Air Chathams chief executive Duane Emeny says there is no government-led system to support regional aviation in "extremely marginal" places.
Air Chathams has secured a $17.2 million Government loan but its chief executive says the regional aviation sector still faces “fundamental structural issues”.
The money is part of a $30m pool from the Regional Infrastructure Fund (RIF) to support at-risk regional routes, which was announced by Regional Development Minister Shane Jones and Associate Transport Minister James Meager last September.
On Friday, Jones and Meager announced Air Chathams ($17.2m to refinance debt), Sounds Air ($4.5m to upgrade its fleet and refinance debt) and Island Air ($252,000 for fleet maintenance) would receive loans from the pool.
Air Chathams chief executive Duane Emeny said it was “a big whack of cash” and concessionary rates applied.
Concessionary loans have more favourable terms than those in the marketplace.
“It gives funding support, albeit debt, at a time when we really, critically, need it,” he said.
“That was last year, before this fuel fiasco, and we certainly need the support now.”
The Chronicle reported this month that because of the Middle East conflict, Air Chathams’ monthly fuel costs had doubled from $500,000 to $1m.
As a result, the airline introduced a $20 base surcharge and reduced Whanganui flights by 22%.
Emeny said while the loan announcement should be celebrated and is “massively helpful”, fundamental structural issues remained.
“There is no government-led system for supporting regional aviation in places where it is extremely marginal to operate,” he said.
“You think about the West Coast, you think about the Far North, the Chatham Islands.”
He said most first-world governments with similar geographical challenges financially supported those airlines.
“They recognise it is exceptionally hard to make it commercially viable.
“I think the last 20-odd years is enough evidence to show that not supporting the sector leads to a massive decline in connectivity.
“Basically, I think our Government needs to s*** or get off the pot.”
He said the Western Australian Government had pledged $122m to its regional aviation sector through to 2031.
“That ensures they can maintain an appropriate airfare that people are able to pay, whether it’s locals or tourists,” Emeny said.
In Western Australia, the Regional Airfare Zone Cap scheme caps high-demand flights at A$265 ($323) one way for locations less than 1000km from Perth, and A$385 one way for locations more than 1000km from Perth.
Meager told the Chronicle that regional airlines had regularly raised the issue of long-term financial support with him since he became associate minister.
“Our No 1 priority is regional connectivity and we are aware that different countries do run different systems,” he said.
“I’m happy to continue taking the regional airlines’ views on it and keep an open mind about the concerns.
“But, at this stage, it’s not something we’ve been willing to take the step into, so it’s not something I can commit to.”
He said there were several ways to keep regions connected, including investing in infrastructure and “making sure our airports are up to scratch”.
“We need to make sure we’ve got the right rules, we’re making it easy for airlines to operate and we’re doing our best to keep costs down.
“That’s where our focus is rather than particular route subsidies.”
Whanganui MP Carl Bates said he and East Coast MP Dana Kirkpatrick wrote to Meager recently to urge “the prompt consideration of Air Chathams’ RIF application”.
“Today’s announcement will help Air Chathams maintain connectivity with highly vulnerable regional destinations such as Whanganui, and that is good news for everyone,” Bates said.
He said he had previously discussed long-term financial support with Emeny.
“My engagement with Air Chathams started before I became an MP and has continued right throughout the term, and I’m sure it will continue for many years to come.
“It is a really important connection to Whanganui.
“But today, the focus is on recognising the success that’s been achieved with the support from the Regional Infrastructure Fund for their route to Whanganui and routes to other regional locations.”
Meager said he had a good relationship with Emeny and all regional airlines.
An interline agreement between Air Chathams and Air NZ had begun for Whakatāne and he was keen to see it expand to Whanganui, he said.
“One of the reasons we’re very keen to support regional airlines is because they service areas like Whanganui, where sometimes the only option for people to travel is to fly.”
Mike Tweed is a multimedia journalist at the Whanganui Chronicle. Since starting in March 2020, he has dabbled in everything from sport to music. At present his focus is local government, primarily Whanganui District Council.