
8.3.1 Establishing Current Revenue & Operating Costs of Bay of Plenty
Airports 103
8.3.2 Benchmarking Comparable Airports 103
8.4 Airline Analysis – Introduction 105
8.4.1 Regional Flight Schedule Review 105
8.4.2 Assumptions for Airline Revenues Estimates 107
8.4.3 Assumptions for Airline Costs Estimates 107
8.4.4 Airline Operational Costs Estimates 107
8.4.5 Airline Cost Summary Outcomes 108
8.5 Airport and Airline Outcomes - Summary 109
9 Transport Planning Analysis------------------------------------------------------------------------ 110
9.1 Introduction Land Transport Planning Analysis 110
9.2 Land Transport Analysis Costing Approach and Methodology 110
9.3 Land Transport Analysis Parameters 111
9.4 Transport Demand Projections 115
9.4.1 Impacts on Capital Expenditure 117
9.5 Costing Land Transport Movements Bay of Plenty 117
9.5.1 Vehicle Operating Costs 117
9.5.2 Travel Time Costs 117
9.5.3 Accident Costs 118
9.5.4 Vehicle Emissions 118
9.6 Land Transport Cost Summary 119
9.7 Non Airport User Effects 119
10 Financial Feasibility Analysis----------------------------------------------------------------------- 120
10.1 Introduction Financial Feasibility 120
10.2 Financial Feasibility Methodology and Approach 120
10.3 Feasibility Analysis Parameters 120
10.4 Financial Inputs Analysis 121
10.4.1 Capital Expenditure 121
10.4.2 Real Estate Costs 122
10.4.3 Profit and Loss Statement 124
10.5 Financial Feasibility Results 125
10.6 Financial Feasibility Sensitivity Testing 125
10.7 Financial Feasibility Conclusions 126
11 Benefit Cost Analysis --------------------------------------------------------------------------------- 129
11.1 Introduction Benefit Cost Analysis 129
11.2 BCA Key Parameters 129
11.3 Base Case and Options for Analysis 130
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11.4 Analysis Methodology 131
11.5 Results of the Benefit-Cost Analysis 133
11.5.1 Sensitivity Analysis 134
11.6 Benefit Cost Analysis Conclusions 142
12 Risk Factors---------------------------------------------------------------------------------------------- 145
13 Conclusions---------------------------------------------------------------------------------------------- 147
General 147
Financial Feasibility 149
Economic Benefit Cost Analysis 152
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List of Tables, Figures, Plates & Appendices

Tables
Table ES.1 - Annual Incremental Economic Impact Summary ($ millions) ..........................................ES-6
Table ES.2 - Current BOP Airport vs Proposed Sites Ongoing Capex Comparison .............................ES-7
Table ES.3 - Existing Airport Land Value .............................................................................................ES-8
Table ES.4 - Regional Airport Land Costs .............................................................................................ES-8
Table ES.5 - Rental Income Summary ...................................................................................................ES-9
Table ES.6 - Incremental Airport and Airline Cost Outcomes ...............................................................ES-9
Table ES.7 - Land Transport Costs ($’m) ............................................................................................ES-10
Table ES.8 - Financial Feasibility Results ...........................................................................................ES-11
Table ES.9 - Base Benefit Cost Analysis Results ................................................................................ES-11
Table 2.1 - Bay Of Plenty 2001 & 2005 Population By District ..................................................................9
Table 2.2 - Bay Of Plenty 2026 Forecast Population By Sub District .......................................................10
Table 2.3 - Bay Of Plenty Airport Traffic Statistics – 2005 .......................................................................11
Table 4.1 - Bay of Plenty Airport Traffic Growth – 1996 to 2005 ............................................................27
Table 4.2 - Bay of Plenty Airports Passenger Forecasts ............................................................................30
Table 4.3 - Benchmark Analysis – Forecast Growth Rates ........................................................................32
Table 4.4 - Ratio Analysis – Historical Traffic-to-Population Ratio .........................................................34
Table 4.5 - Ratio Analysis – Historical & Forecast Traffic-to-Population Ratio .......................................35
Table 4.6 - Ratio Analysis – BOP Regional Airport Traffic-to-Population Ratio (2025) ..........................36
Table 4.7 - Airport Schedules – Daily Services .........................................................................................37
Table 4.8 - Airport Schedules – Daily Service Impacts .............................................................................38
Table 4.9 - Time and VOC Parameters ......................................................................................................40
Table 4.10 - Annual Incremental Economic Impact Summary ($ millions) ..............................................50
Table 5.1 - Potential Site Identification & Short Listing Criteria ..............................................................52
Table 5.2 - Bay Of Plenty Population By District ......................................................................................57
Table 5.3 - Application of Physical Criteria ...............................................................................................60
Table 5.4 - Bay Of Plenty Population By Sub Region ...............................................................................61
Table 5.5 - Application of Contextual Criteria ...........................................................................................66
