Regional airline loans welcomed but ‘insidious’ cost increases may be one reason for sense of urgency

Government loans to help regional airlines have been welcomed.

However, an industry group says urgency is needed to secure passenger and emergency lifelines.

Tākaka-based Golden Bay Air today was the first to get a loan from the Regional Infrastructure Fund.

Another regional airline said loans could help stabilise operations.

Tauranga-based Sunair chief executive Doug Roberts said his airline had applied to the Kānoa Regional Economic Development and Investment Unit for a loan.

“Our big requirement is for money to help fund capital upgrades, engine overhauls. We’ve got engines in the overhaul shop.”

He said the Government had come back with some more questions regarding the application and the airline was working through the process.

“We definitely need that support.”

He said loans under the scheme were with lower interest rates than banks would offer.

Sunair had the additional challenge of trying to recover after being grounded for more than four months.

The Civil Aviation Authority (CAA) grounded the airline in July over what it called maintenance and safety concerns and the suspension continued until November.

Roberts said two Piper PA-23 Aztecs and one Cessna 172 were still not flying.

“All of the aircraft have to go through a re-check ... we’re having to use third-party maintenance providers to do this and of course their workshops are pretty full.”

Its total fleet comprised five Aztecs and three Cessnas.

“We’ve re-established our network on Gisborne-Wairoa-Napier which is pretty critical for the East Coast,” Roberts added.

“We actually had the CAA visit us for a day and a half last week just to look at our progress and they expressed a positive view,” he added.

Blenheim-based Sounds Air managing director Andrew Crawford said his airline had applied.

But he’d been advocating for airlines for years in the face of rising costs and fees.

He said landing fees, CAA levies and fuel prices were all hurting airlines in recent years.

“It’s just insidious ... it’s just never-ending,” he said today.

“We’re just expected to wear it time and time again.”

Crawford said even engines were far more expensive than a few years ago.

The airline flew Cessna 208 Caravans and he said engines which cost $900,000 a few years ago now cost $1.5 million.

Aviation Industry Association (AIANZ) chief executive Simon Wallace said regional routes were critical for carrying passengers, for social services and for disaster relief.

“It’s really great that the Government is following through on its commitment to support regional airlines,” he said today.

“What we want to see now is we want some further announcements around supporting other operators and other critical routes.”

He said airlines would use the loans for maintenance.

“The airlines are not asking for a subsidy or a handout and nor should they get that,” Wallace told the Herald.

But he added: “The reality of this economy we’re dealing with is they need this money now”.

The New Zealand Airports Association said it supported today’s first disbursement of loan funding.

“Targeted support to maintain aircraft, refinance debt and strengthen operational reliability is an investment in the long-term sustainability of the regional network,” chief executive Billie Moore said.

“While we recognise that the assessment process is complex, it is important that the remaining funding is allocated as soon as possible so airlines have the certainty they need to plan and invest with confidence.”

NZ Airports also welcomed the Government’s support for interlining between regional carriers and larger airlines.

An example of interlining was the Air NZ-Air Chathams deal signed in Whakatāne in October which aimed to let customers book a single ticket for flights on both airlines.

Associate Transport Minister James Meager said the funding was designed to help at-risk regional air routes.

“Golden Bay Air’s loan will ensure the regional airline can refinance existing aircraft debt and fund essential ongoing major maintenance checks.”

The funding should also support flights from Tākaka to Nelson, Karamea and Wellington,“ he said.

“The airline moves freight and supports essential access to health care and emergency services, when Tākaka Hill Rd is cut off during severe weather events.”

He said the route was also an important tourism link for visitors accessing the Heaphy and Abel Tasman tracks.

Meager said Kānoa received several loan applications from other airlines and was working to fully allocate funds as fast as possible.

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