CHRISTCHURCH AIRPORT LAND USE ZONINGresources.ccc.govt.nz/files/TheCouncil/policiesreports...FINAL REPORT 1 August 2013 CHRISTCHURCH AIRPORT 1 FINAL LAND USE ZONING 01/08/2013 11489r01

CHRISTCHURCH AIRPORT LAND USE ZONING

FINAL REPORT

1 August 2013

CHRISTCHURCH AIRPORT 1 FINAL LAND USE ZONING 01/08/2013

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TABLE OF CONTENTS

01. INTRODUCTION 2

02. EXECUTIVE SUMMARY 3

03. MODERN SUCCESSFUL AIRPORTS 8

04. AIRPORTS AS ECONOMIC ENABLERS 15

05. AIRPORT ACTIVITIES 23

06. CHRISTCHURCH AIRPORT ECONOMIC CONTRIBUTION 33

07. CHRISTCHURCH AIRPORT LAND USE PLANNING POLICY 40

08. CONCLUSIONS 48


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01. INTRODUCTION

Christchurch Airport is working with the Christchurch City Council in respect of an impending Plan Change including land use zoning provisions as these relate to activities undertaken with the Special Purpose Airport Zone (SPAZ) at and around the airport. Christchurch Airport is seeking to remedy some aspects of current uncertainty in application of the Christchurch District Plan as to what activities can be appropriately undertaken at the airport under the plan.

Christchurch Airport regards the Plan Change as an opportunity to enhance the competitiveness of the airport and the Christchurch region by providing more flexibility and certainty as to what activities can occur as of right on land owned by Christchurch Airport.

Christchurch Airport has sought expert advice from Airbiz Aviation Strategies (Airbiz) in regard to:

→ Whether a safe and efficient airport is a central and essential requirement for the success of a modern urban economy;

→ The importance of a diversity of activities at a modern airport and the ability to develop interim uses of land held for future aeronautical purposes;

→ The importance of allowing for both spatial and timing flexibility so as to be responsive to changes in regulation, technology, safety and security, commercial demand etc.;

→ What constitutes a modern airport and how do they function and provide revenue streams to remain externally competitive;

→ What are the benefits of flexibility in approach and development activities, and how does this help drive and contribute to the Canterbury economy;

→ Whether there is there a role for positive policy provisions for the spatial and timing flexibility necessary to develop a successful airport

→ Reviewing the 2006 Airport Master Plan in terms of its approach to land use management, in light of the Airbiz analysis undertaken;

→ Reviewing the draft plan provisions to assess alignment to the Airbiz analysis; and

→ Providing feedback on appropriate spatial restrictions by zone and whether the identified range of activities provides sufficient flexibility for the airport into the future.


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02. EXECUTIVE SUMMARY

MODERN SUCCESSFUL AIRPORTS

Airports serve countries and communities as the social and economic enabler of air travel and for the movement of freight and mail. Fundamental to this role is the enabling of inter-modal transfers for passengers, freight and mail, usually between road and air, and sometimes including rail and/or marine, working in close conjunction with airline and aviation industry partners. Planning for, providing and maintaining the necessary infrastructure for the aviation operations to efficiently move passengers, freight and aircraft is the heart of the airport role.

The role of an airport has rapidly evolved and expanded over the past two or three decades to where activities of a successful modern airport will typically include being a major regional freight and logistics distribution hub and facilitating wide-ranging commercial and industrial building development for tenant businesses that benefit from being located at or near an airport.

It is now increasingly important that the regional community at business and governmental levels recognises that their airport is a strategic asset and supports the airport operator to successfully facilitate and participate in linked activities so as to drive regional competiveness and commercial success.

In addition to providing successful aeronautical facilities and services, a fundamental element of success for an airport is to maximise value through identifying and implementing commercial and property developments, with a resultant diversification of revenue streams.

The challenge for airports is to convert additional revenue from those passengers in the form of non-aeronautical revenue, through other on-airport services. The obvious sources are those where services are provided by the airport or its concessionaires directly or indirectly to passengers – these would include food and beverage, retail, car hire, car parking, ground transport (taxis and coaches) etc.

However, another significant opportunity for revenue diversification derives from commercial opportunities that are possible as a result of scale and degree of connectivity of air services available at the airport and the volumes of people and goods moving on, off and through the airport. The more flights, the more routes, the more people and the more goods, the better the prospects for secondary businesses to establish at the airport, such as:

→ Hotels and motels;

→ Recreation facilities for transit passengers;

→ Air freight forwarders and consolidators;


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→ Aviation maintenance and spare parts providers;

→ Logistics, warehousing and distribution;

→ Travel and tourism training institutions;

→ Production of time-sensitive goods;

→ Offices for businesses whose people and customers utilise air travel extensively;

→ Show-rooms for products that appeal to people with high propensity to travel and which can take advantage of the strong flows of people “past their doors”; and

→ Services to the people working for or interacting with these secondary businesses as well as for and with aviation related businesses, such as cafes, bars, gyms, banking, supermarket, hairdressing, medical, child care etc.

A modern successful airport may be defined as one which is best able to diversify its revenue stream from the historical base of purely aeronautical charges derived from airlines, to one which generates commercial, non-aeronautical revenues from on-airport activities, some through services to passengers, some through services to people working on or passing through the airport and through property-based investment and development.

AIRPORTS AS ECONOMIC ENABLERS

Airlines and airports together facilitate travel for passengers, whether residents of a country/region/city or visitors to that country/region/city; and the transportation of freight and mail. That travel enables individuals to travel for business or leisure; to connect with people in other cultures for social, economic or educational reasons.

Of great significance to the local economy is visitor spending, which is facilitated through aviation. Visitors spend money on shopping, services, accommodation, food and entertainment while visiting the region, impacting positively on the local economy and generating flow-through benefits in terms of local employment. Airports are in a unique position to assist in-bound tourism through both encouraging and sponsoring airline route development and network connectivity, as well as being the gateway to a region, coordinating the activities of tourism agencies, service and attraction providers. Airport theming and an airport’s contribution into promotion of a region’s uniqueness and attractions are considered essential strategies in today’s competitive tourism world.

The carriage by air of freight and mail is a crucial component in the value chain of production and trade, underpinning the exporting arm of an economy, generating jobs and providing livelihoods, and enabling the importing of goods required or desired by the economy and community. Airports have a particular role in the trade of goods, in contrast to seaports, as being necessary gateways perishable produce, the computer and IT


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industry, and any element of just-in-time supply, which is not typically facilitated by sea freight.

Airports have moved beyond the role of just being a facilitator of travel and trade to becoming economic drivers in their own right. Airports are major centres of employment for local people and. In a world where much business travel is undertaken by air, and where airports are sited well away from CBDs, airport sites can be attractive to businesses where they:

→ Are in close proximity to their customers, being airport based businesses;

→ Have a significant number of employees that regularly use air transport;

→ Produce goods or provide services that require quick efficient access to air freight facilities or to one or more of the surface modal transport networks that hub at an airport;

→ Produce goods or products that appeal to people with high propensity to travel and which can take advantage of the strong flows of people “past their doors”;

→ Benefit from being in close proximity to services provided at an airport; or

→ Provide goods or services to the ever increasing airport population.

AIRPORT ACTIVITIES

The past two to three decades has seen a quantum change worldwide in the diversity of activities undertaken by airports. The diversity of activities, the ability to develop interim uses on land held for future aeronautical purposes and the importance of allowing for spatial and timing flexibility are all essential ingredients for a modern successful airport.

Businesses which are located on-airport because their primary need is to access aviation infrastructure include commercial passenger airlines, commercial freight airlines, government agencies such as police and border control agencies and air traffic control, flying schools, aircraft charter, private jets, fixed base operations, helicopter operations, medical rescue services etc. These businesses then drive a level of activity required to support them, such as aircraft maintenance, repair and overhaul, fuel suppliers, freight forwarders, provision of hangars for rent, private pilots, all levels of general aviation and support and ancillary services generated e.g. fuel, spare parts etc.

Freight services generate business in the form of logistics and distribution centres, warehousing, including perishables and cool-chain facilities, sometimes facilitated by Free Trade Zones, special economic zones etc.

The extent to which an individual airport can successfully pursue non-aviation based activities is dependent on that airport’s characteristics. Airports are attractive locations for businesses which do not rely entirely on aircraft movements to generate their business.


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Such activities could include:

→ Warehousing or bulk goods requiring significant space not available elsewhere;

→ Retail parks e.g. Ikea;

→ Factory outlet stores orientated to both air travelers and locals;

→ Retail display rooms with products that appeal to people with high propensity to travel and which can take advantage of the strong flows of people “past their doors”;

→ Auction, exchange and trade complexes;

→ Business parks, office space, head office locations etc.;

→ Convention and exhibition centres;

→ Cultural and entertainment attractions including museums, art galleries, cinemas, built tourism attractions;

→ Leisure and recreational venues, e.g. golf courses, race tracks and gaming;

→ Personal and family services such as fitness facilities, spas, and childcare for airport employees; and

→ Medical and wellness facilities.