Table 5.6 - Application of Manageable Criteria .........................................................................................67
Table 6.1 - Development Concept Operational Assumptions ...................................................................70
Table 6.2 - Development Concept Infrastructure Assumptions .................................................................72
Table 6.3 - Development Concept Capital Cost .........................................................................................76
Table 6.4 - Current Bay of Plenty Airport vs Proposed Sites Ongoing Capex Comparison ......................79
Table 7.1 - Rotorua Existing Values ..........................................................................................................82
Table 7.2 - Tauranga Existing Values ........................................................................................................82
Table 7.3 - Whakatane Existing Values .....................................................................................................83
Table 7.4 - Rotorua Highest and Best Value Estimate ...............................................................................84
Table 7.5 - Tauranga Highest and Best Value Estimate .............................................................................85
Table 7.6 - Whakatane Highest and Best Value Estimate..........................................................................86
Table 7.7 - Paengaroa Site 1 Land Cost Value Estimate.............................................................................90
Table 7.8 - Paengaroa Site 1 Land Rentals ................................................................................................90
Table 7.9 - Paengaroa Site 2 Land Cost Value Estimate............................................................................92
Table 7.10 - Paengaroa Site 2 Land Rentals ..............................................................................................92
Table 7.11 - Pyes Pa Site 1 Land Cost Value Estimate..............................................................................94
Table 7.12 - Pyes Pa Site 1 Land Rentals ...................................................................................................94
Table 7.13 - Pyes Pa Site 2 Land Cost Value Estimate..............................................................................96
Table 7.14 - Pyes Pa Site 2 Land Rentals ...................................................................................................96
Table 7.15 - Pyes Pa Site 3 Land Cost Value Estimate...............................................................................98
Table 7.16 - Pyes Pa Site 3 Land Rentals ...................................................................................................98
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List of Tables, Figures, Plates & Appendices

Table 7.17 - Existing Airport Land Value Estimate....................................................................................99
Table 7.18 - Regional Airport Land Costs ...............................................................................................100
Table 7.19 - Rental Income Summary ......................................................................................................100
Table 8.1 - Existing BOP Airports Combined Financial Performance ...................................................103
Table 8.2 - Benchmark Airports Financial Results ..................................................................................104
Table 8.3 - Incremental Airport Financial Outcomes ...............................................................................105
Table 8.4 – Current Schedule - Daily Number of Flights ........................................................................106
Table 8.5 - Future Schedule - Daily Number of Flights ...........................................................................106
Table 8.6 - Airline Operational Costs Calculations ..................................................................................108
Table 8.7 - Incremental Airline Financial Outcomes ...............................................................................108
Table 8.8 - Incremental Airport and Airline Cost Outcomes ...................................................................109
Table 9.1 - Distance and Transit Time Parameters ..................................................................................112
Table 9.2 - Local Area Transport Parameters ..........................................................................................114
Table 9.3 - Land Transport Cost Parameters ............................................................................................114
Table 9.4 - Forecast Passenger Movements .............................................................................................115
Table 9.5 - Incremental VKT and VHT Movements (‘000s) ...................................................................116
Table 9.6 - Incremental VOC Costs ($’m) ...............................................................................................117
Table 9.7 - Incremental Travel Time Costs ($’m) ....................................................................................118
Table 9.8 - Incremental Accident Costs ($’m) .........................................................................................118
Table 9.9 - Incremental Vehicle Emission Costs ($’m) ...........................................................................119
Table 9.10 - Land Transport Costs ($’m) .................................................................................................119
Table 10.1 - Financial Feasibility Parameters ..........................................................................................121
