Pilot James Stokes, owner of Queenstown tourism operator Glenorchy Air, explains how little progress on a transtasman bubble is hurting the industry and a lack of information from the Government is causing anxiety for tourism operators.
What does your business do?
Glenorchy Air is a scenic flight company based out of Queenstown and our core business is scenic flights to Milford Sound and other scenic flights of the South. We also have Mt Cook as a destination departing from Queenstown as well, which is growing in popularity, and we're gearing up to launch an option to go down to Stewart Island. The business has existed since 1992. I started working in the business in 2015, and in July 2019 I purchased it from previous owners, the Rutherford family.
How big is your team?
We have a team of 12 people - eight of those are pilots.
How has the Covid-19 pandemic impacted the business?
We had to make a decision as to whether we would give up some of our infrastructure during the period of hibernation under alert level 3 and 4. The decision we made was to hang on to our aircraft and our people, and to keep the business running as it is a lot harder to come back once you start losing infrastructure.
We had also purchased a brand-new 10-seater airplane, a Cessna Grand Caravan EX, at the end of last year, which has only just arrived from the United States because it was held up by Covid, so we wanted to keep running so that we were able to get that up and running. That meant we had to put some extra capital into the business and we were lucky to receive a Strategic Tourism Assets Protection Programme grant, which has helped a lot as well.
We weren't able to trade until we got into level 2 so it was a long period out of the air, and it was a bit stressful for our people, but we were able to trade reasonably strongly coming out of lockdown when a lot of Kiwis were willing to travel. We put some good deals out there and tried to open up the option to people that otherwise wouldn't have been able to afford it.
Is business back to pre-Covid levels?
For this time of year, yes. We have four aircraft flying at the moment and on most days each one of those has a departure. That is pretty normal, it's that summer period we don't have much of a comparison for yet.
In the height of summer, and on the busiest of days, we can have all of our aircraft doing four departures to Milford Sound daily. The difficulty is we just don't know how summer is going to go. Our busiest season is typically from mid-December through to the end of March.
We're going to have to be flexible over that period and move quickly to meet what market we do have. We have deals right up until Christmas on a few different products. For our Stewart Island flight, we have an introductory price of $499 per person, which is much lower than we would normally charge, through until the end of summer. We have tried to make the flight paths longer where we can. Our prices start at $199 for a flight around Glenorchy, Mt Earnslaw and the head of Lake Wakatipu, and at the moment for a Milford Sound over flight is $249. We're raising that price slightly next month to $279 until Christmas, then we also have a 4-hour round trip flying to Milford Sound and going on the cruise boat and flying back to Queenstown for $479, that will go up to $550 next month.
I'm quietly confident that summer is going to be OK. I'm not expecting it to be anything like previous record summers we've had in the last few years, but I think it will be a reasonably steady. There are still a lot of Kiwis that want to travel and experience their own country. We've been pleasantly surprised by the support we've received - coming out of lockdown we were very surprised at how busy we were - we had to take aircraft off ground insurance, we weren't expecting to happen for quite a few weeks or months.
That said, how summer goes for us will depend on whether we get some Australian travel arrangements - it would make a huge difference. At this time of the year most of our customers would be Australian; that changes to more of a American and European market after Christmas. Traditionally, 85 per cent of our customers are overseas visitors and Australians would make up quite a large proportion of that.
What happens if a two-way transtasman bubble isn't established?
As soon as it is safe to do so it needs to happen, and we need to be looking at ways for it to happen rather than the other way round. We haven't been told when it is going to happen and that's a problem. It would do business confidence, and tourism, a big service to actually hear that the transtasman bubble and opening up to Australians is a priority and that the Government is trying to sort it out because our largest export industry needs some help.
There will come a point where Kiwis are done travelling - and if we are going to have more turbulent economic times ahead, and dip further into a recession, which seems to be on the cards, that is also going to make it a lot harder for tourism business all over the country. We do need to hear pretty soon that the transtasman bubble is a priority and what the road map is for it so we can prepare for it.
A lot of businesses would rather have an idea of when it is going to happen and then have it pushed back a bit rather than all of a sudden find out it's all on. There are a lot of agencies wanting it, but as businesses we're just hearing a lot of reasons about why it shouldn't happen rather than reasons about why it should.
I'm not advocating for our big markets like Europe and America to suddenly be allowed in while it is not safe to do so, but there are certain states in Australia where community transmission of coronavirus is equivalent to nothing at all and it should be safe to deal with those states. The most difficult thing for any business is uncertainty and until we hear something about this Australian bubble there is still a lot of uncertainty for us.
What are you spending most of your time working on?
At the moment we have certification things going on with CAA which is occupying quite a bit of my time. We have our new aircraft coming online soon as well; it's a big step up for us so the induction of that is occupying quite a lot of my time also, but whenever I can I like to get in the aircraft and be flying passengers.
What advice would you give to other people who want to buy or start a business?
It is a hard road. Personally, having bought the business a year ago and gone straight into a difficult period is certainly stressful, but I still show up for work every morning wanting to make my business better. Buying into a [tourism] business is a difficult proposition to justify right now, but there will be a recovery at some point and tourism will become New Zealand's biggest export again. The opportunities are there if you can stick it out.