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Development West Coast (DWC) has
announced it will help finance Sounds Air’s purchase of a second back-up
aircraft that will be used to fly passengers between Westport and Wellington after
Air New Zealand pulls its service in April. DWC chairman John Sturgeon and
Sounds Air managing director Andrew Crawford signed the commercial loan
agreement in Greymouth yesterday. Mr Sturgeon told The News he was unable to
say how much money DWC loaned Sounds Air, or what interest it would charge
because Sounds Air was a privately owned business and the details were commercially
sensitive. He confirmed the finance was for a second Pilatus PC12 nine-seater
aircraft that would arrive in June. Like the first PC12, which arrived from Australia
in January, it was previously owned and operated by The Royal Flying Doctor
Service of Australia. Last month Sounds Air confirmed the cost of the second
aircraft was around $3 million, a similar cost of the first. DWC chief
executive Joseph Thomas said DWC was pleased to support the Buller and the
wider West Coast region with the investment. “From an economic point of view it
is important to provide continuity of air service for the region. We have been
impressed with Sounds Air’s track record and are keen to support the airline to
make a success of the new route.” Mr Crawford said the loan arrangement was a win-win
for everyone. “The support we have had from the Buller District Council (BDC)
and DWC has been outstanding. To my mind the old model of an airline coming and
trying to make it work is over. To operate an air service to smaller New
Zealand communities takes a partnership and the BDC, DWC and Sounds Air are
leading the way for what can be achieved.” Mr Crawford was currently in talks
with the Grey District Council in regards to the possibility of extending its
Westport service to Greymouth. Sounds Air also planned to offer charter flights
and was spending about US$65,000 on medical gear, so the planes could provide
emergency medical transfers. Buller District Mayor Garry Howard said DWC’s
investment would help provide a more comprehensive air service from Westport
with affordable airfares. “DWC is making finance available to secure an essential
service for the West Coast and I believe it will benefit the whole of the
Coast. “Also, the planes Sounds Air will fly are used by Australia’s flying
doctors so it may give us the ability to provide medical transfers from
Westport, which is a big plus for the region.” Sounds Air’s 26 flights per week
service using the first aircraft is due to commence at the end of April
following Air New Zealand’s last flight on April 28. Flights between Westport
and Wellington will have a set price of $199 each way for adults and $179 for
children, including 20kg baggage per person. Flight times will be 40 minutes,
10 minutes less than the service Air New Zealand provided. Sounds Air has
committed its service between Wellington and Westport for six years and will
look at extending its six-day-a-week service if there is sufficient demand.
The Buller
District Council has announced it will cover some of the financial shortfall of
Sounds Air’s Westport-Wellington flights should passenger numbers collapse. Mayor
Garry Howard told The News that council had negotiated a commercial agreement
with Sounds Air that provided a “final backstop” if passenger numbers deteriorated.
It became obvious to council that the key to obtaining a secure service with a
user-friendly flight schedule was the provision of a limited form of security. “Without
that security it was clear that the district would only get a ‘left-over’
service using old planes when those planes were not being used elsewhere.” Council
would only become involved if the average occupancy dropped below three seats
per flight. That was “exceptionally unlikely”, he said. The agreement stated
that the income guarantee would be based on the average number of passengers
Sounds Air carried. He pointed out that Air New Zealand currently flew up to 12
passengers per flight. “As Sounds Air will be flying nine-seat planes everyone
hopes that they will be near to full on most flights.” Both the council and
Sounds Air knew that it was not economical to operate an air service at such a low
level. There was no intention that things would ever be allowed to deteriorate
to that point, he said. Both parties had agreed to provide early warning conditions
and provisions that allowed either party to bring the service to an end well
before loadings could drop to such a low level. While the guarantee existed, it
had been carefully constructed using the best legal advice to ensure that it never
had to come into being. “We are very pleased to have secured New Zealand’s
second-largest air service operator. They have been a pleasure to work with.
The proposed schedule is a big improvement and we think that Sounds Air will
only build and expand their business here over time,” he said.
