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Air Chathams is concerned that the skyrocketing prices Auckland Airport is charging smaller airlines will have a big impact on customer demand for important regional connections
“The increases we’ve already seen in this price period are extremely challenging, especially when combined with an almost 50 per cent increase in commercial leases for hangars needed to service our Auckland based fleet over the past decade including the pandemic years,” says Air Chathams chief operating officer Duane Emeny.
“We’re very concerned about the effect of even higher prices on the future viability of our family business.”
Passing on cost increases to travellers will impact on demand and fewer people will fly as a result. If demand for flights to the regions is reduced, that means fewer services, a reduction in cargo options, and ultimately some tough times and tough decisions for airlines like Air Chathams.
“From our Auckland hub, we operate services to Whakatane, Whanganui, Kapiti, the Chatham Islands, and Norfolk Island. All these connections see Air Chathams as the sole operator to help transport passengers and critical cargo to and from these airports.
“What’s really tough about the prices at Auckland Airport is that regional airlines like Air Chathams and Barrier Air will use very little of what the airport company is building. We are all the way down the end of ageing domestic terminal, and this building will be almost unchanged in this price period.
“We won’t be using the international terminal – because we only have one international destination in Norfolk Island, and that’s a single flight per week in Summer with no flights over Winter. At best, we will get some use from some of the tarmac upgrades. Regional airlines face some of the steepest price rises over the price setting event 4 (PSE4) yet we get the least in return.”
The Regional Passenger Charges (RPC) will see increases from $2.64 to $6.88 over the FY23-27 period, and landing charges for aircrafts (less than six tonnes) will jump to $115.04 from $60.24. “It equates to hundreds of thousands of dollars extra each year which we have to find or absorb.”
Duane agrees that AIAL needs an upgrade, but the proposed investments should be efficient, sustainable, and affordable for regional airlines and travellers.
“We support the need for improvements at Auckland Airport, but we don’t feel it is fair to put this burden on small turbo-prop airlines with limited access to capital. Our margins are so tight and it’s not like if we disappear that those remote regions will have another airline right in behind us ready to take up the route. It just means they lose their air service and the wider economic benefit that direct airlinks provide them.
“We support the Commerce Commission inquiry and hope that the right regulatory regime on airport pricing can be achieved that will be in the best interest of the New Zealand traveling public that rely heavily on the services us and other domestic carriers provide.”