CHRISTCHURCH AIRPORT ECONOMIC CONTRIBUTION

Christchurch Airport is highly significant as an enabler of air travel in the region. With the city being home to over a third of the population of the South Island and the most significant airport on the South Island, it plays a major role in facilitating fast, convenient, efficient and affordable travel both domestically, between the South and North Island, and internationally either directly through Christchurch, or via connecting services over Auckland and Australia.

Christchurch Airport is a major stakeholder in the tourism industry through provision of air access to the region and the many iconic destinations in the South Island; services that are critical to Brand New Zealand and the award-winning 100% Pure campaign. The Airport is very active and prominent in tourism marketing, winning awards for attracting new airlines and route services as well as directly marketing destination attractions in the South Island.

The Airport is more than a facilitator or enabler of the economy of the city and broader region. It is a major employer and driver of economic activity in its own right. A confidential economic impact study report prepared for Christchurch Airport in 2012 advises that nearly 6,000 people work at the airport, equivalent to more than


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5,000 Full Time Equivalent (FTE) positions.

CHRISTCHURCH AIRPORT LAND USE PLANNING POLICY

Christchurch Airport completed its most recent master plan in 20061. The 2006 Master Plan continued the key land-use planning principles established in the preceding 1985 Master Plan. The 2006 Master Plan incorporates a Land Use Plan which divides the airport into activity-based segments. The Land Use Plan serves as a tool to balance the needs of long-term strategic planning against the need to maximise returns on property investments.

Since 1985, the key land use provisions of the Airport’s master plans have been progressively incorporated into city planning documents. The operable Christchurch City Plan does not include a segmented zoning map for the Airport. It does, however, provide a list of activities which are deemed permissible within the Special Purpose Airport Zone (SPAZ) but which are significantly more restrictive in their descriptions than the Master Plan’s land use activity descriptions.

The provisions of the designation enable Christchurch Airport to carry out activities for “airport purposes”. Underlying this designation sits the City’s SPAZ that allows for a wide range of activities as long as they are ancillary to the operation of the airport.

The challenge for airport management is to provide a reasonable return on the entire property portfolio in the short- to medium-term, whilst not compromising the key longer-term planning objective of protection for airport purposes. Christchurch Airport presently finds itself constrained by restrictive zoning in its ability to find and secure interim uses for land. To this end, as much flexibility as possible in zoning permissions and requirements for the type of use, timing of development and duration of occupancy is critically important, because there will be no assurance that there will always be available tenant businesses if zoning is restrictive.

1 Christchurch International Airport Master Plan, July 2006


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03. MODERN SUCCESSFUL AIRPORTS

1. INTRODUCTION The focus of this section of paper is to assess what constitutes a modern airport, within the international network of airports, and to consider how they function and provide revenue streams to remain externally competitive.

2. WHAT IS THE ROLE OF AN AIRPORT? Airports serve countries and communities as the social and economic enabler of air travel for residents living in the vicinity or in broader catchments of the airport, for visitors to the region accessing by air services, and for the movement of freight and mail. Fundamental to this role is the enabling of inter-modal transfers for passengers, freight and mail, usually between road and air, and sometimes including rail and/or marine, working in close conjunction with airline and aviation industry partners.

Zones within an Airport typically comprise:

→ Airfield – airside areas including runways, taxiways, aprons, safety areas and airside roads;

→ Terminal – passenger handling, baggage handling, offices;

→ Hangars and facilities with direct airside access;

→ Vehicle parking and roading systems;

→ Landside areas – aviation support facilities;

→ Landside areas – commercial and industrial developments not directly aviation related; and

→ Landside areas – undeveloped, some of which may be reserved for future aeronautical use.

Aviation operations can be diverse and include scheduled passenger services (airlines), charter passenger services, freight and mail services, helicopter operations, police, military, medical rescue, civil defence and various levels of general aviation business, incorporating flying schools, private recreational flying, agricultural services etc.

Planning for, providing and maintaining the necessary infrastructure for the aviation operations to efficiently move passengers, freight and aircraft is the heart of the airport role. Critically, airports must retain flexibility in planning so as to have the ability to appropriately respond to changes brought about by regulation, safety, security and environmental concerns. Regulatory and border protection agencies that have bearing on how airports should be physically laid out and operated can be in New Zealand (such as the Civil Aviation Authority,


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Airways, Customs and the Ministry of Primary Industries) but can also extend their reach and influence from abroad into New Zealand (ICAO2, FAA3, TSA4, CASA5 etc.). There is no one simple standard template for how each airport will need to respond to the uncertain pressures and requirements of traffic demand, business models of air operators, new aircraft types (usually larger), new technologies, regulators and changing expectations of travellers (usually increasingly sophisticated), but flexibility derived through the availability of land is a key opportunity.

The role of an airport has rapidly evolved and expanded over the past two or three decades to where activities of a successful modern airport will typically include being a major regional freight and logistics distribution hub and facilitating wide-ranging commercial and industrial building development for tenant businesses that benefit from being located at or near an airport for one or more of the following reasons:

→ To be in close proximity to their customers, being airport based businesses;

→ Due to having a significant number of employees that regularly use air transport;

→ By virtue of producing goods or providing services that require quick efficient access to air freight facilities or to one or more of the surface modal transport networks that hub at an airport;

→ By virtue of producing goods or products that appeal to people with high propensity to travel and which can take advantage of the strong flows of people “past their doors”;

→ To be in close proximity to services provided at an airport; or

→ To provide goods or services to the ever increasing airport working population.

This evolving trend will continue as:

→ The air and surface mode network connectivity provided at airports increases;

→ The range, diversity, vibrancy and commercial value of activity at airports and critical mass of visitors and employees continues to grow; and

→ Sustainability pressures encourage communities to maximize the use of established transport networks and concentrate the development of facilities around established nodes of activity.

2 ICAO – International Civil Aviation Organisation 3 FAA – Federal Aviation Administration (USA) 4 TSA – Transportation Security Administration (USA) 5 CASA – Civil Aviation Safety Authority (Australia)


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It is now increasingly important that the regional community at business and governmental levels recognises that their airport is a strategic asset and supports the airport operator to successfully facilitate and participate in these linked activities so as to drive regional competiveness and commercial success.

3. WHAT DEFINES A SUCCESSFUL AIRPORT? Definitions of what constitutes a successful airport vary dependent on the stakeholder. Airlines are likely to hold different views from airport operators, and from passengers and other stakeholders such as freight handlers, government agencies and the regional community.

For airports, the challenge is to firstly meet its own objectives and targets, whilst also balancing and meeting wherever possible the often conflicting demands and expectations of all stakeholders in the airport.

Christchurch Airport, in its Statement of Corporate Intent for the year ended 30 June 2014, sets out its objectives as being:

“Christchurch International Airport Ltd.’s principal objective is to operate as a successful business, and to that end its vision is:

“To be the BEST Airport”

This means:

Christchurch Airport will be a leading airport by delivering world-class passenger experiences, being an innovative business partner and delivering excellent economic returns through sustainable management

practises.

To realise this vision and deliver sustainable growth in long-term value to our shareholders, CIAL will focus on five strategic objectives:

→ Maintain an engaged workforce which performs strongly;

→ Deliver outstanding airport and airport-related services and aeronautical growth;

→ Maximise economic value through commercial opportunities;

→ Maximise economic value through property development and management; and

→ Deliver robust business enablers to ensure success.”

These Christchurch Airport objectives are fully consistent with what is needed to become an internationally recognised successful airport.


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Christchurch Airport has specific attributes that test its ability to achieving these strategic objectives, whilst others provide opportunity:

→ Christchurch is geographically remote from most markets;

→ The city and region has a small population;

→ There is limited central government and corporate office activity within the region, compared with Wellington and Auckland; however

→ Christchurch is the gateway to a very strong travel destination – the South Island.

There is, therefore, no simple formula for the success of Christchurch Airport and its ability to contribute to the economic and social well-being of Christchurch and the Canterbury region – the airport has to work, innovate and compete strenuously just to maintain, let alone grow its position and share of world travellers. Having the ability to broaden its connectivity to the world’s aviation networks is essential.

In addition to providing successful aeronautical facilities and services, a fundamental element of success for an airport and particularly for Christchurch Airport is to maximise value through identifying and implementing commercial and property developments, with a resultant diversification of revenue streams. Christchurch is fortunate in having relatively large parcels of undeveloped land located conveniently within the city as a whole and it can and should play its part in contributing to the Christchurch’s economic activities.

For airlines, a successful airport is one where they experience sufficient passenger demand for their services and are able to deploy their capacity without constraints. Airlines prefer their services to have diversification in terms of locals and visitors, travelling for a broad range of reasons, including business, leisure, education, events and visiting friends/relatives, and ideally for the airport to provide opportunities for air freight carried as supplementary payload on passenger aircraft, generating additional revenue. By spreading their risk over a diverse range of passenger and freight-related markets at a particular airport, airlines are able to offset some of the challenges of the industry in terms of seasonality, directionality and peak and trough demand.