Source : Westport News
So its going to be $800 return for two people - wasn't this the public's outrage in the first place?
ReplyDeleteAside from committing ratepayers money to secure a marginal airservice, nothing has been achieved aside from offering a smaller, single engine, single pilot operation with no lounge in WLG, no frequent flyer benefits for businessmen and no guarantees of onward connections from WLG if theres weather disruption, as this will now be another airline.
Gone are the days of $80 one way grab a seats into WSZ for the early birds.
All the best to them, we shall all be watching closely to see whether this becomes a success.
$400 return per person is not an unfair proposition. And while I agree with some of your other points, I don't think a lounge operation is necessary for a provincial RPT operation.
DeleteI completely agree, $400 return isn't unfair, but its exactly what the flying public have been complaining about regarding Air NZ to local papers such as the Nelson Mail.
Delete"Horror Stories" of NSN-CHC-DUD costing $800 return. Thats 4 sectors booked last minute. Describing them as extortionate so lets start calling this extortionate, there is NO difference at all, yet suddenly its justified because it doesn't have a koru on the tail.
Simple tall poppy syndrome
A lounge operation is certainly necessary to the mostly Gold and Gold Elite customers that currently use WLG-WSZ, they certainly enjoy visiting the lounge to load up on food and drink.
DeleteFor similar money, they will no longer have that privilege despite still being members (different airline). Instead they will be able to wait at the un air-conditioned end of the WLG regional departures wing.
Additionally if they use this particular sector a lot, they will notice a drop in their status points earnings.
SoundsAir should perhaps be working on a frequent flyer system now they have a 7 destination network. This will attract more business people to use the wider network for example WSZ-WLG-WAG
I think the real benefit will come if/when Air New Zealand code share flights on Sounds Air aircraft. That is the realistic solution to this. But people are now trolling with first world problems. No air con on 1 10 degree windy day in Wellington? Having to make breakfast before you leave the house in the morning because you can't get into the Koru lounge?
DeleteI think the businessmen that are regular travellers will overlook all of this and be appreciative of the continued air route, instead of flying into Hokitika and driving up!
I work for a company in Australia operating similar aircraft and know the operating costs of pressurisation systems, turbine engines as well as older avionics. I have long scratched by head at Eagle's economics and how they manage to offer such ridiculous fare prices of $80pp.
I firmly believe that their pricing is realistic, although there is a bit of room to move for them. But I don't know what their loan repayments are but for a single aircraft on a 10 year loan, it would be around the $1000 per day mark.
I think if the route gains numbers and assurance, the fares could certainly drop.
I appreciate that they seem steep in comparison to Eagle's grab a seat fares, but they were certainly not sustainable.
Single pilot, single engine operations and a code share?
DeleteDon't think so.
Agree that a code share will not happen due to STAR limitations however an interline line arrangement may be a possible option?
Delete"No guarantees of onward connections from WLG if theres weather disruption, as this will now be another airline"
ReplyDeleteExactly.
If your flight to Wellington is delayed and you have a connecting flight elsewhere, do you think another carrier is going to wait for you?
Could get expensive.
New Zealand is an English speaking, technically advanced third world country, I think we all expect too much, this is the reality of communities wanting/needing a service and some supplier needing to make a buck. As an ex Origin pilot I believe the Government should tell ANZ to suck it up as the taxpayer bailed them out and its their social responsibility. ANZ can be predatory as the taxpayer wont let them go under. I get tired of a new Domestic Airline starting and all they do is fly the main truck while the provinces hemorrhage cash
ReplyDeleteHistory lesson, the Labour government had two options in 2001,
Delete1) Allow Singapore Airlines to increase its shareholding in Air NZ. This would require a foreign ownership law change. BUT no tax payer money would be required. Ansett would have been also saved if this was the chosen path and saved tens of thousands of Australian jobs.
2) Bail out Air NZ and have Ansett cut loose. That costed $800 million.
In the past 14 years Air NZ has paid more than $500 million to the crown.
Last year 49% of Air NZ was sold for around $300 million. This equals $800 million.
