Monday, July 23, 2007

Airport sale: Business versus xenophobia

The sale of Auckland's airport to the same company whose purchase of US ports was spurned earlier this year values the airport at $5.6 billion, and will put the airport in the hands of an international business in which our own 'window on the world' will be an integrated part, particularly of Dubai's Emirate's Airways.

That's a great thing for NZ, and that figure of $5.6 billion (and the wealth it represents) is an enormous vote of confidence in New Zealand, and a tribute to the decision made just a few years ago to privatise the airport.

Naturally any boon like this has an equal and opposite political reaction, and no surprise that the two noisiest reactions are from the leaders of the two most xenophobic parties in parliament. Both the Greens and NZ First leapt immediately to decry the prospect of dirty foreigners getting their hands on "our" assets -- as if the asset was about to be shipped offshore.

In being opposed to "profits going offshore" and at the same time to the money coming in to buy the airport, Winston Peters demonstrates both that he's impossible to please (whichever way the money is going he's unhappy), that he's ignorant of the benefits of trade, and that as long as a business is in hands other than the government, it's largely irrelevant who owns it. The benefits accrue whoever owns it.

In saying that he can't see how New Zealanders will benefit from the purchase, Russel Norman joins Winston Peters as a politician in serious need of remedial economics . That's like saying he doesn't understand how wealth is produced through trade ... which when you think about it is true. He doesn't.

He also says it's wrong for control of Auckland's only airport to go offshore, ignoring first that no one is going to pay a couple of billion dollars just to make a pig's ear of the place, and that Russel's Greens have declared themselves as expressly opposed to a second Auckland airport that might provide this one with some competition, and that the Greens are strong supporters of the RMA, an egregious piece of legislation that makes construction of a second airport inordinately difficult, if not completely impossible.

So in short then, a great result for all of us, especially for the owners and Auckland Airport shares.

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10 Comments:

Blogger Greg Bourke said...

What is the annualised rate of return since floating for an Auckland airport shareholder?

Anyone sharholders care to calculate? Is it better than the 'incredible' 'breathtaking' 'mindboggling' 15% p.a. trumpeted by 42below?
--------------------------
Bravo to the consortium. At least they don't stuff their money into bridgecorp and rental property.

7/23/2007 06:39:00 pm  
Anonymous Anonymous said...

It will be interesting to watch the conservative reaction to this, given their hostility to the Arab world and Muslims in general. Xenophobia is only part of it.

I suspect this may not get much comment in the rightosphere, lest they be called on economic hypocrisy.

By far the dumbest comment of the day came from Barry Curtis, who said the buyer may choose to close the airport. May more dumb comments to come, I'm sure.

7/23/2007 06:59:00 pm  
Anonymous Anonymous said...

And here we go:

At the top of the tree [in DAE] is Sheikh Ahmed al Mahktoum, one of the UAE ruling family. If you are comfortable having a member of a ruling cabal in a non-democratic oil-rich Arab state, who also happens to be head of the local Civil Aviation Authority and head of the local airline as head of your airport, then fine!

Grab the popcorn for this one.

7/23/2007 07:25:00 pm  
Blogger libertyscott said...

Nobody has noted that a reflection of how much the average New Zealander cares is seen in how successful Emirates is in NZ. Three flights a day to/from Auckland and one to/from Christchurch - and it's not all foreigners using it.

7/23/2007 09:21:00 pm  
Anonymous Anonymous said...

Disagree. I think you will find that the average NZer cares a great deal and will want to keep the airport "NZ Owned".

Then there's Winstone and the councils stirring people up, and back at the trailer park the conspiracy theories have started...

7/24/2007 07:12:00 am  
Blogger libertyscott said...

and will spend nothing to do it. If the average New Zealander wants it to be owned by New Zealanders they should pay for it.

7/24/2007 07:59:00 am  
Blogger Craig Ranapia said...

Anonymous #2:

Yeah, I had to laugh at that too - I notice nobody had any problem with "a member of a ruling cabal in a non-democratic oil-rich Arab state" pouring leads of money into a fucking boat race.

I'm just waiting for Winston to trot out the 'sell the airport, and the terrorists win' line that was run in the United States over the sale of some port operations to Dubai Ports World, last year.

7/24/2007 08:06:00 am  
Anonymous Major Xenophobe said...