For passengers, their satisfaction or not with an airport will depend on their personal experiences at numerous interaction points including (but not limited to) surface transportation interfaces, dealings with airline staff, check-in, security, immigration, retail, food and beverage, pricing, baggage collection, flight information, ease of way-finding, airline on-time-performance, availability of toilets, cleanliness and terminal ambience. These aspects are consistent with reports from regular surveys and award processes such as Skytrax World Airport Awards and the Airports Council International (ACI) Airport Service Quality (ASQ) Awards.

The most recent Skytrax review ranks Auckland Airport first out of ten airports within the Australasia / Pacific region and Christchurch Airport at a commendable 5th place ranking.


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4. AIRPORT REVENUE STREAM DIVERSIFICATION Airports experience significant pressure from airlines in negotiating the setting of prices for the use of airport infrastructure and facilities. Airlines universally want prices and charges to be as low as possible, in some cases nil and in other cases actually competitively bidding for airports to pay the airline in order to capture its services. The challenge for airports is that their infrastructure is fixed in its location, whereas airlines are able to redeploy their mobile assets, in the form of people and aircraft, to other markets. Airlines, particularly low cost airlines, are increasingly negotiating longer term deals with airports based on a sliding scale of pricing, whereby as passenger numbers increase revenues may also increase but at a reducing rate, leaving the airport with less revenue per passenger, but an increasing volume of passengers.

The challenge for airports is to convert additional revenue from those passengers in the form of non-aeronautical revenue, through other on-airport services. The obvious sources are those where services are provided by the airport or its concessionaires directly or indirectly to passengers – these would include food and beverage, retail, car hire, car parking, ground transport (taxis and coaches) etc.

However, another significant opportunity for revenue diversification derives from commercial opportunities that are possible as a result of scale and degree of connectivity of air services available at the airport and the volumes of people and goods moving on, off and through the airport. The more flights, the more routes, the more people and the more goods, the better the prospects for secondary businesses to establish at the airport, such as:

→ Hotels and motels;

→ Recreation facilities for transit passengers;

→ Air freight forwarders and consolidators;

→ Aviation maintenance and spare parts providers;

→ Logistics, warehousing and distribution;

→ Travel and tourism training institutions;

→ Production of time-sensitive goods;

→ Offices for businesses whose people and customers utilise air travel extensively;

→ Show-rooms for products that appeal to people with high propensity to travel and which can take advantage of the strong flows of people “past their doors”; and

→ Services to the people working for or interacting with these secondary businesses as well as for and with aviation-related businesses, such as cafes, bars, gyms, banking, supermarket, hairdressing, medical, child


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care etc.

The airport’s role in this secondary opportunity is to create the availability of the land, plan for appropriate and attractive precincts that are compatible with other aeronautical and non-aeronautical activities, provide utilities and road infrastructure, identify and attract tenants and to facilitate and invest in appropriate commercial and industrial property development.

An airport surrounded by such commercial and industrial developments thereby generates an environment where:

→ The range and economic vibrancy of activity at the airport and critical mass of business and employees continues to grow;

→ Freight hub activity increases and provides efficiencies and competiveness to the region;

→ The connectivity provided at the airport increases;

→ The airport’s revenues are diversified, not overly reliant on aeronautical sources; and

→ The airport may be more successful in attracting new air services.

Given the business model described above, a successful airport may also be defined as one which is best able to diversify its revenue stream from the historical base of purely aeronautical charges derived from airlines, to one which generates commercial, non-aeronautical revenues from on-airport activities, some through services to passengers, some through services to people working on or passing through the airport and through property-based investment and development.

By diversifying its revenue stream, and reducing pressure on aeronautical charging, a virtuous circle relationship is possible with airline partners.


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The model illustrated above creates a growth environment, driven by increased competition and reduced air fares, where capacity is increased as well as the connection options, passenger volumes increase, fare prices may decrease due to increased competition, passenger volumes increase again due to new passengers entering the market etc. What would appear to be profitless volume to the airport has the potential to be converted to increased profit in the form of non-aeronautical revenue, increased foot fall through the airport and in the airport surrounds, increased opportunities for freight and subsequent efficiency gains, greater on-airport property development, increased employment, resulting in increased flow through social and economic benefits to the wider community and regional economy.

Virtuous circle

Increased capacity

Greater connectivity

Decreased fares

Increased passenger volumes

Increased economic

activity

Increased freight activity


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04. AIRPORTS AS ECONOMIC ENABLERS

1. SUMMARY This section considers whether a safe and efficient airport is a central and essential requirement for the success of a modern urban economy.

The analysis highlights airports as enablers of a regional economy, how they are economic drivers in their own right and the huge impact of airports on the world’s economy.

2. AIRPORTS AS ENABLERS OF AN ECONOMY Airlines and airports together facilitate travel for passengers, whether residents of a country/region/city or visitors to that country/region/city; and the transportation of freight and mail. That travel enables individuals to travel for business or leisure; to connect with people in other cultures for social, economic or educational reasons. That travel brings together families and loved ones living across what is now a global community.

Airports enable an economy through facilitating travel for business and leisure purposes:

→ Local business people travel from the region;

→ Local residents travelling for leisure purposes, e.g. holiday, recreational or sporting events etc.;

→ Local residents visiting friends and relatives;

→ Visitors travelling to the region for the purposes of business, education, medical services and leisure;

→ Business visitors attending conferences with accompanying guests;

→ Leisure visitors attending events or visit for the purpose of holiday; and

→ Leisure visitors visiting local residents (friends and relatives).

Although outbound travel by locals could possibly be seen as having a negative impact on the local economy as residents are spending their money elsewhere, such travel could include payments to local travel agents and airlines.

Of greater significance to the local economy is visitor spending, which is facilitated through aviation. Visitors spend money on shopping, services, accommodation, food and entertainment while visiting the region, impacting positively on the local economy and generating flow-through benefits in terms of local employment. Airports are


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in a unique position to assist in-bound tourism through both encouraging and sponsoring airline route development and network connectivity, as well as being the gateway to a region, coordinating the activities of tourism agencies, service and attraction providers. Airport theming and an airport’s contribution into promotion of a region’s uniqueness and attractions are considered essential strategies in today’s competitive tourism world.

The carriage by air of freight and mail is a crucial component in the value chain of production and trade, underpinning the exporting arm of an economy, generating jobs and providing livelihoods, and enabling the importing of goods required or desired by the economy and community. Airports have a particular role in the trade of goods, in contrast to seaports, as being necessary gateways perishable produce, the computer and IT industry, and any element of just-in-time supply, which is not typically facilitated by sea freight.

Tony Tyler, Director General and CEO of the International Air Transport Association (IATA), delivered a briefing in Auckland in early July 2013, stating:

“Connectivity, enabled by aviation, has turned our planet into a global community. We take it for granted that exotic fruits appear in Auckland’s grocery stores and that New Zealand produce is sold around the world. We don’t think twice about another international blockbuster being filmed in this beautiful country. Innovative Kiwi companies do business in global markets. All the while personal connections and cultural ties crisscross the globe and strengthen day-by-day”.

Further, he commented:

“In my meetings with the government yesterday it was very clear that they value the contribution of aviation to New Zealand’s economy and are eager to support its successful development. This country has a great reputation in the aviation world that is fully deserved for its pragmatic approach. It is refreshing to see a government that is so aware of aviation’s important role. In many cases the value that this industry delivers is taken for granted”.

A recent PWC study6 established that Christchurch is under served by air freight capacity. Growth of airport campus activity will drive flights up, with a resultant increase in air freight capacity, helping to meet the existing shortfall and then drive further import/export growth.

An Oxford Economics report “Aviation Benefits Beyond Borders” on behalf of the Air Transport Action Group (ATAG)7 in 2012 reported on the impacts of aviation worldwide, regionally and by country:

→ Globally aviation supported 3.5% of global GDP and 56.6 million jobs worldwide, both directly and indirectly, with a global economic impact of US$2.2 trillion including direct, indirect, induced and tourism

6 “Opening up the South”, a report to the Canterbury Development Corporation, PWC, September 2011 7 Aviation Benefits Beyond Borders, Air Transport Action Group (ATAG), March 2012


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catalytic benefits.

→ In New Zealand the same report calculated the aviation sector supports 128,000 jobs in New Zealand, including 32,000 jobs directly dependent on the aviation sector. The industry generates 6.3% of New Zealand GDP or NZ$11.8 billion, with NZ$3.5 billion directly contributed through the aviation sector, comprising airlines, airports and ground services.

The significance of aviation in New Zealand can be evidenced very simply in comparing the GDP contribution of aviation as 3.5% globally, but nearly double at 6.3% in New Zealand, as reported above.

The “Aviation Benefits Beyond Borders” New Zealand sub-report shows the connectivity of New Zealand to the rest of the world in 2010 in Chart 2.1, illustrating the 31 routes connecting New Zealand to urban agglomerations around the world, including eight cities with more than 10 million inhabitants.

