The Goverment’s announcement that it will provide loan funding of $30 million for at-risk regional airlines is being welcomed as a lifeline by Air Chathams to maintain its Whakatāne to Auckland route.
However, Whakatāne Mayor Victor Luca thinks the Government offer falls short of what it should be doing to keep regional airlines operating.
“It’s a start,” he said. “Only the operators know if it’s enough.
“I still think the Government has an obligation to do more. If Air New Zealand is 51% owned by us, and they are making hundreds of millions of profit these days, then I think they need to be more forthcoming.”
Some aviation experts are calling the confirmed funding a “game-changer” for the regions. (Source: 1News)
Air Chathams announced in April it might need to discontinue its Whakatāne to Auckland service by the end of this year, as it had been operating it at a loss since 2023.
Chief commercial officer Duane Emeny asked the council for financial support such as waiving airport fees for a year and writing off a $350,000 loan it had received from the council five years ago to get flights operating again after Covid lockdowns.
In May, the council agreed to a six-month fee waiver but refused all other requests.
Luca said at the time that central government should be providing financial assistance. He wrote to Minister for Transport Chris Bishop and Associate Transport Minister James Meager advocating for government support for Air Chathams, suggesting a small portion of the 51% government-owned Air New Zealand profit should be distributed to supporting regional air connectivity.
He said Air New Zealand made a $412 million net profit in the 2023 financial year,.
“A subsidy of $1 million to Air Chathams from Air New Zealand profits would represent only 0.2% of that.”
Regional Development Minister Shane Jones and Associate Transport Minister James Meager announced on Monday that the Government would provide concessionary loans of up to $30 million from the Regional Infrastructure Fund for small passenger airlines.
“Reliable air services are critical for the economic and social wellbeing of regional New Zealand,” Jones said.
“The aim is to stabilise the sector and support regional routes in the short to medium term. This is not intended to meet all the airlines’ capital needs but to provide targeted relief for such things as aircraft leasing, maintenance and debt refinancing.”
Cabinet also approved funding for digital upgrades that integrated regional transport bookings with the platforms of major carriers.
Known as “interlining”, the upgrades will enable passengers to book a single itinerary and flights on different airlines, including the major carriers.
“Streamlining bookings and baggage-handling between the smaller carriers and the bigger players in the aviation sector will make it much easier for the travelling public to plan and book their preferred routes in one go,” Meager said.
Emeny described the announcement as “a long-awaited recognition of the essential role regional air services play in keeping New Zealand connected”.
“For many of the regions we fly to, air services are not a luxury – they are the only reliable means of connecting people with family, work, health, and tourism. Today’s announcement is a clear recognition by the Government that regional connectivity is as critical to New Zealand as road, rail, and sea transport.
“Once full details are known, this support will likely ensure surety in maintaining their essential air connections and provides a platform to rebuild and grow regional air services for the future.”
Air Chathams said it was grateful to Meager and Jones for their determination to understand the issues and find a way forward.
It also noted the advocacy of NZ Airports, BARNZ, and the Aviation Industry Association.
“Special thanks go to Air New Zealand for its creation of an airline group to highlight key areas needing Government support and Emeny notes that work on interline connectivity between the two airlines is already well advanced,” it said.
The airline acknowledged Auckland Airport for its openness and commitment to finding ways to help reduce structural costs and maintain regional services.
“Today’s announcement is not the result of one organisation or one airline,” said Emeny. “It is the product of collective effort on a common issue.”
He hoped it would signal further support from the Government to support regional airlines.
East Coast MP Dana Kirkpatrick said both Air Chathams and Sunair would receive assistance from the fund.
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“These airlines have met with me and Government officials, requesting a loan scheme – and we have listened.
“Air Chathams came to the rescue when Air New Zealand left Whakatane and Sunair are attempting to offer a service between Whakatane and Gisborne.
“We all know that reliable air services are critical for the East Coast economy and regional connectivity and none of us want to see further cuts to flights or worse, total withdrawal of services, which was a real possibility without the Government stepping in with this one-off assistance package.”
Local Democracy Reporting is local-body journalism co-funded by RNZ and NZ On Air