I can't stand Johnny Foreigns. Most of them can't speak English properly and they look different; dark hairy little buggers. Of course their money is as good as anyone elses' would you know it! And you can often conduct business with them. Fancy that. The bluddy blighters can do business.

Well, you don't have to socialise with them or even listen to their yibber yabber wig wom funny talk silly sound languages. No indeed!

And you don't have to have the unclean foreign spotty dogs in your home. Smelly bastards. But their money is as good as anyone's. Money talks men, money talks.

Now once they buy the airport the only question is, are they going to take it away? I ask,l do, are they going to dismantle the buildings and chip up the concrete runway and ship the lot off to Dubai?

And who are they going to employ at the airport? Surely not those surley smelly Kiwi bastards that are employed there now? Surely they'd have the decency to populate the place with the beautiful women of the Sheik's harem. I especially like mistress #3. She can weigh my luggage on her conveyor belt any time.

And whose going to be the customers flying hither and yon, there and here? Surely not those horrible Kiwi trash that embark upon the rest of the World from that place now? Surley they'll get someone else? No?

No? Are you sure?

Then damn it all, they'll have to run the place to keep the Kiwi travellers happy. Oh no! Then that means they'll have to keep using Kiwi employees. After all, who else can puit up with Kiwi talk and expectation?

Damn it all men, I want the harem!

Can't trust anyone see, dirty Johnny Foreigners. They'll run that place to suit the custom.

Major Xenophobe

7/24/2007 05:50:00 pm  
Blogger Craig Ranapia said...

Oh, shit... I hate being right (source:http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10453663).

QUOTE
Foreign Minister Winston Peters yesterday raised the stakes over the sale of Auckland International Airport by linking national security issues to the controversial Dubai bid.

The New Zealand First leader drew attention to the fact that United States politicians moved last year to block the sale of some port operations to a group from Dubai.

The US politicians were concerned that the move posed a risk to national security and cited the 9/11 Commission report, which stated that two of the September 11 hijackers were United Arab Emirates nationals. Dubai is part of the UAE.

During question time at Parliament yesterday Mr Peters raised the issue and asked if "matters of national security" would be considered by the Government in the airport takeover, given that a large chunk of international business arrived through the gateway.
QUOTE

Racism, paranoia and a blithe disregard for reality from the mouth of Winston Raymond Peters? Must be an election just around the corner, with Winston First's poll numbers in the toilet...

7/25/2007 07:32:00 am  
Anonymous Anonymous said...

No surprise eh Craig.

Here are a few facts about DAE. Sounds like an exciting company.

There are some things airport and airline investors need to know about the two year old Dubai Aerospace Enterprises (DAE) group of companies which has just put $2.3 billion on the table for at least 51 per cent of Auckland Airport.

- DAE represents many tens of billions of dollars in United Arab Emirates state investment funds that would like to call Australia and New Zealand home.

- A few months ago it began spending $15 billion seed money on Dubai World Central, which is to become what it calls the heart of a trillion dollar aviation and technology empire.

- The New Zealand government is the unwilling long term owner of the 80 per cent of Air New Zealand it had to pick up after the Kiwi flag carrier abandoned Ansett in 2001, and...

- The state investments arms of Dubai and Singapore are chasing the same goals in terms of airline, airport and aerospace activities on a world scale, with the Singaporeans so far failing to back any winners.

...

Dubai World Central at Jebel Ali, some 35 kilometres from the capital, is beside the giant sea port of the same name, has a 140 square kilometre ground plan, includes six runways, and terminals for 120 million passengers a year (four times the traffic at Sydney today) and will be ready in around six years time as Dubai’s second airport.

The intention is to host maintenance, repair and overhaul facilities for as many as 100 jets at a time, provide facilities for the new business of space tourism rocket flights, and induce Airbus or Boeing or both to set up final assembly lines for airliners similar to one Airbus is already building in China.

The Auckland bid is a clear signal that DAE is the second wave of the UAE’s aviation strategy following the nearly geometric expansion of Emirates in the last two decades.

It can’t fail to remind Qantas and Singapore Airlines of the enormous pressure they will come under from Dubai, where enterprises may well make very good profits, but their costs of capital, and tax rate, can be zero.

7/25/2007 07:49:00 am  

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