Iran war: Fuel prices squeeze regional airlines, Government open to being ‘flexible’ about help

The Government says it’s open to helping regional airlines hit hard in the fuel price crisis.

The Aviation Industry Association (AIANZ) said avgas and jet fuel prices were putting some airlines in a near-impossible position, with regional connectivity at risk.

“These prices are becoming almost unsustainable,” AIANZ chief executive Simon Wallace said.

“They’ve got to the point now where they can’t pass all the costs on to customers.”

He said the quality of information about fuel stocks had improved but financial assistance from the Government was needed.

“Avgas supplies are normal and the stock levels are healthy and there is no current disruption to avgas supplies,” he said this week.

He said airlines wanted to know what was happening with the $30 million earmarked in September to be set aside from the Regional Infrastructure Fund (RIF) for carriers.

Golden Bay Air in late February was announced as the recipient of a $1.1m loan, but Wallace said he was unaware of any others receiving support.

He said the fuel price crisis meant now was an ideal time for the RIF to support airlines.

Wallace said subsidies might be needed as well as loans.

Whanganui District Council this week declined Air Chathams’ request to temporarily waive aeronautical fees.

Associate Minister of Transport James Meager said announcements were due imminently on other recipients.

“I note the majority of New Zealand’s regional airlines have lodged applications and are being worked through at pace,” he said.

“The package was designed to stabilise the sector and support regional routes in the short to medium term, by providing targeted relief for such things as aircraft leasing, maintenance and debt refinancing.”

Meager said he acknowledged the fuel crisis had created more pressure for regional airlines.

“And I believe it is worth considering what flexibility there is under the existing fund conditions,” he added.

“No decisions have been made on this, with any changes subject to Cabinet approval.”

He said he was mindful of supporting regional connectivity and responding to the Middle East war’s impacts.

“This includes engaging closely with key industries affected by the global disruption to fuel supply, including the aviation sector, to seek input to the National Fuel Response Plan."

That was focused on the details of phases three and four in the plan, and to understand how the industry is responding to fuel supply and price challenges.

Phase one was described as “watchful” and phase two as “precautionary”.

Phase three would be for when supply was tighter and the Government was making sure fuel went where it was needed most.

Phase four was about protecting critical services.

It would be for times of major or sustained supply disruption, and there would be formal rules to ensure fuel is distributed fairly.

Overseas, Lufthansa said yesterday it was closing regional subsidiary carrier CityLine because of fuel prices and labour disputes.

The German airline also said it was taking steps to remove “particularly inefficient aircraft” from operations.

The head of the International Energy Agency this morning told AP that Europe had “maybe six weeks or so” of remaining jet fuel supplies.

The New Zealand Government in its latest fuel update said the country had 21.3 days of jet fuel in the country and 10 days’ worth on the water less than two days away.

A further 15.7 days’ worth was on the water up to three weeks away.

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