Passenger Recovery Supports Auckland International Airport's Substantial Capital Expenditure Plans

Auckland Airport is the largest airport in New Zealand. We expect air travel in New Zealand to rise more than 50% over the next decade, and no other airport in the country is likely to outdo Auckland as an international hub. That combined with a favorable regulatory environment justifies a wide economic moat. Aeronautical and nonaeronautical operations each contribute about half of revenue. Retail is the biggest part of the nonaeronautical business, and relies on international passenger traffic. The property business is about half the size of retail, but has grown faster, driven by new and rent reviews. On the aeronautical side of the business, landing fees and per-passenger charges are reviewed every five years in consultation with the airlines, and have historically increased at or above inflation. After a downward reset in fiscal 2020 due to COVID-19, we expect this upward trend to resume over the long term.