The report also illustrates the relationship between air network connectivity and foreign direct investment (FDI) in Chart 2.2. The chart plots the total value of FDI built up in individual countries in relation to their GDP against an index of connectivity (produced by IATA) that measures the availability of flights, weighted by the importance of each of the destinations served. The chart shows that countries (and cities) with higher connectivity, such as New


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Zealand are in general more successful at attracting FDI. This is emphasized by the upward sloping line that confirms the statistical relationship between greater connectivity and greater FDI.

The Aviation Benefits Beyond Borders New Zealand sub-report shows the air connectivity index of New Zealand in comparison to the rest of world. New Zealand is ranked sixth worldwide, behind major aviation hubs and remote island nations such as UAE, Hong Kong, Singapore and Mauritius. Australia is ranked 12th, by comparison. The report estimates that a 10% increase in air connectivity (relative to GDP) would result in a NZ$119 million per annum increase in long-run GDP.

3. AIRPORTS AS ECONOMIC DRIVERS IN THEIR OWN RIGHT Airports have moved beyond the role of just being a facilitator of travel and trade to becoming economic drivers in their own right. Airports are major centres of employment for local people and in a world where much business travel is undertaken by air, and where airports are sited well away from CBDs, airport sites can be attractive to businesses where they:



→ Produce goods or provide services that require quick efficient access to air freight facilities or to one or more of the surface modal transport networks that hub at an airport;

→ Benefit from being in close proximity to services provided at an airport; or


Dr John Kasarda, the originator of the “Airport Cities” concept and director of the Centre of Air Commerce at the University of North Carolina’s Kenan Institute of Private Enterprise, in the report Global Airport Cities8, identifies growth in the area in and around and airport as being driven by:

1. Firms providing air transport services; 2. Firms which are frequent consumers of air transportation; 3. Businesses which cater to the ancillary needs of air travellers and employees of the previous two types of

firms; and 4. Companies which may simply be searching for accommodating sites with good regional highway access.

8 Global Airport Cities, Insight Media 2010


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Further, Dr Kasarda identifies that when a number or all these levels of airport activity combine they “create a ratcheting effect, accelerating airport area growth in a largely organic manner”. Dr Kasarda reports on the following examples of airport locations being major centres for commerce and employment:

→ Amsterdam Aerotropolis located at Amsterdam Schiphol Airport provides office space to over 1000 companies, including the world headquarters of ABN Amro and ING Bank.

→ Rossypole, the business park development at Paris Charles de Gaulle Airport has over 230,000 m2 of offices. On the airport site of 3,200 hectares, 700 companies employ a total of 87,000 people.

An example of an airport in the Oceania region which has undertaken a development focused on the economic drivers of the region may be seen at Perth Airport. A business park development, Kewpoint, located on airport, targets the resources industry as tenants. The offices are located adjacent to the remote base operations for the Roy Hill Iron Ore project, being developed in the Pilbara region and serviced from Perth Airport. Media reporting suggests the airport location would be valuable to resource companies as a corporate base, compared to the CBD, given it has easy access to air services, ample parking and will benefit from planned upgrades to the road network at Perth Airport.

4. THE ECONOMIC IMPACT OF AIRPORTS The ATAG “Aviation Benefits Beyond Borders” report describes the economic impacts of aviation worldwide as being a combination of:

→ Direct impacts;

→ Indirect impacts;

→ Induced impacts; and

→ Tourism catalytic impacts.


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The report measures the direct impact of aviation worldwide as generating 8.36 million jobs and US$538.9 billion dollars in direct impact. By the time indirect, induced and tourism catalytic impacts are included, aviation contributes to 56.6 million jobs and US$2.206 trillion in GDP globally, equivalent to 3.5% of total GDP. The report describes aviation as being equivalent in size to the 19th most significant economy in the world, if it were a country in its own right.


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These economic impacts are explained as follows:

DEFINITION EXAMPLE

Direct impacts Expenditures directly associated with the operation of the airport – labour, materials, supplies, capital. The first round of impacts, usually for businesses based on the airport or for whom the airport is the sole or major driver of their business (e.g. off-site car parking). Construction or capital expenditure at airports heavily influences direct economic impacts.

Indirect impacts The economic activity generated by the first round of impacts i.e. the economic activity generated by the businesses which form the direct impacts (ground handlers, airport management companies), the supply of goods, services and labour driven by the first round activities, e.g. the suppliers of office stationery to the airport management company.

Induced impacts The expenditure generated by those employed at the airport in the businesses which form the first round of impacts, generally in the context of household expenditure. I.E. the grocery shopping done by on-airport employees and the economic benefit and employment that generates in the local economy

Tourism catalytic impacts This impact is the economic benefit brought to the region by visitation by tourists, in terms of value add to the economy, jobs generated etc. It is often excluded or separated from the reporting of economic impact studies of airports. The airport is an enabler of visitation, but not typically the only form of transport available to tourists. Therefore if the airport did not exist, while tourism may decline it would not potentially cease to exist, as tourists could still access the region through other modes of transport or even other competing airports in the broader region.

5. IN THE ABSENCE OF AIR TRAVEL: ICELANDIC VOLCANO CASE STUDY The significance of air travel to economies and the role airports play in the facilitation of travel is well illustrated by a case study of what happens in the absence of air travel and the impacts felt worldwide of a significant and unplanned disruption.


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Access to air transport is a central feature of the society and economy of virtually all countries in the world, developed and developing. In the absence of air transport, business is interrupted, passengers inconvenienced and individuals left in limbo with disrupted travel plans, as was evidenced during the Icelandic Volcano interruption to air travel in Northern Europe and across the Atlantic during April 2010.

A report commissioned by Airbus from Oxford Economics into the crisis9 determined that in one week, global GDP was impacted by US$4.7billion. Impacts were far reaching beyond the North Atlantic and European aviation markets, with lost sales of African fast-perishing produce such as flowers, fruit and vegetables estimated to cost the continent US$65million due to the impact of the air space shut down.

The report illustrated impacts felt both economically and for trade and productivity. Financial impacts were felt beyond Europe in the Americas, Middle East and Africa and the Asia Pacific region. Trade and productivity impacts were felt in terms of international trade and lost output from stranded passengers. The human scale of the interruption was significant in terms of recovering those who had their travel plans interrupted and lost travel from those who did not travel at all during the period of interruption. For both sets of passenger impacts, there were economic impacts due to lack of productivity for those individuals.

Trade markets which were significantly impacted by the interruption to air freight, including perishable goods, as illustrated above in the African agricultural sector, and electrical, machine parts and equipment, which experienced shut downs without key components being available on a just-in-time basis.

9 “The Economic Impact of Air Travel Restrictions Due to Volcanic Ash”, report by Oxford Economics for Airbus, 2010


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05. AIRPORT ACTIVITIES

1. SUMMARY The past two to three decades has seen a quantum change worldwide in the diversity of activities undertaken by airports.

This section of works highlights the range of activities now found at airports, comments on the importance of a diversity of activities and the ability to develop interim uses on land held for future aeronautical purposes, and the importance of allowing for spatial and timing flexibility.

2. INTRODUCTION Recognising the changing environment of airport revenues, with greater emphasis on raising non-aeronautical revenues, airport operators now operate in a continuum of various different businesses beyond the traditional aviation-related activities of operating an airport. Today an airport operator could also be a land developer, a commercial/industrial building developer, landlord, commercial centre developer and manager, and in some cases a merchant. The continuum of commercial activities between strictly aviation/aeronautical and non-aviation/non-aeronautical could be depicted as follows.


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An airport’s projects and business activities may fall in various places along the continuum described above, beginning with those which are integral to airport and aviation operations and moving into related activities, such as cargo buildings, to pure commercial and institutional buildings at the other end of the scale.

Mathis and Michael Güller10, identify three cascading categories of on-airport activities:

ACTIVITY FUNCTION OF BUSINESS

Core aeronautical activities Technical functions, directly supporting the air traffic function.

Airport-related activities Direct relationship to air passenger or air freight movements, with competitiveness and revenues closely tied to the scale of air traffic, e.g. logistics, distribution activities, terminal retail or hotels.

Airport-orientated activities Businesses which choose the airport area to locate to because of the image of the airport and its excellent ground accessibility. This market is impacted more by the price and availability of land and surface connectivity, than the volume of air traffic.

The categories above are cascading, with the core aeronautical activities 100% driven by the presence of the airport and directly impacted by the volume of passenger and aircraft movements, through to the airport-orientated activities, which do not rely entirely on movements.

A fourth category of activity is now required and justified, as:

ACTIVITY FUNCTION OF BUSINESS

Non-airport related activities Support services to the people working for or interacting with on-airport businesses as well as for and with aviation related businesses, such as cafes, bars, gyms, banking, supermarket, hairdressing, medical, child care etc.

10 Airport to Airport City, Mathis and Michael Güller, 2003


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These businesses spring up to service the volume of people working on airport, with no direct relationship to air movements, but with the business generated as a result of the volume of employment the airport generates. Examples of such activities would include the success of Brisbane’s “Airport Village”, as case study for which is provided below.

