New Zealand Government to Support Regional Airlines

New Zealand’s Coalition Government will support at risk regional air routes with around $17.74 million in loans from the Regional Infrastructure Fund for small passenger airlines to help supporting them to face rising costs, Regional Development Minister Shane Jones and Associate Transport Minister James Meager said.

Jones said that reliable air services were critical for the economic and social wellbeing of regional New Zealand. They enable access to healthcare, education, business, and whanau, particularly in areas where other transport options are limited.

“Small regional carriers are under pressure from rising costs, limited access to capital, and ongoing post-COVID disruptions. Without this support, some communities risk losing vital air links and potential regional development,” Jones added.

Meager said that the support is not a bailout, with funding coming in the form of concessionary loans.

“The aim is to stabilise the sector and support regional routes in the short to medium term. This is not intended to meet all the airlines’ capital needs but to provide targeted relief for such things as aircraft leasing, maintenance and debt refinancing,” he said.

The New Zealand Cabinet has also approved funding for what could be a game-changing development for small regional carriers – digital upgrades that integrate regional transport bookings with the platforms of major carriers.

Known as interlining, the upgrades will enable passengers to book a single itinerary and flights on different airlines, including the major carriers.

“Streamlining bookings and baggage-handling between the smaller carriers and the bigger players in the aviation sector will makes it much easier for the travelling public to plan and book their preferred routes in one go,” Meager pointed out.

Jones said that without intervention, the regional airlines face further service cuts or a complete withdrawal from routes, as they have seen in some regions around the country. Once fleet capacity is lost, recovery is difficult and costly.

“We are acting now because a combination of factors, including the ongoing after-effects of the pandemic on air services, are placing exceptional pressures on the sector at present,” Jones added.

Small Airlines Welcome Decision

Regional airlines and the NZ Airports Association have described the Government’s regional air connectivity announcement as a turning point for New Zealand’s regional aviation network.

Regional airlines operate over 600 flights per week and are the only reliable and frequent transport to some parts of New Zealand. Regional air routes connect communities with jobs, healthcare, tourism, and emergency services.

For decades, these services have been sustained without government support – an unusual achievement compared with other countries, where subsidies are standard for regional and remote communities.

NZ Airports Chief Executive Billie Moore said that they were fortunate that New Zealand’s regional aviation network has sustained itself commercially for so long.

“But the long tail of COVID, rising operating and maintenance costs, and the less favourable finance terms available to smaller airlines have changed the equation. In many cases it is now more attractive for operators to sell their aircraft into the international market than to continue running services in New Zealand. Despite this, regional airlines want to keep flying and serving their communities,” he said.

NZ Airports, Air Chathams, Sounds Air, Barrier Air and Origin Air have worked over the past 12 months to analyse the issues in the regional air transport system and develop policy options for the Government to consider.

Lauding the two Ministers for taking action, the airlines said that along with Minister Patterson, they dedicated time and effort to understand the complexities of regional aviation and its importance to New Zealand’s economy and social fabric.

“It is important to note that this support comes after some routes have already been lost. The challenge now is to stabilise the system, prevent further losses where possible, and put regional air connectivity back on a path to growth,” they said.