KwaZulu-Natal Regional Airport Growth and KZN Air Series

Dr Clive CoetzeeGeneral Manager: Infrastructure Management and Economic ServicesKZN Provincial Treasury

THE BIG PICTURE

Passenger Flights pre-2011

Passenger Flights 2011 to 2014

Passenger Movements

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000Monthly Average

Increased Scheduled Flights, Destinations and

Passenger Movements

Avis Opened an Office in Ulundi

Number of Property Sales in Margate because of direct flights

Increased number of direct jobs at the 9 regional airports = 36

Total Investment in 9 regional airports = +-R115m post 2010

Total savings of +-R6m pa for PMB Businesses using PMB Airport re KSIA

Revenue to the Msunduzi Municipality increased from R3.5m in 2010 to R7.4m in 2013

Savings for KZN Gov from using flights to and from Ulundi = +- R3.5m April 12 to Jun 14

Passenger Flights planned post 2014

Concept is to showcase KZN aviation and the various municipal airports, to

support tourism in the province and to position the province as an attractive and

competitive aviation industry location.

Why Investing in KZN Regional Airports – PMB Airport

• Achievements and In the Pipe line– Increase in Cargo Activity– Investor to establish a bio fuel developed aircraft

engine manufacturing establishment and to create an aviation industry

– Land Developments (Hotel, etc) need to take place

9

PIETERMARITZBURG AIRPORT

Massive Progress – Great Success Story

An airport to be proud off

Significant Opportunities

Dedicated Partnership Imperative

• PMB Airport experienced significant growth and improvement in performance

• Its becoming an “Airport of Choice”

• No doubt its a success story

• But some challenges still exists

PIETERMARITZBURG AIRPORT

1,500

3,500

5,500

7,500

9,500

11,500

13,500

Total PassengersLinear (Total Passengers)Linear (Total Passengers)

PIETERMARITZBURG AIRPORT

Average 2006

Average 2007

Average 2008

Average 2009

Average 2010

Average 2011

Average 2012

Average 2013

Average 2014

Average 2015

Arrival Flights: Scheduled 140 123 114 106 105 98 123 119 138 116

Arrival Flights: Non-Scheduled 344 373 351 106 312 262 252 164 157 135

Departure Flights: Scheduled 139 123 113 314 105 98 123 127 137 115

Departure Flights: Non-Scheduled 338 344 333 116 269 230 213 142 141 112

Local & Training Flights 519 462 684 767 575 506 439 373 305 295

Total Flights 1 481 1 424 1 595 1 408 1 366 1 193 1 149 932 877 773

Arriving Passengers: Scheduled 2 894 2 994 2 829 2 096 2 030 3 616 3 935 4 734 5 042 4 749Arriving Passengers: Non-Scheduled 365 334 403 392 393 271 206 123 117 124

Departing Passengers: Scheduled 2 850 2 787 2 556 2 046 1 939 3 690 4 002 4 829 5 168 4 921Departing Passengers: Non-Scheduled 377 430 490 500 571 413 415 157 160 207

Total Passengers 6 486 6 545 6 278 5 034 4 933 7 990 8 557 9 842 10 486 10 001

Flight Diversions 5 4 5 9 3 1 1 1 1 0

Diversions as a % of Arrivals 1 1 1 5 1 0 0 0 0 0

Passengers per Departing Flight 20 23 23 7 18 37 33 38 38 42

Passengers per Arriving Flight 21 24 25 20 19 37 32 38 37 41

PIETERMARITZBURG AIRPORT

R’000 2008/09. 2010/11. % Change pa

2011/12. 2012/13. 2013/14. 2014/15.

Receipts

Passenger Levy 1004 1493 24.37 1967 2545 3932 4325

Landing Fees 703 1107 28.74 1444 1861 2288 2516

Other Receipts 993 906 -4.39 1003 1093 1134 1247

Total inflows 2700 3506 48.72 4414 5499 7354 8089

Payments

Total outflows -5689 -4313 -12.09 -5104 -4633 -5004 -5505

Net Cash Flow -2989 -807 -36.50 -690 865 2349 2584

PIETERMARITZBURG AIRPORT

2003/04. 2004/05. 2005/06. 2006/07. 2007/08. 2008/09. 2010/11. 2011/12. 2012/13. 2013/14. 2014/15.

-4000

-3000

-2000

-1000

0

1000

2000

3000

Net Cash Flow

Summary Stats of Passenger Survey

Where do you Reside? PMB 59.61 PTA 7.84 JHB 17.25 DBN 3.53

The location of your business/departme

nt?PMB 50.59 PTA 9.41 JHB 16.47 DBN 3.53

Do you primarily travel for business, government, non-governmental or personal (private)

purposes

Business 56.47 Government 7.06 Personal 19.61 Business&personal 4.31

PIETERMARITZBURG AIRPORT

Average number of flights per year over the past 3 years? Average 26.46 Sum 6723Number of officials from your business/department who fly regularly (more than four times/year)? Average 36.15 Sum 9219Number of flights paid for by the company/department in an average year? Average 104.31 Sum 26496Please indicate your preference and/or willingness to fly to the following destination(number of flights per year)