3. PASSENGER-BASED ACTIVITIES ON-AIRPORT The following activities are common and familiar examples of activities that service the needs of passengers, generally based in or near passenger terminals or on the airport land, comprising:

→ Restaurants, catering and other food services, some locally-themed;

→ International brand and specialty shops;

→ Banks and currency exchanges;

→ Duty free shops;

→ Airline lounges;

→ Private meeting rooms;

→ Hotels and accommodation; and

→ Tourism and entertainment.

Other on-airport activities arise from ground transport which can comprise taxis, trains, hire cars, campervans and bussing, including charter buses, local and national scheduled bus services, minibuses to specific hotels etc. Ground transport drives a secondary level of service support in its own right, through associated and ancillary businesses, e.g. petrol stations to fuel returning hire cars, car washes, maintenance, valet and repair etc.

4. AVIATION-BASED ACTIVITIES ON-AIRPORT Businesses which are located on-airport because their primary need is to access aviation infrastructure include commercial passenger airlines, commercial freight airlines, government agencies such as police and border control agencies and air traffic control, flying schools, aircraft charter operators, private jet owners and operators, fixed base operations, helicopter operations, medical rescue services etc.

These businesses then drive a consequential level of business activity required to support them, such as aircraft maintenance, repair and overhaul, fuel suppliers, freight forwarders, provision of hangars for rent, private pilots, all levels of general aviation and support and ancillary services generated e.g. fuel, spare parts etc.


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Freight services generate business in the form of logistics and distribution centres, warehousing, including perishables and cool-chain facilities, sometimes facilitated by Free Trade Zones, special economic zones etc.

5. DRIVERS OF NON-AVIATION-BASED ON-AIRPORT ACTIVITIES The extent to which an individual airport can successfully pursue non-aviation based activities is dependent on that airport’s characteristics. Some of the drivers which impact on an airport’s potential to develop on-airport activities include:

→ The scale and diversity of aeronautical activity;

→ The degree of route network connectivity;

→ The size and configuration of the land bank available for development;

→ The supply of other competing land available for development;

→ The airport’s land use plan, planning permissions/restrictions, or master plan;

→ The access to road and rail infrastructure, potential for the development of a multi-modal transport hub, interchange between freight from air to road and/or rail;

→ The supply of labour available locally; and

→ Local drivers such as existing industries (leisure, tourism, education).

In the final case, local drivers can lead to clustering of businesses, where like or ancillary businesses co-locate to provide a range of associated services. An example could be the establishment of a large diversified logistics and freight centre, where transportation distribution systems are efficiently and effectively clustered and managed, leading to the timely and competitive movement of goods.

6. NON-AVIATION-BASED ON-AIRPORT ACTIVITIES As identified above, airports are attractive locations for businesses which do not rely entirely on aircraft movements to generate their business. Such activities could include:

→ Warehousing or bulk goods requiring significant space not available elsewhere;

→ Retail parks e.g. Ikea;

→ Factory outlet stores orientated to both air travelers and locals;

→ Retail display rooms with products that appeal to people with high propensity to travel and which can


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take advantage of the strong flows of people “past their doors”;

→ Auction, exchange and trade complexes;

→ Business parks, office space, head office locations etc.;

→ Convention and exhibition centres;

→ Cultural and entertainment attractions including museums, art galleries, cinemas, built tourism attractions;

→ Leisure and recreational venues, e.g. golf courses, race tracks and gaming;

→ Personal and family services such as fitness facilities, spas, and childcare for airport employees; and

→ Medical and wellness facilities.

7. ACTIVITIES IDENTIFIED AS NOT BEING COMPLIANT WITH AIRPORTS Not all businesses or industries are suitable for on-airport location. A business or industry generating excessive dust or smoke or giving rise to chimneys/towers etc., which would conflict with impact air navigation or height restrictions would be likely deemed inappropriate for location on or near an airport.

The Australian Federal Government Aviation White Paper 200911 identified incompatible developments as including long-term residential development, residential aged or community care facilities, nursing homes, hospitals and schools. The only exceptions for the educational criteria are for child care provided for on-airport staff or educational facilities directly relating to aviation.

Other factors to consider would include:

→ Noise;

→ Odour;

→ Dust/smoke;

→ Light emission or intrusion;

→ Compatibility/land use planning;

11 Australian Government National Aviation Policy White Paper, December 2009


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→ Activities which may pose a security risk;

→ Structures or activities which infringe clearance limitations;

→ Electrical or frequency interference; and

→ Activities which may attract birds, insects or vermin etc.

8. CASE STUDY: BRISBANE AIRPORT’S AIRPORT VILLAGE Brisbane Airport has a substantial land bank and has developed a strategy to diversify its revenue through property development. The strategy is built around developing an Airport City. Brisbane Airport has undertaken various staged developments of its land bank not reserved for aeronautical activity, including an outlet centre, hotel and office space area.

Through these developments, plus the traditional aeronautical activities of the airport, the volume of people travelling to work at Brisbane Airport every day is sufficient to support the Airport Village development. The development is targeted specifically at on-airport employees, providing an anchor tenant supermarket and smaller supporting and specialty stores, such as a coffee shop, bakery, travel agents, hairdresser, chemist, beauticians and fitness centre (see illustration below)12.

12 Brisbane Airport website


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Brisbane Airport’s Village


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The Airport Village is located between two significant developments for Brisbane Airport – the business park where the airport company has its head office, and the DFO retail outlet park, which itself is located next to the Airport’s access to the Gateway Motorway. Therefore employees based at both of these developments or at the terminals or elsewhere on airport are driving past the Airport Village as they leave work and return to their homes, ensuring a steady flow of traffic.

The DFO itself, which is a retail park targeted at the general public either visiting the airport, or driving past on the Gateway Motorway, further generates potential visitors to the Airport Village. The DFO development comprises 120 specialty stores and food and beverage outlets. The majority of stores are clothing stores comprising brand name clothing retailers, selling seconds, discontinued or old stock, samples and reduced price merchandise.

The example of the Airport Village is made here to illustrate the development potential when an airport reaches the critical mass of passengers, employees, meeters and greeters to support such a development. No tenant in the Airport Village precinct has a business related to aviation (with the possible exception of the Flight Centre store front). Each business is there because of the secondary, flow-through impacts of the volume of people travelling in, around or on the airport precinct and the service industry potential they generate.


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9. CASE STUDY: CANBERRA AIRPORT’S DIVERSIFICATION FROM AERONAUTICAL ACTIVITY Canberra Airport was purchased in 1998 by the Capital Airport Group Pty Ltd. The airport serves a mature and very well developed aviation market. The city has a relatively low population but high demand for travel due to skew of population driven by being the Australian capital, with resident public servants and itinerant politicians, making frequent national and international travel, mostly facilitated by connections over Sydney. Further Canberra’s status as the capital drives a higher degree of visitor business traffic.

Canberra Airport’s ability to grow aeronautical revenue is rather limited being tied to incremental passenger growth from what is already a highly mobile catchment population and visitor market. Therefore Canberra Airport’s greatest opportunity to increase revenue has been the development of its land bank, leveraging the airport’s strategic location, access to air services and lack of alternative, competing development land in the vicinity.

Canberra Airport now describes itself as a national transportation hub, commercial business park and retail destination, rather than an airport.

Canberra Airport has three precincts of property development, comprising staged developments of the land bank13.

→ The Brindabella Business Park on airport development comprises 18 commercial buildings totaling 100,000 m2 office space housing approximately 5,000 employees. The business park also has a child care facility, service station, gymnasium, cafes, restaurants and sports fields.

→ The Majura Park development is currently being developed and is focused on clustering businesses serving the needs of locals in the region, rather than the corporate or travelling market. Retail facilities include a shopping centre, Costco Wholesale and landmark tenants from the Woolworths Group such as Woolworths, Big W and Masters Hardware.

→ The Fairbairn commercial precinct is the largest of the three development areas, currently accommodating 2,000 workers, with a focus on environmental sustainability and quality of lifestyle for those working there. The development incorporates green space, walking tracks and an 18-hole golf course.

13 Canberra Airport website


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By segmenting the development to clusters serving different markets, namely corporates and the locals market, Canberra Airport has grown its revenue and increased profits based on the airport’s asset of a substantial land bank. As a consequence, Canberra Airport has successfully diversified its aeronautical business, which had limited growth potential due to the already mature nature of the market, high frequency with which locals and visitors already travel, and limited potential for discretionary travel to grow through stimulation by low cost carriers, in a strongly business market.

The example of Canberra Airport is made here to illustrate how an already mature aeronautical business can increase its revenue stream and offset aeronautical risk and limited growth potential through property development. As a result, Canberra Airport is a more attractive business, with one benefit being it is well positioned to raise debt to invest in capital expenditure on the airport, such as the recently completed terminal development.


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06. CHRISTCHURCH AIRPORT ECONOMIC CONTRIBUTION

1. SUMMARY This section first provides an overview of the current Canterbury regional economy and how Christchurch Airport is an enabler to that economy.

