The headwinds facing regional airlines
Photo:
Sharon Brettkelly
Passenger numbers on regional airlines have never been better, but the costs of running them have never been higher.
"Passenger numbers are through the roof," says Sounds Air boss Andrew Crawford.
But it has had to "kill off" Taupō and Westport routes and sell an aircraft, and the company is still losing money.
"I wouldn't know one airline that isn't," he says, citing fuel, labour and maintenance as the three big costs of flying.
Add in landing fees, Airways fees and the Civil Aviation Authority more than doubling the passenger service levy.
"This is a critical issue for New Zealand," says Crawford. "Between us we're flying around 600 flights a week around regional New Zealand. We don't do that for fun, that's essential services, and I can tell you that a big part of it is healthcare."
Photo:
Sounds Air
Unless something drastic happens Crawford says he can't guarantee the security of other Sounds Air routes.
He's not the only one. Air Chathams has dropped Norfolk Island and its Auckland - Whakatāne service is up in the air.
Chief operating officer Duane Emeny tells
The Detail
that flying is a high risk business and conditions are the toughest they've been in his airline's 41 year history.
"You're one bad day from maybe having to pull an engine off an aircraft and send it away because you had a bird strike."
He says his father Craig Emeny, founder and chief executive, has taken the airline through the global financial crisis in the early 2000s, intense competition and even a grounding by the CAA and survived.
"He's had some real challenges in his life and this seems to be trumping a lot of them at the moment," he says.
Both airline bosses say they have had meetings with government ministers about support for the sector but Crawford says after six years he's given up.
"For six years we've been fighting to try and get support, try and get regional aviation in this country recognised and it just falls on deaf ears," Crawford says.
His airline is "hanging off shareholders' mortgages" but no one is listening.
Taupō mayor David Trewavas has a brand new $9 million airport terminal built with a Provincial Growth Fund grant but he can't find another airline willing to take over the Wellington - Taupō route after Sounds Air then Origin Air pulled out.
Origin Air lasted no more than six weeks before deciding the service wasn't viable.
Trewavas says his council could not have done any more to keep either airline.
"They were looking for a direct investment in the company and I don't think it's the council's business to be a part owner of an aviation company," he says.
But finding a replacement is not easy. Air New Zealand had looked at the route but doesn't have an aircraft available and Air Chathams is only a "possibility".
"There's not too many second tier airlines in New Zealand," he says.
Duane Emeny, chief operating officer of Air Chathams.
Photo:
Sharon Brettkelly
Air Chathams' Duane Emeny says the most important step for the government would be to give airlines access to low or no-interest government concessionary loans.
"To be really clear, it is a loan, so it is money that those airlines would absolutely be paying back," he says.
But there's no definite response from the government.
In an email to
The Detail
the Associate Transport Minister James Meager says the government is currently considering a range of options to support regional connectivity and improve competition in the sector but is yet to make any decisions, including on whether access to concessionary loans would be the right thing to do.
"We are committed to supporting existing measures to improve consumer experience flying, such as improving airline on-time performance through regular reporting, technology investments to speed up security queues, and infrastructure investments in our regional airports.
"The Commerce Commission is looking at competition in airports, and I am considering whether there is any benefit in further moves around airfare transparency and further scrutiny on how to reduce the wider costs facing the aviation sector."
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