Palmerston North Airport could do with a turbo boost

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Palmerston North Airport is spending $2m on car park improvements including shelters for pickups and drop-offs. Next, it's the $40m terminal.

Warwick Smith/Stuff

Palmerston North Airport is spending $2m on car park improvements including shelters for pickups and drop-offs. Next, it’s the $40m terminal.

The search could be on for a new investor or shareholder to give Palmerston North Airport a lift.

The airport company is about to embark on the biggest spend in its history, a $40 million new terminal building, which will take its debt to the highest levels ever.

The city council, the sole shareholder in the airport, has recommended its own staff work on some options to secure additional investment.

The proposal came from Mayor Grant Smith during the economic growth committee’s debate on approving the airport company’s plans.

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Smith said the terminal investment was essential to ensure the city had an airport that was ready with passenger screening facilities before they became mandatory or jet flights could be accommodated.

The airport also needed to be in a position to contribute to the city’s Te Utanganui distribution and logistics centre goals, with airport land available for freight facilities.

Airport chief executive David Lanham explained the capital spending on the terminal would absorb almost all the company’s capacity to borrow and afford debt repayments over the next decade.

That meant it had only limited ability to invest in the development of the Ruapehu Aeropark.

It would need a joint partner to progress with a proposed $12m warehouse, and beyond that would not be able to take advantage of market interest in further development of its land holdings.

Those developments, if they went ahead with third party support, would help diversify the airport company’s income.

It was income beyond landing fees that had helped the company survive Covid-19 lockdowns and travel restrictions without having to ask the city council for a bailout.

Palmerston North Airport could need new money to support development plans.

WARWICK SMITH/Stuff

Palmerston North Airport could need new money to support development plans.

Cr Vaughan Dennison supported the mayor’s recommendation.

He said the airport company’s future funding plan was weak, but it had so much untapped potential.

Dennison said he disagreed with councillors who wanted the company to resume paying the council a dividend, when what it really needed was ongoing investment.

He said without that, the company was left in a checkmate position.

While councillors voted unanimously for exploring other ways to attract investment into the airport, there was dissent about its overall plans.

Green councillor Brent Barrett said he could not support a 10-year plan that based on forecasts of passenger numbers growing to nearly one million a year.

That would lead to increased emissions in a climate crisis and there was no certainty there would be lower-emission aircraft flying by then, Barrett said.

Cr Karen Naylor said the plans were too risky, that the terminal redevelopment could be pegged back, and the company was not returning enough benefit to ratepayers.

Lanham said after the meeting the company appreciated the majority vote of confidence from councillors and their recognition of the importance of the terminal building.

He said the recommendation to look at alternative investment options, including the possible sale of a stake in the company’s equity, was welcomed.

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