Table 10.2 - Development Concept Capital Cost .....................................................................................122
Table 10.3 - Current BOP Airport vs Proposed Sites Ongoing Capex Comparison ................................122
Table 10.4 - Existing Airport Land Value Estimates ...............................................................................123
Table 10.5 - Regional Airport Land Costs ..............................................................................................123
Table 10.6 - Annual Rental Income .........................................................................................................124
Table 10.7 - Incremental Airport Financial Outcomes .............................................................................124
Table 10.8 - Financial Feasibility Results ................................................................................................125
Table 10.9 - Financial Feasibility Sensitivity Results ..............................................................................126
Table 11.1 - Base Benefit Cost Analysis Results .....................................................................................133
Table 11.2 - Best Case Scenario Benefit Cost Result Summary .............................................................135
Table 11.3 - Worst Case Scenario Benefit Cost Result Summary ...........................................................136
Table 11.4 - Ratio-Passenger Benefit Cost Result Summary ...................................................................137
Table 11.5 - Rotorua Passenger Benefit Cost Result Summary ...............................................................138
Table 11.6 - Reduced CapEx Benefit Cost Result Summary ...................................................................139
Table 11.7 - Increased CapEx Benefit Cost Result Summary ..................................................................140
Table 11.8 - Visitor Spend Benefit Cost Result Summary .......................................................................141
Table 11.9 - Increased Annual CapEx Benefit Cost Result Summary .....................................................142
Table 13.1 - Financial Feasibility Results ................................................................................................149
Table 13.1 - Financial Feasibility Sensitivity Results ..............................................................................150
Table 13.3 - Base Benefit Cost Analysis Results .....................................................................................153
Figures
Figure ES.1 -Bay Of Plenty Locality Map .............................................................................................ES-1
Figure ES.2 Traffic Forecasting Methodology .......................................................................................ES-3
Figure ES.3 - Bay of Plenty Passenger Traffic Projection – Regional Airport – 2025 ..........................ES-5
Figure ES.4 - Regional Airport Scoping Study Process ......................................................................ES-13
Figure 1.1 - Regional Airport Scoping Study Process ................................................................................1
Figure 1.2 - Typical New Greenfield Airport Development Process ...........................................................3
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Figure 1.3 - Overall Methodology ................................................................................................................5
Figure 2.1 - Bay Of Plenty Locality Map .....................................................................................................8
Figure 3.1 - Workstream 1 .........................................................................................................................15
Figure 3.2 - Benefit-Cost Analysis Process ................................................................................................16
Figure 4.1 - Workstream 2 .........................................................................................................................22
Figure 4.2 - Traffic Forecasting Methodology ...........................................................................................22
Figure 4.3 - Traffic Forecasting & Facility Requirements Process ............................................................23
Figure 4.4 - Historical Tauranga Passenger and Aircraft Movement Data – 1996 to 2005 .......................24
Figure 4.5 - Historical Rotorua Passenger and Aircraft Movement Data – 1996 to 2005 .........................25
Figure 4.6 - Historical Whakatane Passenger and Aircraft Movement Data – 1996 to 2005 ...................26
Figure 4.7 - Bay of Plenty Combined Passenger Traffic – 2005 ................................................................27
Figure 4.8 - Bay of Plenty Combined Passenger Traffic Comparison – 2005 ...........................................28
Figure 4.9 - BOP Trend Forecasts ..............................................................................................................29
Figure 4.10 -- Bay of Plenty Passenger Traffic Projection to 2025 High and Low Case ...........................30
Figure 4.11 - Bay of Plenty Passenger Forecast to 2025 ............................................................................39
Figure 4.12 - Frequency Modal Shift Impacts – 2025 ................................................................................40
Figure 4.13 - Time and VOC Modal Shift Impacts – 2025 ........................................................................41
Figure 4.14 - Trans-Tasman Service Impacts – 2025 .................................................................................42
Figure 4.15 - Market Share Growth – 2025 ...............................................................................................43
