Mr Fleck has taken over coverage of Auckland Airport for Morningstar, an Australian research and analysis company.
He expected the airport's revenue to have compound growth of 7.9% per year during the next five years. Compound earnings before interest, tax, depreciation and amortisation (ebitda, or operating profit) of 8.9% was expected.
Among airports globally, Auckland Airport enjoyed one of the highest ebitda margins, reflecting a light-handed regulatory environment and a greater mix of international passengers versus domestic passengers, Mr Fleck said.
The aeronautical business was not regulated and could set prices, in conjunction with airlines, to cover its cost of capital. In contrast, the vast majority of airports around the world had regulated structures. In most instances, that meant the commercial arm of the airport (retail) tended to subsidise the aeronautical business, he said.
International passengers made up 51% of overall travellers at Auckland Airport compared with about 32% in Sydney and about 21% in Melbourne. On a per-passenger basis, the amount spent by international passengers far outstripped that spent by domestic passengers, resulting in significantly higher margins for the airport.
Auckland Airport's ebitda margins had historically hovered near 75% to 78%, something Mr Fleck expected to continue.
``We forecast strong international passenger growth, especially from China, but also as a result of four non-China airlines announcing plans to start flying into Auckland, including American Airlines and United. This, will in turn, have a positive flow-on effect on Auckland's terminal retail business.''
Morningstar remained confident in Auckland's ``wide moat'', or economic advantage. It was the only airport in Auckland and was the busiest airport in the country, accounting for 70% of passenger traffic, Mr Fleck said.
There were also good opportunities for Auckland Airport to expand its commercial property portfolio by taking advantage of its massive land bank. Pent-up demand from multinational firms involved in freight, logistics and transportation businesses should spur on development activity. That should in turn drive rental growth.
Looking at retail, Mr Fleck said a significant increase in the number of high-spending Asian tourists wanting to visit duty-free stores would probably significantly lift retail revenue over time.
The route-development strategy undertaken by management had already boosted seat capacity into and out of Auckland by more than one million passengers since the 2012 financial year.
``This bodes well for both aeronautical and retail income. Management sees immense opportunities from Asia, particularly China and India, and is wooing airlines to commence new services to Auckland.''
Morningstar believed the airport's route-development strategy would yield significant capacity growth from Asia and passenger spend rates would continue to rise, he said.
Auckland Airport's investments, such as North Queensland Airports and Queenstown, were also paying dividends. Queensland, in particular, was demonstrating an ``outstanding performance''.
Rental income was expected to grow in the high single digits in the medium term as the airport continued to develop its massive land bank, Mr Fleck said.
Under a heading of ``risk'', Mr Fleck said the airport was vulnerable to a slowdown in international passenger traffic from factors that could destabilise tourist growth. Those included Sars and terrorism.
Also, a strong New Zealand dollar might discourage tourists away from New Zealand to cheaper destinations.
An economic recession or slowdown in New Zealand would affect overseas and domestic travel. Higher fuel prices might be passed on to passengers in the form of a fuel surcharge, which might also dampen air travel.
Property revenue was linked to rental demand, which in turn could be affected by an economic recession.
And persistent complaints from airlines such as Air New Zealand, Auckland Airport's biggest customer, could prompt the Government to regulate the aeronautical business, reducing the appeal of the business from a returns perspective, he said.
