Airports a great investment, says researcher

New Zealand’s major airports have experienced impressive growth in both revenue and profits since they were commercialised from the late 1980s, says Dr David Lyon who was conferred with his PhD during a Massey University graduation ceremony this afternoon.

Dr Lyon is only the third person to receive a doctoral degree through Massey’s School of Aviation, and he believes he is the first to make the country’s airports a PhD thesis subject.

He has spent the last eight years researching the airport industry and examining whether the fourth Labour government’s policy of airport commercialisation has been a success. In the process he learned that New Zealand’s airports are very strongly-performing businesses.

“Put it this way, as an investor, I would definitely put my money into airports, not airlines,” Dr Lyon says. “Since they were established from the late eighties, airport companies have been increasingly profitable in real terms and, in 20 years of data, there have only been five times when one of the country’s major airports has reported a negative annual result.

“The outlook is also very positive – both freight and passenger numbers are going up, and the growth projections for the Asia Pacific region are better than for anywhere else on the globe, which can only be good news for New Zealand.”

In his thesis Dr Lyon concludes that the policy of airport commercialisation has been hugely successful, but he points out that this is separate to the debate about privatisation. Five of New Zealand’s seven major airports remain in full public ownership, he says, and Auckand and Wellington, the two partially privatised airports, still have significant public shareholding in them.

“The current arrangements all seem to be working quite well, with airports able to get the capital they need to take advantage of commercial opportunities,” Dr Lyon says. “Airports have operated profitably irrespective of their ownership structures so, on that basis, I don’t think I would recommend a strategy of airport privatisation in New Zealand.”

Not surprisingly, the strong financial performance of airports has led to claims of monopoly profits from airlines. While Dr Lyon has some sympathy for them, he does not recommend the introduction of legislation to control airport charges.

“I do have sympathy for the the argument put forward by airlines as they are not easy businesses to operate profitably,” he says. “But I don’t think the answer is to regulate one part of the aviation industry to create better operating conditions for another.”

Dr Lyon, who heads the business school at the Bay of Plenty Polytechnic and lectures within the Masters in Aviation course at Massey University, plans to pursue his interest in airports with further research papers. He has also become Massey’s “resident expert” on airport businesses.

His thesis subject was the natural outcome of having a strong interest in both aviation and business. Before being awarded his doctoral degree, Dr Lyon completed an MBA (also from Massey University), a Postgraduate Certificate in Business Research, and a Teaching Diploma (both from the University of Waikato).

Dr Lyon says he has “aviation in his blood” as his parents were based at the Ohakea Air Base during the Second World War. He also has a pilot’s licence – as does his mother and brother – and he is part of a syndicate that owns and operates an aircraft in Tauranga.

Dr Lyon is one of 42 doctoral candidates who will graduate during Massey University’s five Manawatu campus ceremonies this week, where a total of 1326 students will be capped. This follows six Albany campus ceremonies in Auckland last month, and Wellington campus ceremonies will take place at the end of May.