Jones told to face economic facts following broadside attacking Air NZ
Wednesday, 21 March 2018
Regional Development Minister Shane Jones' furious criticisms of Air New Zealand's regional services have struck a chord with the business community.
But while there is some talk of subsidies to maintain air links to more remote places, there is also acceptance that some of the cuts were a matter of economic necessity.
Jones attack on the national carrier followed its recent decision to end flights to the Kapiti Coast, on top of axing services to Kaitaia and a number of other regional centres in the last couple of years.
A recent Tourism Industry Aotearoa (TIA) report pointed out that domestic airline seat numbers had grown dramatically over the past four years, going from 13.5m a year to 16.2m seats.
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TIA chief executive Chris Roberts said lack of capacity and cost of seats was limiting tourism development for at least nine regional centres, but tourism operators had to face commercial reality.
'In terms of airline seats out of the main centres there's more than there's ever been, it's just that they've reduced the total size of their network slightly.
'Unless there is some decision at a regional or national level to subsidise flights, the services will only be provided if they're profitable.
'It would be a big bold step for New Zealand to decide to start subsidising air travel.'
Aviation consultant Irene King said third level operators, such as Sounds Air and Air Chathams, had picked up where Air NZ had left off and were doing well because they had lower overheads as a result of using older, much smaller aircraft.
'The airlines that are coming in can still make a buck out of it and they will be.'
'Air NZ has to put its aircraft, which are hugely more expensive than anything else operating in New Zealand, on routes where they can make the best money.'
Some form of subsidy to maintain regional air links was mooted by the NZ Airports Association last year in the lead up to the election and chief executive Kevin Ward said they were organising a meeting with the new Transport Minister to put their case.
The association wants the government to establish a fund to help airports upgrade infrastructure with a portion available to underwrite the cost of essential air services if necessary.
Subsidies are available across the Tasman in Queensland and Western Australia to support air services to very remote communities.
Peter Habison is the executive chair of aviation analysts the CAPA Centre for Aviation and he said at the most basic level an airline that successfully tendered for a route was guaranteed a monopoly.
'So if they get the route going, someone else doesn't come in over them and cream them, and there are pretty stringent reporting conditions to ensure they meet the needs of the community.'
In other areas fares are heavily subsidised, but he emphasised they were for extremely remote locations. 'These are communities that if you were going to drive there, it would take seven or eight hours.'
The Buller District Council agreed to underwrite Sounds Air's Westport service after Air New Zealand pulled out, and airline chief executive Andrew Crawford said loadings had been so good they had never needed to call on the council funding.
'It would have to be diabolically bad to enforce that.'
He said the flights were important to small towns like Westport because they were often used by visiting support people such as lawyers, geologists and health care specialists.