A year ago, the head of Air Chathams said it was the worst time in the airline’s 40-year history.
Then came the Middle East conflict that doubled the airline’s monthly fuel bill and forced it to pull out of one route and cut services on others.
Chief executive Duane Emeny says news of a peace deal between the US and Iran will make little difference to the airline’s expectations of sky-high fuel costs persisting until the middle of next year.
“We are forecasting a continued long tail,” he says. “And hoping for better. It’s not the first time Trump has made a ‘deal’.
“We’re seeing a significantly escalated fuel price run out at least until the middle of next year,” says Emeny. “I don’t think we’re going to see the fuel prices that we had in January or February this year any time soon. That is a serious concern for us because effectively you’re delivering the same product, you’ve just got this increased direct operating cost that you can’t get rid of.”
Emeny was about to take over from his father Craig – the airline’s founder – when The Detail interviewed him a year ago at the airline’s hangar and head office at Auckland Airport.
It had just made the difficult decision to suspend its Norfolk Island flights, its Chatham Islands service was feeling the strain, and its other routes were under pressure.
After emerging from Covid to a much-welcome travel boom, the sector had been hit by the deep recession and many airlines were forced to make cuts and raise prices.
But the fuel crisis this year was the tipping point for its Kapiti-Auckland route, says Emeny.
In April, the Government responded to the regional airlines’ pleas for help with $30 million in concessionary loans through the Regional Infrastructure Fund. Golden Bay Air is the first airline to get a loan, of $1.1m, while Air Chathams is still waiting for its promised $17.2m.
“I think we’re learning a lesson in government bureaucracy but when you’re dealing with taxpayers’ money you’ve got to do it properly and I respect that but from where I’m sitting as a private business trying to provide airline services into communities it can’t happen fast enough,” he says.
The money will be used to refinance debt.
“It shows the amount of debt that our family business has actually had to take on to maintain regional connectivity in this country,” he says.
But the concessionary loans are the first step, according to Emeny. He is calling for the Government to treat the regional air sector as essential infrastructure – to treat skies like highways – with routes getting weighted funding depending on where they’re going. He warns that the industry will keep shrinking without it.
“If change doesn’t come, if the issue is continually kicked down the road then we’re going to see what we’ve actually seen in the last 20 years.
“If you go back 20 years and write all the names of the second, third-tier airlines that were operating in this country, you will see that there are a significant number less than there was then and my projection is that that will continue to happen.”
The mayor of Tasman District, Tim King, says the loan to Golden Bay Air means that the small airline can continue its Tākaka-based operation, offering regular passenger services and as an emergency responder.
The council owns and runs the Tākaka airport at a cost of $100,000 a year. King says it is not up to councils to help prop up airlines, but funding the airport is money well spent.
“We have a small ratepayer base for a very large region and an awful lot of things to provide. This is one of the challenges for New Zealand in general but certainly for us in ensuring that these critical bits of infrastructure are available both for day-to-day use, but also as critical assets in an emergency, particularly in Golden Bay with one road in and one road out,” says King.
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