Whakatatane Mayor Victor Luca

Transport, and especially land transport, is a major concern of most councils. According to our LTP, transport connections account for about 12.5 percent of council expenditure. This is comparable to what is spent on waste management. About 32 percent of expenditure is on drinking water, wastewater and storm water services.

The April 11 front page of the Beacon screamed out the decision of the council not to provide financial support as requested by Air Chathams to improve the commercial viability of the airline’s Whakatāne to Auckland route. The Beacon letters section and Facebook erupted with a diversity of views, some supporting the council and others denouncing us. Even a former mayor had plenty to say on the subject. Without knowing what was going on behind the scenes, I might add.

The council is like a fish tank. Folk looking from the outside might think they can see everything that is going on, but they can’t see behind the rocks and weeds to get an impression of the complex workings of one of the district’s largest organisations. Then on May 9, I appeared on the front page of the Beaconand was quoted as saying We are not an airline. The story reported on what had transpired at a council meeting the previous day where the community got to see for the first time the straight scoop on Air Chathams from the council’s perspective. Revealed was the significant support that the council had extended to the airline since Covid hit.

Also detailed was what Air Chathams was asking the council for. Much of this information had previously been considered in public excluded briefings and meetings because of the commercial sensitivity of the information.

For the past several years, the council has tried to help Air Chathams by extending a loan, providing marketing support and exempting them from landing fees for periods of time.

The council has also lobbied the Government to provide support to the airline. On December 4, 2023, I added my signature to a letter in support of the airline’s ongoing aspiration to formalise an interline agreement with Air New Zealand.

On July 15, I wrote to the minister supporting a Regional Infrastructure Funding application by Air Chathams. It is my understanding that the bid was unsuccessful.

Whakatāne Airport is a Council-Controlled Organisation (CCO) formed in 2006 under the Local Government Act 2002. The airport is a valued community asset, which contributes to residents’ quality of life and is considered crucial to the economic well-being of the Whakatāne district and the sub-region that includes the districts of Ōpōtiki and Kawerau.

It operated under a Joint Venture Agreement, which was established between
the council and the Government under the Airport Authorities Act
(1966).

Like many regional airports in New Zealand, our airport operates at a loss and therefore
needs to be subsidised by ratepayers. With the intention of converting our airport from a loss-making business to profit, I have been championing the establishment of a solar farm at the airport. The additional revenue would be one of many ways to keep rates affordable.

Historically, Air NZ was providing a service from Whakatāne to Auckland and Whakatāne to Wellington but withdrew the service in the mid-2000s. Presumably this was because it became unprofitable or not sufficiently profitable. Air Chathams subsequently stepped in to fill that void left by Air NZ.

Initially, Air Chathams was able to operate the route profitably until Covid-19 struck, passenger flights were impacted, subsequently business decisions were made on other routes, and the Whakatāne - Auckland route became unprofitable.

To support Air Chathams flying the Whakatāne-Auckland route, following Covid, in 2020, the council (ratepayers) extended an interest-free loan of $350,000 to the airline. The council also provided marketing support and an exemption from landing fees. To permit the landing of a 36-seat aircraft (Saab 340) at the airport, the council also covers compliance costs of approximately $300,000 a year. We clearly did a lot to help the airline.

I continue to believe the council should not be in the aviation business. The airline industry is cutthroat and a difficult industry in which to make money, and the community can’t afford the costs. The Covid pandemic wreaked havoc and took a heavy toll on aviation, including on Air NZ, and that is why we helped Air Chathams out at the time. Since the pandemic, things have improved significantly, and Air Chathams should be able to fly unassisted.

I decided to look up the state of Air NZ’s finances and discovered that in 2023, Air NZ made a net after-tax profit of $412 million. In 2024 that profit is expected to increase. These profits are not bad going for the flag carrier and should be able to be sustained going forward, provided there are no black swan events. The airline has done a good job of stripping away all non-essential and non-profitable provincial services such as the Whakatāne - Auckland route.

However, Air NZ is a 51 percent Government-owned enterprise, and the Government is all of us. Since much of the wealth of the country derives from the provinces and given Air NZ gave up many provincial services, it seems only right to me that some of Air NZ’s substantial profit is used to assist/subsidise any of our eight or so provincial airlines that are experiencing difficulties servicing certain routes.

To my way of thinking, the Government has a duty of care to the provinces to step in and help with a lens on provincial connectivity and regional economic growth. Were the Government to extend a subsidy of $1 million to each provincial airline, this would represent less than a meagre 2 percent of Air NZ’s 2023 annual profit.

I have now written a letter to the Minister of Transport Chris Bishop making this argument in the hope the Government will come to the party.  I urge supporters of Air Chathams to also write to the Minister. Dare I say it, maybe even organise a petition.

As I stated at the outset, the council spends quite a lot of money on roading infrastructure. It manages over 1000 kilometres of local roads, both sealed and unsealed, as well as bridges and footpaths. Speaking of bridges, I have recently stepped up the lobbying for an additional bridge for Whakatāne and replacement for Pekatahi on State Highway 2.

Supporters are getting behind the cause with a petition. There are copies available for signing at various places around town and I am told that an online version also goes live soon. Standby folks.