Thereafter the focus is on analysing the benefits of flexibility in approach and activity provision, and how this can positively contribute to growth of the Canterbury economy.

2. CHRISTCHURCH AIRPORT AS AN ENABLER OF AIR TRAVEL The population of the urban area of Christchurch was estimated at 376,000 people in June 2012, with the broader Canterbury region being home to 559,000 people. 4,468,000 people were estimated to live in New Zealand, with the South Island being home to just under a quarter (23%), with 1,039,000 people. Over a third of the South Island population (36%) lives in the Christchurch urban area, and would therefore regard Christchurch Airport as their local airport14.

Economically, the region’s gross regional product was estimated to be 12% of national GDP, and the major economic drivers of the Canterbury region are:

→ Primary industries such as forestry, fishing and agriculture, with significance placed on viticulture;

→ Energy resources such as coal and hydropower; and

→ Tourism.

Christchurch Airport is situated approximately 12 km or 20-minutes’ drive from the CBD. There are no other commercial airports within a two hour drive of Christchurch. Christchurch Airport is clearly the gateway airport to the Canterbury region and arguably to the South Island with only Queenstown Airport and Dunedin Airport having Tasman services.

14 Sources: New Zealand Census 2006


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Internationally, Christchurch Airport as the second largest airport in New Zealand after Auckland provides direct services to Australia, Japan, Fiji and Singapore. In 2013 an estimated capacity of 1.6 million international seats will be available to travel to and from Christchurch Airport.

Domestically, Christchurch is the third most significant airport, behind Auckland and Wellington, accounting for one in five of all domestic seats nationally (20% domestic market share). In 2013 an estimated capacity of 5.37 million domestic seats are available to travel to and from Christchurch Airport15. The fourth placed domestic airport is Queenstown, being substantially behind Christchurch in size and scale, with just 4% of domestic seats.

Christchurch Airport is highly significant as an enabler of air travel in the region. With the city being home to over a third of the population of the South Island and the most significant airport on the South Island, it plays a major role in facilitating fast, convenient, efficient and affordable travel both domestically, between the South and North Island, and internationally either directly through Christchurch, or via connecting services over Auckland and Australia.

Facilitating air access to the North Island enables Christchurch locals to access the commercial and political centres on the North Island. Conversely the domestic and international air services available to Christchurch Airport enable visitors from elsewhere in New Zealand and the rest of the world to access Christchurch as a region and a gateway to the South Island.

Air freight is enabled for the South Island’s valuable agricultural markets through Christchurch Airport, as is access to the significant Antarctic programme which is based at Christchurch Airport.

The tourism industry in the South Island is in part facilitated by visitors accessing the South Island through Christchurch Airport, either domestically or internationally, as either their arrival or departure airport, or both.

As previously noted, airports are in a unique position to assist local in-bound tourism through both encouraging and sponsoring route development, as well as projecting themselves as a gateway to a region. Airport theming and promotion of a region’s uniqueness and attractions are considered essential strategies in today’s competitive tourism world. Consistent with this message Christchurch Airport is a major stakeholder in the tourism industry through provision of air access to the region and the many iconic destinations in the South Island; services that are critical to Brand New Zealand and the award-winning 100% Pure campaign. The Airport is very active and prominent in tourism marketing, winning awards for attracting new airlines and route services as well as directly marketing destination attractions in the South Island.

15 Source: Airbiz analysis of 2013 capacity data in Sabre Airport Data Intelligence


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3. THE AIRPORT AS A DRIVER OF THE CANTERBURY AND CHRISTCHURCH ECONOMY Christchurch Airport is more than a facilitator or enabler of the economy of the city and broader region. It is a major employer and driver of economic activity in its own right. A confidential economic impact study report prepared for Christchurch Airport in 2012 advises that nearly 6,000 people work at the airport, equivalent to more than 5,000 Full Time Equivalent (FTE) positions.

As reported above in the chapter relating to how airports enable economies, impacts are created through direct, indirect and induced impacts. In total, Christchurch Airport’s confidential economic impact study reports that the operation of the airport complex generated a total impact of NZ$1.75 billion, contributing NZ$831 million to regional GDP and supporting a total of 10,368 FTE positions. In terms of direct impacts only, Christchurch Airport generated a gross output of NZ$886 million, contributing NZ$395 million to regional GDP and generated 5,159 FTE roles. By either measure, Christchurch Airport can be said to be a significant driver of the regional economy.

Gold Coast Airport in Southern Queensland reports16 approximately 5.7 million total passengers for calendar year 2012, very similar to Christchurch Airport’s reported 5.5 million passengers for the same period17. However Gold Coast Airport’s economic impact study for Financial Year 2009/10, published for its 2011 Master Plan18, reports 1,719 individuals were employed on-airport in 1,319 FTE positions. This represents only about one-third of the direct on-airport employment at Christchurch Airport, a substantial disparity for an airport with similar levels of aeronautical activity.

Another comparative measure is the proportion of aeronautical revenue to total revenue reported by each airport which will broadly indicate the degree to which non-aeronautical business has been developed and is contributing. For Gold Coast19, the ratio in FY2012 was 61% compared with 36% for Christchurch Airport.

Comparisons can also be made with Wellington Airport which has similar levels of aviation activity to both Christchurch and Gold Coast. Wellington Airport reported 5.2 million total passengers for the financial year 2012 (April 2011 to March 2012). The proportion of aeronautical to total revenues assessed for financial year 2012 was 57%. 16 Gold Coast Airport website 17 Christchurch Airport website 18 Gold Coast Airport Preliminary Draft Master Plan 2011 19 Queensland Airports Ltd (QAL) does not report revenues by airport and also does not split out aeronautical revenues. The 61% has been estimated using an assumption that Gold Coast Airport generates ~75% of the total QAL group revenues. In FY2011 and FY2012 the airport averaged 74% of the group’s passengers and 80% of the group’s aircraft movements.


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Comparison of these measures for all three airports shows that Christchurch has the lowest aeronautical to total revenue ratio, indicating a more developed non-aeronautical business sector.

It is likely that the reason for this disparity in the respective levels of non-aeronautical commercial business activities lies in the availability of land outside that required for core aeronautical activities. Both Gold Coast and Wellington Airports have highly constrained sites. At Gold Coast the availability of land for commercial uses (developed or not yet developed) is less than half the availability at Christchurch Airport, while at Wellington the availability of land for commercial uses is even more constrained and nearer to its ultimate potential. Both these airports therefore have less potential than Christchurch to develop on-airport businesses which would generate employment and direct economic benefits to the region.

Having land to develop for commercial returns is an important "natural advantage" in respect of which Christchurch Airport should not be restrained, as it does not have other natural attributes that Gold Coast has in its destinational attraction and that Wellington benefits from having the seat of government, administration and business headquarters. Although Christchurch Airport is the main gateway for international travel to and from the South Island, it is still among the most remote international airports in the world, servicing a very small and remote population and very remote destination. It is critical that Christchurch Airport is not restrained in its ability to achieve competitive aeronautical charges to attract and retain airline services and developing commercial revenue streams is a significant contributor to this.

Employment at Christchurch Airport is generated by three major industry groups: Transport and Storage, Property and Business Services and Manufacturing. These three industry groups together account for three-quarters (74%) of all Christchurch Airport complex FTE employment. The three industry groupings also relate strongly to aviation activities and are therefore in the first or second categories of on-airport businesses of core aeronautical or airport-related activities, identified above in the chapter relating to airport activities.

CHRISTCHURCH AIRPORT LEADING ON-AIRPORT INDUSTRIES SPECIFIC EXAMPLE ACTIVITIES

Transport and Storage Mail, airline, logistics and freight forwarding

Manufacturing Maintenance, repair and overhaul Property and Business Services Rental vehicle services

Scientific research support to the Antarctic programme


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Specific mention of the Antarctic programme must be made, in acknowledging the unique characteristics of the programme and its role in the Christchurch and Canterbury economy and relationship to Christchurch Airport, where it is based. A 2007 economic impact study report for the Christchurch Development Corporation (Saunders et al 2007) on the value of Antarctic associations concluded the total benefit of Antarctic related activity to the Canterbury economy was estimated at NZ$155 million, supporting employment of 2,115 people in the region.

There are also opportunities to further enhance the contributions made by the Antarctic programme, specific issues being:

→ The need for certainty to justify further investment;

→ The need for new facilities to deliver efficiency benefits to operations of the various nations – United States, Italy, Korea and New Zealand;

→ New facilities may lead to an expansion of countries facilitating their Antarctic operations through Christchurch;

→ Notwithstanding the positive contribution to the region’s economy, Christchurch Airport’s return on investment on Antarctic investments is very poor, with limited contribution from aircraft landing charges and long-standing lease arrangements based on quite old, well-depreciated buildings.

→ This leads on to whether there could be opportunities to derive better lease arrangements for new purpose built facilities?

→ Broadening the range of Christchurch Airport activities may help to maintain and build upon the “deep freeze” operations.