This means the government has received back the money they CHOSE to pay and still own 49% of the company. In the end they have heavily profited from their decision.
So the whole oh we saved you, oh we bailed you out thing is tired and flogged to death.
The reality is NZ is better served provincially than Australia and Canada. Australian regional airfares are similar but largely slightly higher than ours.
I concur with the historian above. You cannot compare NZ fares to the ones in Australia. They have some of the HIGHEST number of flights/seats going between destinations (namely Sydney - Melbourne) compared to anywhere in the world.
DeleteI don't know what it will take to drum into people's heads that the taxpayer never bailed out Air New Zealand.
DeleteThey simply became a majority shareholder and profited handsomely.
Tiresome, small town GA xenophobia at its very worst.
There are three issues that are quite concerning over the details. Over-all I think that Sounds Air will do a great job but!!!
ReplyDelete1) Public funds supporting a private company.
Where is the contest-ability of the funding? How does the WDC know they have the best value without opening the operation subsidy to the wider aviation community.
2) Competition
Now that the council has a vested interest in the operation of Sounds Air, how will they treat any other operator who may want to try their luck? Will they gift any advantages (building access, low interest capital support or ground support equipment gifted by Air NZ) that they have given Sounds Air to a new operator?
3) What mandate did the council have from the rate payers to provide financial support to a private company?
I don't understand this whole part about providing an air ambulance service, being a big plus etc. The Coast already HAS a fantastic air ambulance service, and has had since Pontius was a Pilot. Many coasters have had the misfortune of experiencing this service, hundreds a year. How are sounds air going to do the same thing when their planes are dedicated to a passenger service (that will not only be wesport/grey, mark my words) and the current operator has a couple of dedicated air ambulance planes. When someone's dying you think sounds air will just pull their plane out of passenger service disrupting however many pre paid people, spend hours re configuring their aircraft to air ambulance to do one patient transfer then reconfigurer back to passenger hours later apologizing to everyone for the service being out for the day ? I don't think so.
ReplyDeleteI can't speak for the West Coast DHB but certainly some of the DHBs around the country have a requirement over and above the minimum Ambulance New Zealand (ANZ) / Air Ambulance /Air Search and Rescue Service Standard that staff travel in twin engine aircraft. The PC12 would meet the required standards being a turbine single but that doesn't help if you (the DHBs) have a policy or contractual obligation to use twin engine aircraft.
DeleteHere here, garden city have been and do provide the local air ambulance service for the west coast for many years now.I can't see that changing any time soon. the notion that sounds air is spending extra money on Aero medical equipment IMHO is rubbish, these planes come from the RFDS who are getting rid of old equipment. This is just an extra marketing ploy to butter up the local ratepayers who don't know better.
DeleteWhilst the merits of the scheduled ops may be genuine. Air ambulance is a completely different thing
No one has said anything about the West Coast of DHB
DeleteQuote "That’s something that we are encouraging and we will have discussions with the DHB with regard to that"
DeleteI might be wrong but in the article it siad the council will step in if passenger loadings go below 3 does this mean that the break even cost is $600 for this service so if they have break even of 4 passengers they could have fares of $150-$175 witch is substansialy cheaper and may boost passenger numbers by 1 or 2
ReplyDeleteI doubt it. I don't know what the specific average running costs of that aircraft will be, and sounds air won't either until they have several hundred or a thousand hours in service, but going on similar category and performance aircraft my guess would be circa $800 to 1200 per sector BEFORE any finance on the 3 million dollar machines. Far greater than the caravans which can seat more albeit do the job slower. Maintenance and parts is where the costs will run away from the caravan, getting into pressurized high performance aircraft is a whole new ball game in that regard
DeleteIf the Pilatus parts and support costs are anything like what they charge for the Porter this could turn out to be a very expensive operation compared to the C208. It will however still be cheaper than a King Air or B1900 operation.
ReplyDeleteso any reason the councils backing them up if less than 3 seats?
ReplyDelete$600 40 min means $900 hour this seems to be what id think it would be
ReplyDelete