Fuel prices: Helicopters, tourism, flight schools and rural aviators face ‘astronomical’ costs

Some flight schools, tour operators and pilots crucial to farming are facing huge fuel cost increases they can’t pass on, an aviation group says.

Regional operator Air Ruatōria’s aviation gas (avgas) costs were up from $3.17 a litre before the Iran war to $4.21 this week.

“We have Avgas 100 and the price has gone up a lot,” Air Ruatōria chief executive Mahanga Maru said today.

While much discussion has been had about jet fuel, avgas was widely used across the country by a variety of companies.

Avgas is used in small piston-engine aircraft, such as Air Ruatōria’s five-seater Cessna 206s and four-seater Cessna 172.

Maru said there were typically two avgas providers in New Zealand.

“They have installations at different airports around the country,” he said.

“So we can get access to the fuel, which hasn’t been an issue to date. But I also have my own storage.”

Maru told the Herald additional storage was often needed on the East Coast.

The bigger issue now was not so much fuel availability but a question of when and how to pass on rising costs.

“We haven’t implemented a surcharge ... as yet, but we’re going to have to pretty shortly.”

Maru had also noticed a downturn in foreign tourist demand for some scenic flights, such as from Whakatāne to Whakaari/White Island.

“It’s a matter of managing your resources as efficiently as you can.”

He said uncertainty over the Middle East conflict was likely a concern for many in the sector but added: “You’ve just got to be optimistic.”

Big airlines had an issue with jet fuel but the entire New Zealand aviation system also faced rising costs, Aviation Industry Association (AIANZ) chief executive Simon Wallace said.

“We can’t have a situation where international airlines have exclusive priority to fuel, leaving the regions and rural areas dry,” Wallace said.

Avgas price increases were not as dramatic as those for jet fuel, but were still causing problems.

Wallace said many operators conducting top-dressing, pest control and vegetation clearance were crucial to agriculture and conservation.

He said some aviators also provided emergency firefighting and healthcare services.

Supplies at some regional facilities were a concern, Wallace said.

“Some airfields were running out of fuel. I’m doing some work on that today ... Our rural airfields are really important,” he added.

“You might have one or two fuel pumps at a rural airfield.”

Wallace said some operators were unable to pass on costs and others had been told they were not allowed to.

“Think of flight training schools. They can’t pass on any costs to those students. They’ve got fixed costs they’re having to absorb, and that can only go on for so long.”

Wallace said one small South Island aviation tourism operator’s fuel bill was up about $2000 last week.

He said a helicopter operator in agricultural aviation was having to charge an extra $200 an hour just to absorb added fuel costs.

A helicopter flight training school was looking at additional costs of $1800-$3400 per student per year.

Those costs could not be passed on or applied to a student loan, Wallace said.

“These are astronomical increases in fuel the operators are facing.”

Wallace said this was a critical time of year for agricultural operators, especially those applying fertiliser to sheep and beef farms.

There, operators were reporting full order books, but long lead times to get to any incoming new orders, he said.

“A shortage in fuel could mean farmers are unable to get fertiliser on this autumn.”

Minister of Finance Nicola Willis this afternoon said she expected banks to help under-pressure farming businesses.

She said with rising fuel costs likely impacting the rural sector, she had contacted banks and received assurances customers would be supported.

Wallace said operators contracted to Fire and Emergency New Zealand were initially unable to pass on fuel cost increases under existing contracts.

Wallace said that issue was resolved late last week.

He said AIANZ was likely to be meeting with Associate Minister of Transport James Meager today.

Wallace said the Department of Conservation (DoC) had told operators recouping additional costs from fuel rises was not an option.

DoC said that was not the case.

“Like many organisations, DoC is experiencing increased fuel costs, including for aviation and remote operations,” Mike Tully, DoC deputy director-general organisation support said.

“DoC has not issued any blanket direction preventing contractors from passing on fuel cost increases,” he added.

“We are in regular contact with our aviation and operational partners and are working through impacts on a case-by-case basis.

“Our focus is on maintaining critical conservation work while taking a practical approach to cost pressures being experienced across the sector.”

John Weekes is a business journalist covering aviation and courts. He previously covered consumer affairs, crime, politics and courts.