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Small passenger airlines across Aotearoa are set to receive a much-needed boost, with the Government recently announcing up to $30 million in concessionary loans from its Regional Infrastructure Fund to help offset rising operational costs and strengthen regional connectivity.
The support package — welcomed by the Aviation Industry Association (AIA) — aims to support struggling routes and pave the way for digital interlining, a move industry leaders say could transform both domestic and international travel across the motu.
AIA chief executive Simon Wallace says the technology investment is a crucial step toward ensuring smaller carriers remain viable in the face of tightening margins.
“I think the announcement around digital upgrades that was part of the government and that whole government announcement around regional connectivity is really important because that’s going to provide the infrastructure to support the interlining arrangements so or to get that up and running. So for example when I think of Air Chatam, Auckland, Kapiti Coast, Auckland, Whakatane to provide an interline service will actually along with help the viability of those regional airlines because it’s not just about New Zealand is leaving to go overseas it’s about international passengers being able to transit more easily and get to those other destinations so it will increase traffic inbound as well as outbound.”
He says “I think a technology investment that the government has committed to allow those interlining arrangements between the regional airlines in New Zealand in particular, once it’s up and running I think that will be a real game changer and help to improve the viability of those some of those regional airlines.”
Simon says that while the new funding package offers a critical lifeline, true sustainability will rely on tackling a range of cost pressures facing small carriers — from airport landing fees to Civil Aviation Authority (CAA) levies.
“It’s all of those things, so I mean the concessionary loads have been used in Australia in particular to support regional routes that have very marginal operations and it won’t necessarily provide the long-term sustainability, but it will allow that short to medium-term sustainability. It’s not what I call a kind of a silver bullet solution. There are other things like airport landing charges like CAA levies, civil aviation authority like CAA levies, like airways levies all of those things are particularly at the cost burden of smaller airlines and the government has said through this whole package for regional airlines that they’re looking at those things and they’re looking at how they can reduce those costs longer term,”
Associate Transport minister James Meager has said there’s going to be a much more a much tighter scrutiny on some of those levies because we’ve seen with some airways who operate a 17.7% increase in their levies that’s just been announced over the next three years and that that is actually really significant for a small airline when you’ve got to know your cost when your margins are really tight, that is quite a significant cost so it’s not just concessionary loads it’s all those other things together that can be looked at that will provide more long-term viability.”
Simon urges the Government to view regional aviation as vital infrastructure, on par with road and rail.
“I guess the other thing I’d say is that the government has put a lot of investment into roads and rail without any kind of subsidies so they see how important road and rail is but what I would say is that regional airlines are important not just for passenger and tourism but they are important for health services and emergency and search and rescue so the government’s got to acknowledge that regional air services are not just about tourism and passengers they’re actually about health services and social services as well.”
Looking ahead, the AIA is backing efforts to establish seamless booking systems across multiple carriers — allowing passengers to check in once and have baggage transferred all the way to their final destination, similar to major international hubs.
Simon says it’s a technology investment while he isn’t a digital expert, it has to be a priority.
“I think some of the places like Kapiti, Coast, but also you know some of the Sounds Air routes as well into Wellington, if there can be an interline arrangement it will help in both inbound and outbound traffic. I think the ideal being that you can have someone on an outbound checking in at Kapiti and you know not seeing their bag until they get to London you can’t do that if you fly from Kapiti you’ve got to collect your bag in Auckland and re-check it.”
“You know you can only really do that from Air New Zealand centres so that’s what we need to look at because I think that will be a major contributing factor to making these to helping the viability of these regional airlines.”
He said the clock is ticking on delivery, with a government commitment already in place to have interlining in effect by 2026.
“There’s an aviation action plan that the transport minister James Meager launched at our conference he talked about this )seamless interlining) and there is an action in the aviation action plan that says this has got to be done by 2026 so you know that’s next year. So the pressure is definitely on everybody industry and government to make this happen and I just want to reiterate it’s not just about outbound it’s about international visitors coming to New Zealand and being able to connect more easily to those airlines that are operated by those other airlines.”
“But certainly we as an industry body will be keeping the pressure on because we know how important this is for regional airlines if they belong to our members of our association. he says.”