Figure 4.16 - Bay of Plenty Passenger Traffic Projection – Regional Airport – 2025 ...............................44
Figure 4.17 - Sensitivity of Passenger Numbers – 2025 ............................................................................47
Figure 4.18 - Incremental Regional Airport Economic Impact – Regional Forecast .................................48
Figure 4.19 - Incremental Regional Airport Economic Impact – NZ Ratio Forecast ................................49
Figure 4.20 - Annual Economic Impact with Trans-Tasman Sensitivity ...................................................51
Figure 5.1 - Workstream 3 .........................................................................................................................51
Figure 5.2 - Site Identification Criteria development Process ....................................................................51
Figure 5.3 –Original Site Identification ......................................................................................................57
Figure 5.4 –Wind Analysis .........................................................................................................................62
Figure 5.5 – Site Orientation ......................................................................................................................63
Figure 5.6 – Alternative Site Identification ................................................................................................65
Figure 6.1 – Workstream 4 .........................................................................................................................68
Figure 6.2 – Regional Airport Development Concept ................................................................................74
Figure 7.1 – Workstream 5 .........................................................................................................................80
Figure 7.2: Paengaroa – Site 1 Lot Requirements ......................................................................................89
Figure 7.3: Paengaroa – Site 2 Lot Requirements ......................................................................................91
Figure 7.4: Pyes Pa Site 1 ..........................................................................................................................93
Figure 7.5: Pyes Pa Site 2 ..........................................................................................................................95
Figure 7.6: Pyes Pa Site 3 ..........................................................................................................................97
Figure 8.1 - Workstream 6 ......................................................................................................................101
Figure 8.2 - Airport & Airline Operations & Cost Analysis Process .......................................................101
Figure 9.1 - Workstream 7 .......................................................................................................................110
Figure 9.2 - Land Transport Planning Process .........................................................................................111
Figure 9.3 - Site Options .........................................................................................................................113
Figure 9.4 - Sources of Passenger Growth ...............................................................................................117
Figure 10.1 - Workstream 8 .....................................................................................................................120
Figure 11.1 - Workstream 1 .....................................................................................................................129
Figure 11.2 - Discounted Cashflow Analysis Methodology ...................................................................132
Figure 13.1 - Regional Airport Scoping Study Process ..........................................................................147

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Executive Summary

Background
This document reports the findings of a feasibility study, incorporating an economic benefit-cost analysis
and financial assessment, conducted by URS for Environment Bay of Plenty (EBOP) on the proposal to
replace the three primary passenger airports within the Bay of Plenty – Tauranga, Rotorua and Whakatane
– with a single regional airport.
While the study did investigate potential locations, the study did not include any technical, detailed
considerations of these potential locations – for example, geotechnical, weather or environmental
considerations. Consequently, the outcome of the study is not a recommendation to build an airport on a
particular site. Rather, the objective is to determine if a regional airport is worthy of further consideration
and if so, provide an indication of the potential availability of sites. Consideration of these more
detailed, technical issues are part of the next stage of consideration of a regional airport. A summary of
the findings of the URS study into the feasibility of a Bay of Plenty Regional Airport are set out in the
remainder of this executive summary.
Current Situation
The Bay of Plenty (BOP) region, shown in Figure 2.1 below, comprises an area of about 12,500km2 in
essentially a “y” formation, at the north - eastern side of New Zealand’s North Island. The area
comprises coastal plains to the north, which accommodate most of the urban areas as well as large areas
utilised for pasture/cropping and large forested mountain ranges to the south. The region is made up of
seven districts - Western Bay of Plenty, Tauranga, Whakatane, Kawerau, Opotiki, a large part of the
Rotorua District and a small part of the Taupo District - which are quite different with respect to
geography, demography and economics.
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ES-1