4. POTENTIAL BENEFITS OF GREATER PROPERTY DEVELOPMENT AT CHRISTCHURCH AIRPORT TO THE DIVERSIFICATION OF AIRPORT REVENUES

Accepting the preferred airline charging model established above, of increasing volumes of passengers but a receding rate of return on a per passenger basis due to volume discounts, this report established that a successful airport is one which is able to offset some of the pressure on aeronautical charges by diversifying revenue streams to non-aeronautical/commercial and property revenue streams.

By having the freedom to develop alternative revenue streams to aeronautical revenue, Christchurch Airport will best be able to support its airline partners to grow capacity and grow economic flow-through benefits to the region. In order to be able to develop alternative revenue streams to aeronautical revenue, Christchurch Airport needs support and clarity from all planning stakeholders in terms of permissible non-aeronautical development on airport land.


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5. POTENTIAL BENEFITS OF GREATER PROPERTY DEVELOPMENT AT CHRISTCHURCH AIRPORT TO THE CANTERBURY AND CHRISTCHURCH ECONOMY

The virtuous circle airline pricing model established above illustrates the potential increased passenger through put which would be achieved at Christchurch Airport through increased airline capacity to existing and potential new destinations, should pressure on aeronautical charging be reduced by more extensive non-aeronautical/commercial or property development.

This principle supports increases in capacity by airlines, increased competition, lower fares, increased volumes of passengers at new/lower price points stimulate markets which have not historically travelled at higher fares. The increased volume of passengers, including visitors to the region, spending in the region, would create flow through economic benefits for the region.

Growth in air capacity would enable greater choice of travel for locals and visitors to the region, in terms of current destinations/visitor source markets and potential new destinations/visitor source markets. As established above through the example of the Tasmanian Access Report, access to frequent, convenient and affordable air travel is not just crucial to visitors to the region, but also to local residents in doing business, maintaining contact with the North Island and the rest of the world.

Christchurch Airport is the South Island’s largest airport, serving the South Island’s largest population. It acts as the gateway for visitors in accessing the Canterbury region as well as the departure point for local residents in doing business with the rest of the country and the rest of the world. The potential to reduce pressure on aeronautical revenue through the broadest possible remit to develop alternative revenue streams from non-aeronautical/commercial or property development would enhance Christchurch Airport’s ability to serve airline partners and stimulate growth in passenger movements, to the ultimate benefit of the regional economy which it serves.

6. IMPACT OF THE EARTHQUAKES ON REGION AND AIRPORT The Christchurch Earthquakes of 2010-2012 have created a dramatically new planning environment for the region. The CBD is being rebuilt. Some suburbs have been abandoned. New development is taking place through the Christchurch Central Recovery Plan, and funding of landmark developments has recently been signed off by a partnership of the Crown and Christchurch City Council.

As a result of the earthquakes, the entire planning environment in Christchurch has changed. Therefore it is considered appropriate to review the historic land use patterns and plans for Christchurch Airport in the context of wider Canterbury recovery and growth, while remaining compatible with endeavours to restore the CBD, the zoning of various regions and suburbs for development, where the freight corridors will be and which suburbs will require road and freight access to the Airport.


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The Earthquakes have given Christchurch Airport the opportunity to review the existing and historic planning environment, which has evolved over time from a legacy position. The Earthquakes have created an opportunity to visit the planning environment related to Christchurch Airport with a clean sheet and fresh thinking, given the entire environment has changed.


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07. CHRISTCHURCH AIRPORT LAND USE PLANNING POLICY

1. SUMMARY The principles of planning and reserving land for long term aeronautical use are reinforced in this section, whilst also recognising benefits associated with interim uses of that land.

The land use planning principles noted in the 2006 Christchurch Airport Master Plan, together with the use of sub-zones by activity type are summarised and reviewed.

2. NEED FOR LONG TERM PLANNING AT AIRPORTS As discussed earlier in this paper, airports are widely recognised as having significant strategic and economic benefits for the cities and regions which they serve and service. At the most obvious level, airports provide inter-modal facilities for the arrival and departure of international and domestic passengers and freight by air and the transfer to and from aircraft of those passengers and freight from road, and in some cases rail and other surface transport modes.

There are also other advantages that an airport brings to a community including communications links with other communities and regions within the country and overseas, the provision of essential border control services such as immigration, customs, security and quarantine checkpoints, medical services and focal points for civil and national defence activities.

And it has also been clearly demonstrated that airports have significant roles as enablers of city and regional economies and are substantial economic generators in their own right.

A major aspect of successfully maintaining and operating an airport is having a robust and accepted development strategy. Such a strategy must include a plan for the airport, the protection of land for future airport development and operations, plans for how reserved land can contribute to and diversify the revenue streams for the airport business, relieving pressure on aeronautical charges, and the provision of a noise buffer for the surrounding community.

Reservation of land is particularly important around airports because:

→ Land needs for aircraft operations and efficient processing of passengers and freight are considerable;

→ Stringent requirements must be provided and adhered to for safe clearances from aircraft to other aircraft, buildings and obstacles as required by the New Zealand Civil Aviation Authority;


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→ Diverse aspects of airport operations mean that allocation of land for particular uses must be done carefully to ensure operational and environmental compatibility with adjacent uses both within an airport and outside the airport; and

→ The aviation industry is recognised as having relatively high long term growth characteristics.

Many of the world’s major airports suffer from lack of adequate reservation of surrounding land and appropriate land use planning. Almost without exception this results in constraints on development, operational flexibility, airport capacity and environmental problems, which hamper the economic well-being and quality of life of the community served by the airport.

In the United States, Canada and Australia there are statutory requirements covering the frequency and format for updating and publishing major airport master plans, typically at five year intervals. The same provisions are not included in New Zealand legislation but astute well-managed airports, such as Christchurch, recognise the critical importance of doing so and are regularly updating part or all of their overall plans.

3. CHRISTCHURCH AIRPORT MASTER PLAN AND LAND USE PLAN Christchurch Airport completed its most recent master plan in 200620. The 2006 Master Plan continued the key land-use planning principles established in the preceding 1985 Master Plan including:

→ The use of sub-zoning by activity type;

→ Continued observance to the framework of the 1985 “Preferred” land use plan;

→ Limiting the extent of the Master Plan to the Special Purpose Airport Zone (or Airport Zone as it was in 1985);

→ Noting that planning for land outside of the Christchurch City Plan’s Special Purpose Airport Zone (SPAZ) would be the subject of separate studies; and

→ Maintaining a planning horizon of 20 years.

Christchurch Airport owns approximately 780 Ha of land. Most of this land (683 Ha) sits inside the Christchurch City Plan’s SPAZ. The remainder consists of rurally zoned land adjacent to the SPAZ. The Airport also has long-term perpetual lease interests in land owned by the Canterbury regional council, Environment Canterbury (ECan), much of which is designated for airport purposes.



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Since 1985, the key land use provisions of the Airport’s master plans have been progressively incorporated into city planning documents. The operable Christchurch City Plan does not include a segmented zoning map for the Airport but rather lists activities which are deemed permissible within the SPAZ.

The majority of land within the SPAZ and airport boundary is subject to two levels of statutory planning control. At the upper level sit the provisions of the “Airport” designation that are under the jurisdiction of Christchurch Airport as the Requiring Authority. The underlying territorial authority zoning provides the lower level control. In Christchurch Airport’s case this is Christchurch City.

The relationship of the airport land and boundary to the SPAZ is shown in the following graphic.

2006 Special Purpose Airport Zone (SPAZ)


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The provisions of the designation enable Christchurch Airport to carry out activities for “airport purposes”. Underlying this designation sits the City’s SPAZ that allows for a wide range of activities as long as they are ancillary to the operation of the airport.

The 2006 Master Plan incorporates a Land Use Plan which divides the airport into activity-based segments. The philosophy groups together similar activities / operations, which perform similar functions, require similar inputs, and produce similar outputs. Two main benefits accrue from adoption of this approach to land management:

→ Consolidation of like activities leads to efficiencies in the provision of capital intensive infrastructure; and

→ Activity zones mitigate instances of activity-based conflicts occurring between adjacent operators.

The Land Use Plan serves as a tool to balance the needs of long-term strategic planning against the need to maximise returns on property investments.

The objectives of each land use zone are explained as follows.

PASSENGER TERMINAL ZONE

Activities to be allowed for within the Passenger Terminal Zone (PTZ) should include, but not be restricted to; passenger terminal buildings, air traffic control tower administration and support offices, aircraft apron stands, GSE staging, car parking, and landside road networks and associated activities.

CARGO / FREIGHT ZONE

Activities to be allowed for within the Cargo/Freight Zone (CFZ) may include, but not be restricted to; air cargo operations, freight forwarding, US Antarctic operations, aircraft catering, quarantine facilities, aircraft aprons and associated car parking, landside road networks and associated activities.

