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Does international passenger growth make Auckland International Airport Ltd the perfect buy?

Auckland International Airport Ltd (ASX: AIA) and big brother Sydney Airport Limited (ASX: SYD) are companies that traditionally don’t command a lot of interest among readers.

I expect a lot of that has to do with the steady-steady nature of the businesses; a 1.4% increase in monthly traffic on the previous year is hard to get excited about, and there are far fewer wild swings like those associated with commodities or technology shares to intrigue investors.

To use the cricketing analogy, companies like Auckland and Sydney Airport never hit sixes; rather they hit a continuous string of ones, day after day, year after year…decade after decade.

With the end result being that both companies have significantly outperformed the ASX over the past ten years, and that’s before dividends.

Readers may be aware that I covered the competitive advantages of Sydney and Auckland airport in this article back in May.

While I won’t reiterate those points here, it’s enough to note that both airports are expecting to roughly double their amount of passengers by 2030, with a constant string of passenger growth, new carrier, and facility expansion announcements putting them well on track to achieving that goal.

Auckland Airport’s latest announcement today revealed a number of interesting trends for the airport both in rolling-12 month and Financial Year-To-Date (YTD) measures.


  • Total international passengers up 1.4% (2.5% including transits) on the prior corresponding period (pcp)
  • Total domestic passengers up 1.9% on pcp
  • Financial YTD shows total domestic passengers up 3.5% on prior YTD, with transit passengers increasing 15.7%
  • Strong passenger growth from USA (10.3%), Japan (13%), Germany (7.2%), Korea (7%) and India (54.5%), with People’s Republic of China passengers falling 13.7%

It’s difficult to use monthly figures to identify trends from any particular region since factors like weather and holiday periods can skew these numbers majorly.

Several countries that did jump out at me though were rolling 12-month increases of passengers from India (up 22.5%), Germany (up 14.5%), and the USA (up 10.4%) compared to the previous twelve months.

Changes in the value of currency aren’t the whole picture either, because although the Rupiah has improved a small amount against the NZD in the past six months, it’s still at its lowest point in five years. The Euro is pretty much unchanged against the NZD, while a major improvement in the USD has driven less growth than in German and Indian passengers.

Is Auckland Airport witnessing the beginning of new trends in the composition of its visitors?

It’s hard to say at this early stage, but both of the ASX’s listed airports deserve a place on your dividend watch-list.

Since the nearest market, Australia, is pretty much mature, investors should expect to see most of the growth come from elsewhere, in particular south-east Asian nations like India, Korea and perhaps China.

The increase in German traffic is also encouraging since it suggests that the cost of airfares is not enough to deter a visit to a single nation.

Given New Zealand’s proximity to emerging nations and attractive tourist destinations like Tonga, Samoa and Fiji, Auckland Airport can also expect to see increases in transit traffic which should give its operations a little extra fizz.

Auckland and Sydney airports aren’t the only reliable options for yield-hungry investors….

Top Motley Fool investment advisor Scott Phillips has just named his #1 dividend-paying stock for 2014-2015. With solid growth prospects and a fat, fully franked dividend, this ASX stock could be a huge winner for your portfolio. Discover the name and code FREE by clicking here now.

Motley Fool contributor Sean O'Neill doesn't own shares in any company mentioned.

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