Air Chathams has secured a $1.2 million Government grant for operations, as regional aviation battles “the carnage” caused by fuel price increases.
Regional Development Minister Shane Jones and Associate Transport Minister James Meager announced the funding on October 5.
“These are extraordinary times, with regional airlines having to navigate a period of ongoing challenges,” Jones said.
“Significant pressures, including the price of jet fuel and aviation gas increasing by more than 50% since March, have created problems for the operators providing much-needed regional connectivity.
“Ministers have agreed that $5.7m from the Regional Infrastructure Fund [RIF] will be made available for working capital grants for regional airlines.
“I want to emphasise that this support is temporary, targeted and proportionate. This funding will help maintain service levels and preserve essential regional routes that might otherwise be vulnerable.”
The working capital grants will come from the remainder of the RIF-funded regional air connectivity package set up in 2025 to support vulnerable regional air services.
In April, the Government allocated $30m from the RIF to support at-risk regional routes, with Air Chathams getting a $17.2m loan to refinance debt.
Chief executive Duane Emeny said he was pleased the remaining money had gone to the sector rather than returning to Treasury.
He acknowledged Jones and Meager for “staying very close to the airlines”.
“They are hearing and seeing the carnage as a result of fuel cost increases.
“[The grant] does come with caveats, like all things from government, and it’s paid out quarterly over a 12-month period.
“[We have to keep the] same frequency in and out of Whanganui and not suspend or withdraw any routes.”
The airline announced in April it would reduce Whanganui flights by 22% after its monthly fuel costs rose from $500,000 to $1m.
In July, three return flights were reinstated on Mondays, Wednesdays and Thursdays.
Fuel prices were now within 10c of the highest they had been since the Middle East conflict began, Emeny said.
Before the funding announcement, Air Chathams was “staring down the barrel of making some pretty tough decisions”, including reducing flight frequencies.
“Enough Arabian oil is getting through now, but New Zealand relies almost entirely on Singapore and South Korea for diesel and jet [fuel] refining,” Emeny said.
“Those traditional supply lines they relied on aren’t as improved as other parts of the market. That’s what’s hurting us.”
Emeny said the weak New Zealand dollar also meant people could not afford to travel overseas.
“Everything we buy is in US dollars, so we are getting hurt on that side of it as well.
“There is zero money to be made in this industry at the moment. It’s really just minimising your losses and hanging around long enough to hopefully see things improve.”
While Air Chathams was a private company, it did not make decisions based purely on commercial factors, he said.
“If I cut services to Whanganui tomorrow, it would affect a whole lot of people and businesses, the whole community really.
“But this [grant] is taxpayer money and it needs to be spent properly.
“We are doing everything we possibly can to be efficient, productive and to reduce costs.”
Source: Whanganui Chronicle
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