Tuesday, 26 May 2015

If you believe the study...

If Christchurch Council believes the report it commissioned into the wider economic benefits of long-haul flights into Christchurch, it could pay its airport to adjust its slotting fees to ensure that long-haul routes are maintained.

Here's The Press:
Air New Zealand is pulling its last remaining long haul flights from Christchurch, cancelling direct seasonal flights to Tokyo.

After questions from Fairfax Media on Monday night, the airline began contacting the industry warning it of plans to end the flights, which currently operate over the summer months from Christchurch to Narita International Airport.

It later confirmed that the flights would not be operated next summer, saying it was putting on more flights from Tokyo to Auckland in response to research which said consumers had "no clear preference to fly into Christchurch".

"While we accept this decision is disappointing for Christchurch tourism stakeholders, the impact on the total number of seats the airline will operate into Christchurch is minimal," Air NZ said in a statement.

...Peter Townsend, chief executive of the Canterbury Employers' Chamber of Commerce, said Christchurch needed airport links to Asia both to cater to freight demands and bring in tourists to travel throughout the region.

"Air New Zealand need to consider the overall economic impact of their decisions. This isn't just about plane landings or passenger numbers into a particular airport, it's about the economic benefit that accrues from having direct international linkages into the South Island and into the regions of the South Island consequently," he said.

In 2010 a report commissioned for Christchurch Airport by Berl Economics estimated that direct flights from Singapore to the city created more than 2100 full time jobs and added $243.7 million in output to the region.
If Townsend believes those kinds of numbers, he should be asking Council to provide a special levy on businesses that benefit from those flights to subsidise continued routings - not asking Air NZ to turn into a regional development agency.

The continued decline in long-haul traffic into Christchurch must surely be giving Wellington Council second thoughts about expensive runway extensions, mustn't it?


  1. I'd say that the business case for the runway extensions would be quite unrelated to the economic case published by a local economic development lobby group. But yes, if they're so certain on the amazing economic benefits, then perhaps they should put their money where their mouth is.

    I'm still not fully clear on the amazing difference for consumers or businesses between two flights: one with a 2 hour stop over in Auckland, and one which goes straight there. There's a bit of time value of wages - but not much, and you might even argue that more frequent flights via Auckland than the few directs via CHC could in fact be net positive for time value of wages.

    From an airline market perspective it's also interesting how airlines can reach a stable equilibrium outcome to send the vast majority of inbound and outbound air traffic via one major city instead of distributed through several cities. Rather like Schelling's co-locating ice cream stands on the beach: the preferred outcome is concentration instead of distribution. This doesn't always hold in airline networks though (see Australia's move towards distribution away from concentration in the last decade).

  2. The astounding economic numbers suggest the report on long-haul flights is a half-brother to the one on cycleways--designed to support a conclusion already reached.