CPT direct ? Yes 185 No 70

CPT via PE ? Yes 56 No 199

CPT via EL ? Yes 60 No 195

Lanseria ? Yes 92 No 160

BLOEM Yes 64 No 190

Other ? (please specify) OR Tambo 8 JHB 11Would you support a new airline and/or a new destination (please specify)? No 46 Yes 207

Regional Airport PrecinctsEconomic Activities-Land Areas (Ha)

Mkuse PZB Dundee Margate Newcastle

Ladysmith Ulundi R/ Bay Total

Primary industry 1.00 12.00 0.00 73.00 41.50 127.50

Logistics 173.00 173.00

Technology 1.80 2.00 11.00 3.00 4.00 1.40 23.20

Business 1.80 40.00 41.80

Residential 6.00 3.50 1.30 17.00 4.20 5.10 37.10

Tourism/Culture 5.00 12.00 23.00 40.00

Urban Agric 4.00 46.00 3.10 53.10

Terminal/Parking 1.80 3.00 3.00 1.20 3.00 3.00 1.30 2.30 18.60

Generall Aviation 11.00 5.50 2.50 6.30 6.00 4.00 1.30 4.50 41.10Runway/Apron/

Taxi 41.00 37.00 17.00 27.00 33.00 40.00 43.50 37.00 275.50

Roads2.00 4.00 0.50 2.00 11.00 4.00 3.00 2.00 28.50

75.40 65.00 81.00 39.80 350.00 135.50 60.40 52.30 859.40

Airport Net Present Values and Internal Rate of Return (R million and Per cent)

Initial Capital Capex NPV NPV IRR

(KZN Grant) IIPSA Model 8% 4%

Pietermaritzburg R 39.00 R 126.63 R 65.65 R 129.23 23.1%

Richards Bay R 12.00 R 145.65 R -61.48 R -83.85 N/A

Margate R 10.00 R 118.20 R 4.59 R 35.62 9.0%

Ulundi R 30.00 R 69.83 -R 10.27 R 0.68 4.2%

Newcastle R 272.92 -R 93.78 -R 104.68 -7.6%

Mkuze R 130.20 R -15.21 R 6.49 4.9%

Dundee R 47.88 -R 16.51 -R 18.21 -9.4%

Ladysmith R 194.50 R -15.58 R 11.34 5.3%

Total R 91.00 R 1 105.81 R -142.59 R -23.39

PMB Case Study

The project is for the establishment, financing, designing, constructing and

operating of a number of regional innovation and technology hubs in the province.

Msunduzi, Newcastle, Hibiscus Coast, uMhlathuze

Site Location

PMB

LOCAL MUNICIPALITY

Size (HECTARES)

Cost to develop Zoning / Ownership

Newcastle LM 5.46 ha R 613 211 517 EDUCATIONAL /Majuba FET

Umhlathuze LM 9.05 ha R 1 676 780 058 IN PDA PROCESS / Umhlathuze LM

Msunduzi LM 25 ha R 1 959 596 160 COMMERCIAL, INDUSTRIAL / Msunduzi LM

Hibiscus Coast LM 28.5 ha R 1 138 472 194 TO BE SUBDIVIDED / Hibiscus Coast LM

Financial Analysis

Financial Analysis

NPV IRR MIRR Discount Payback Period

R 6,609,479,754.23 19% 13% 10.47

The concept initiatively seems sustainable from a capital budgeting point of view. The concept has a positive net

present value, an estimated yield of between 13% and 19% and a discounted payback period of about 11 years. Total

capex of R5.5bn plus total opex of R6.5bn vs. Total income of R34bn = NPV of R6.6bn over a 23 year period or R289m

per annum.

Financial Analysis

Total Capex Total Opex Total Costs Total Income NPV NPV pa

Province (Concept)

5 450 963 267 6 497 021 281 11 947 984

54834 342 893

2946 637 390

777288 582

208

PMB 1 959 596 160 3 021 846 002 4 981 442 162 15 691 007

8093 389 038

778147 349

512

Newcastle 613 211 517 749 392 196 1 362 603 713 4 465 492 298 973 901 875 42 343 560

Hibiscus coast

1 201 375 532 1 509 895 344 2 711 270 876 5 846 313 854 788 941 220 34 301 792

Umhlathuze 1 676 780 058 1 215 887 739 2 892 667 797 8 260 907 907 1 487 210

370 64 661 320

AVIATION ACADEMY

Durban University of Technology

The World Cycling Centre

Aircraft Manufacturing

Msunduzi Technology and Innovation Hub:Advanced Manufacturing and related cluster for the Transport Industry

Air Terrestrial Maritime Space + n

Skills – Low end to Post-Doc , determine current and future skills needed

Underlying Science and TechnologyMaterial Science, Process Technologies, Energy, n

Shared facilities – testing, labs, 3D printers , conference and meeting space , high end computing

Business Support – legal (IP), entrepreneurship, access to capital, Community of practice, Networking Opportunities (act on what the Market wants)

Recreational activities – cycle tracks, possible gym/sport institute, use as draw card towards the Innovation Park (Create Sense of place)

Cross Cutting Platforms