AIRCRAFT MAINTENANCE ZONE

Activities to be allowed for within the Aircraft Maintenance Zone (AMZ) may include, but not be restricted to; Maintenance and manufacture of aircraft components, engines and airframes; aircraft wash down activities; aircraft parking and storage; engine testing; aviation research; cabin servicing; aircraft sales; aircraft parts sales and storage; airfield aprons; car parking; landside road networks; and associated activities.

COMMERCIAL SUPPORT ZONE

The Commercial Support Zone (CSZ) is intended to have a broader, more flexible definition to better provide for a wider variety of activities including business, retail, community, leisure, tourism, and recreation. This activity spectrum could perhaps be alternatively labelled as service industries.


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Activities to be allowed for within the CSZ may include, but not be restricted to; office developments, child care centres, hospitality facilities (restaurants, eateries, cafes), tourist facilities and attractions, vehicle servicing facilities, rental car facilities, community hall, banks and postal services, call centres, technology centres, travellers accommodation, conference facilities, recreational facilities, retail, garden centres, and associated car parking.

GENERAL AVIATION ZONE

Activities within the General Aviation Zone (GAZ)include, but are not restricted to; facilities for pilot training, aero club operations, aerial work, air charter services, the activities of corporate and private aircraft, light aircraft maintenance, helicopter operation and maintenance.

FUTURE DEVELOPMENT ZONE

Within the footprint of the Special Purpose Airport Zone there are two areas, amounting to almost 45 hectares, which have been classified “Future Development” in lieu of being allocated specified activities. These areas provide for land requirements beyond the 20-year planning horizon if expected growth is achieved and they may also be used as reserves for additional or unforeseen space requirements (non-airfield), thus providing the Land Use Plan with increased flexibility.

The types of interim activities that will be permitted to develop within the Future Development Zone (FDZ) should allow future redevelopment to proceed rapidly at minimal expense. The Airport considers that the types of interim activities that would be acceptable may include, but not be limited to; farming and other low intensity agriculture, car parking, rental car operators, tour coach service centres and sales office space for recreational aviation operators, container storage, airport fire service training grounds, Defence Department purposes etc.

AIRFIELD RESERVE

Airfield Reserves are parcels of land that lie inside the current Airport Zone boundary but which are less desirable for long term development due to potential restrictions imposed because of proximity to future aircraft operations or air traffic control infrastructure. There are six such areas identified in the 2006 Land-use Plan comprising approximately 112 hectares, all are adjacent to the existing airfield and could be easily incorporated into the airfield area should airfield operational expansion require.

Types of activities that may be permitted to develop within these Airfield Reserves will meet requirements relating to operational restrictions including; runway end safety areas (RESA), runway end protection areas (REPA), obstacle clearances, noise sensitivity, propensity to attract birds etc.

Some of the land included in the Airfield Reserve protects for possible future airfield, operational or regulatory developments. Christchurch Airport may consider relatively short-term alternative developments in such areas, but it would do so knowing that they must be removed should operational requirements dictate.


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The locations of the various zones within the Land Use Plan are shown on the following graphic.

2006 Land Use Plan


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4. FLEXIBILITY FOR TIMELINESS AND USE OF LAND Airport land is often reserved in master plans for future aeronautical use, which may not eventuate for 10/20/50 years. In the meantime that land has a use and value and short- to mid-term development could be appropriate to enable the airport to derive revenue from that land, until such times as it is required for aeronautical development.

As noted in the 2006 Christchurch Airport Master Plan21:

“Once land within the SPAZ is acquired, the Airport would like to attract interim uses so that a return can be made while protecting the land for future airport purposes. Agricultural livestock is an example of such an interim use, however in some cases it is not feasible to use a particular land holding for agricultural livestock purposes. Ironically, the task of finding an interim use is made more difficult by restrictive zoning requirements that limit the types of activities permitted to operate within the SPAZ.”

Christchurch Airport endeavours to apply the following principles in the consideration of potential developments:

→ The need to manage time horizons e.g. short to medium-term developments are considered for lower value capital projects, giving CIAL a return on property until a longer-term development is appropriate or available; and

→ Infrastructure is developed in stages to ensure appropriate service levels and to minimise the Airport’s holding costs.

The challenge for airport management is to provide a reasonable return on the entire property portfolio in the short- to medium-term, whilst not compromising the key longer-term planning objective of protection for airport purposes. The Master Plan reference above highlights that Christchurch Airport presently finds itself constrained by restrictive zoning in its ability to find and secure interim uses for land. To this end, as much flexibility as possible in zoning permissions and requirements for the type of use, timing of development and duration of occupancy is critically important, because there will be no assurance that there will always be available tenant businesses if zoning is restrictive.

5. REVIEW OF MASTER PLAN LAND USE PROVISIONS As with most airports, planning of zoning on or near Christchurch Airport has evolved over time. Whilst the current plans are a mix of legacy and historical plans, in most part the Master Plan provisions are reasonable and



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workable.

It would be beneficial to extend more flexible aviation, freight and commercial provisions over the Future Development zones.

6. REVIEW OF CITY PLAN LAND USE PROVISIONS A review of the City Land Use provisions was carried out against what would be optimum to create a planning environment supporting desirable commercial development outcomes, as outlined in previous sections of this report.

The earthquakes have also reinforced that the time is right to review, as the historic and legacy plans relate to an environment changed forever by these events.

Focus of this part of the review was to consider the Attachment A Draft Provisions, as provided by Christchurch Airport. Airbiz believes that the Attachment A Draft Provisions require further revision, as various shortcomings are noted:

→ The wording is in part circumlocutory and interpretation potentially debatable. For example, Clause (a) permits an aviation activity, such as a runway or apron, to be built anywhere and Clauses (f) and (g) allows service stations or food outlets to be built on the airfield; both obviously unintended outcomes.

→ Wording and interpretation of the City Plan Land Use Provisions has to be clear and unambiguous. In that regard it may assist to retain zones consistent with those prescribed in the Master Plan Land Use Provisions.

→ It would be preferable for the City to be specific about what it does NOT want developed at the airport – and why. By understanding the City’s basis of concerns, Christchurch Airport can start to reach agreement over developments that specifically will not be permitted at the airport.

→ It is preferable that discussion between the City and Christchurch Airport is specific about types of development, rather than size.

→ Clause m (iii) appears to block Large Format Retail, including Supermarket developments, but will also: - Block showroom retail other than automotive and marine. Showrooms for products appealing to

travellers and those with high propensity to travel may be successful interim use developments. - This clause is very limiting in quantum – approximately only 11 small tenancies

→ Clause q (ii) appears to block significant office developments, but will also be very limiting in quantum – approximately only 11 small tenancies.


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08. CONCLUSIONS

It is essential that the Christchurch city and Canterbury regional community at business and governmental levels recognise that their airport, Christchurch Airport, is a strategic asset that requires support to play its part in driving regional competiveness and commercial success.

In addition to providing successful aeronautical facilities and services, a fundamental element of success for Christchurch Airport is to maximise value through identifying and implementing commercial and property developments, with a resultant diversification of revenue streams. The types of commercial opportunities that are possible derive from the scale and degree of connectivity of air services available at the airport and the volumes of people and goods moving on, off and through the airport.

The more flights, the more routes, the more people and the more goods, the better the prospects for secondary businesses to establish at the airport.

Christchurch Airport is a significant facilitator of travel and trade for the city, region and South Island and is an economic driver in its own right through the potential to be a major centre of employment for local people. In a world where much business travel is undertaken by air, Christchurch Airport will be attractive to businesses where they:



→ Produce goods or provide services that require quick efficient access to air freight facilities or to one or more of the surface modal transport networks that hub at the airport;

→ Produce goods or products that appeal to people with high propensity to travel and which can take advantage of the strong flows of people “past their doors”;

→ Benefit from being in close proximity to services provided at the airport; or


The Christchurch Airport 2006 Master Plan incorporates a Land Use Plan which serves as a tool to balance the needs of long-term strategic planning against the need to maximise returns on property investments. The provisions in the Land Use Plan for the types of activities that could be located at the airport are appropriate for these purposes although more flexibility should be provided for broader ranges of uses for the segment of airport land denoted "Future Development Land".


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However, Christchurch Airport presently finds itself constrained by restrictive zoning requirements in the Christchurch City Plan in its ability to find and secure interim uses for land. Further, the draft provisions that the City has indicated it wishes to promulgate for the future, which have been reviewed in the course of this report, still appear to be restrictive, particularly in respect of the size and scale of retail and office developments, and will likely continue to hamper the Airport in its efforts to diversify its revenue streams and contribute to its potential as an economic enabler for the city and region.

It is recommended that as much flexibility as possible be provided in zoning permissions and requirements for the type of use, timing of development and duration of occupancy at the Airport, because there will be no assurance that there will always be available tenant businesses if zoning is restrictive.

Documents

CHRISTCHURCH AIRPORT LAND USE ZONINGresources.ccc.govt.nz/files/TheCouncil/policiesreports...FINAL REPORT 1 August 2013 CHRISTCHURCH AIRPORT 1 FINAL LAND USE ZONING 01/08/2013 11489r01