With majestic mountains and varied landscapes, coupled with captivating wildlife and the freshest foods straight from the fisherman’s catch or farmers market, New Zealand is almost the last stop on earth but features highly on many travellers bucket list. Made famous by Hollywood (and Bollywood!) hits such as The Lord of the Rings and the Hobbit, New Zealand has much to offer of so many destinations - in one compact location. But often, a long haul flight from most global markets.
How important are air services to New Zealand's economy and is this understood by the general public? We asked one of the regions most experienced network development executives, Matthew Findlay, most recently of Christchurch International Airport, but from the start of this year Executive Manager Commercial and Aviation Business Development of Newcastle Airport in Australia, for his views.
New Zealand is at the closest point, about a two or three hour flight from Australia, its closest neighbour. Even some of the Island cousins are further north. Air services have become one of the most efficient forms of transport across such large distances.
“Travel by air is crucial to allow us as a nation and an economy to share our lives and participate in the global economy. Without air services, tourism would not be jostling with dairy as New Zealand’s number one export, and the country would not have the ability to participate in global markets as successfully as it does today.”
The value of air services in an economy so remote therefore becomes crucially important. “It's not as widely understood by most, how much direct and indirect economic value is created by a new air service,” said Findlay.
“Over a 12 month period, an airline could carry tens of thousands of passengers and many tonnes of freight – passengers that are travellers, or visitors arriving or departing for any number of reasons. In addition air cargo exports to foreign markets may not have occurred if an air service didn't exist,” he added.
It is universally accepted understanding that air services are an economic enabler and various independent studies show the full value of air connectivity and which show local communities benefit significantly more from air services than just the airline or airport.
“The ripple effects from connecting a community to global markets is felt far and wide,” said Findlay. “Depending on the passenger demographic and mix of traveller, airline customers may have any number of needs when visiting a region or location.”
International students for instance are an often understated demographic, according to Findlay, as often this group creates new free independent travellers from families visiting that student to local long-standing connections which in turn create new visitor streams in future years. “The direct, indirect and induced impacts are exponential,” added Findlay.
When asked how these models are created, Findlay notes the myriad of studies he has seen and others that are available that assist in building the case for why air connectivity is so important. “A number of organisations are wising up to the importance of connectivity to global markets and with the recent signing of the Trans-Pacific Partnership Agreement (TPP) encouraging more global trade, air connectivity becomes more vital' he explained.
“Complex econometric modelling or simple visitor demographic calculations can be used to demonstrate the impacts of new air services on a region. What's more important, is communicating those impacts to the community in which an airports catchment serves,” he added.
In recent months, Qantas has released an analysis of its economic impact on the Australian economy, while Wellington Airport has cited the impact on its region approval and construction of an extended runway will deliver. “In both examples, the airline/airport invoke discussion surrounding the economic and social benefit from air connectivity,” said Findlay.
For airports, these impacts should encourage a broader perspective and level of engagement with community stakeholders, noted the executive.
For every new arriving passenger, a certain proportion of value created is inherently earned by the airline/airport, but a greater proportion is provided to the wider economy. Depending on the community, studies have shown a return for the airline and airport, but also to that of the wider region.
In fact, in some regions, airlines serving new communities have been shown to stimulate new house sales and property valuation creep that otherwise wouldn't have occurred, stimulating investment from property developers seeking to meet newly created demand. Other airlines and organisations that have recently considered their impacts on communities include Emirates Airline and IATA and more and more and seeking evidence to help justify investments in their own growth.
New air services also go on to create opportunities beyond the visitor economy – such as items that could be exported or imported to/from global markets. Findlay noted that in recent years, PWC completed studies for Christchurch Airport that showed that an airfreight ‘gap’ existed, - that the volumes of products that could be exported, should airfreight capacity be available for export to offshore markets via new air capacity, would have a step-change benefit to many stakeholders.
“In essence, airports and local community stakeholders need to be more informed to the wider down-stream impacts of improving a competitive environment that stimulates the visitor economy – and I refer to that term, as it infers more than just tourism, and reflects the broader spectrum of what creates a natural reason to attract an airline to a market,” said Findlay.
The big issue, he noted, is local and regional bodies and central government have to realise that air connectivity can have a significant impact on the smallest of locales and should be encouraged as much as possible to stimulate the aforesaid benefits. “Agencies and governments need to take a broader analysis of ensuring and supporting new airline capacity deployment, to ensure opportunities are provided to regions or destinations that collectively will benefit from improved connectivity,” he said.
Through his years of experience at Auckland International, London Luton and most recently at Christchurch International airports, Findlay noted that it is clear that most airlines inherently know their service creates economic opportunity. Yet, he highlighted that so often they have the lack of resource or don't have the local connections to articulate the benefits they bring. “That in turn doesn't allow the airline or community to truly reach its full potential,” he concluded.
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