16 February 2015
Financing Westport's New Air Service
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
Posted by Steve L at 9:56 AM