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Get to know a company in less than five minutes: That's what a Motley Fool Cheat Sheet is all about. If you're new to Auckland International Airport (OTC BB: ACKDF.PK), consider this your Foolish way to get introduced and in the know.
What it does
Auckland International Airport's name gives us the facts straightaway. The company owns and operates an international airport in the New Zealand capital of Auckland. It generates revenue from myriad sources: Fees airlines pay each time a plane lands or takes off account for just 18% of sales; terminal retail stores are 26%; fees charged to international passengers make up 20%; car parking is 9%; and terminal services for the airlines account for 8%. The remaining 19% is derived from renting out property at the airport to customers including FedEx and Royal Dutch Shell.
How it stacks up
Airports as businesses can have the best moats, since, for most destinations, there is only one or a very small number. Auckland International has a phenomenal moat, even when compared to other airports. Because it is an international airport on an island nation, there are literally no substitutes for its service. You can't drive or take a train to New Zealand, for obvious reasons, and even from Australia boats are unrealistic.
Auckland International Airport's passenger mix also makes it more attractive than most other publicly traded airports. While the vast majority of travelers passing through Mexican airports Grupo Aeroportuario del Centro Norte (Nasdaq: OMAB ) and Grupo Aeroportuario del Sureste (NYSE: ASR ) are tourists, less than half of the 13 million people coming through Auckland International Airport each year are on vacation. (That total is three times the country's population!) Auckland is a major business hub, and the passenger numbers reflect the city's position as the second-most-popular international destination in Oceania, right after Sydney.
What to watch out for
Auckland International Airport's diversified revenue streams are attractive, but you need to make sure management isn't stretching itself too thin. For example, they recently purchased a stake in the Cairns and Mackay airports on Australia's Gold Coast. Though the investment accounts for less than 5% of AIA's investments, these are a different kind of airport (they service primarily tourist destinations) in a different country (Australia).