Regional air shake-up: Departing airline says operating costs are crippling

Sounds Air says high operating costs have forced it to drop Westport services. Photo / Supplied

Sounds Air has cancelled its Wellington-Westport service, blaming high costs and lack of government support for an operating environment that is the toughest in two decades.

The airline will operate its last flight on December 31 but Nelson-based regional airline, Originair will fill the gap after finalising a deal with Buller District Council.

Sounds Air managing director Andrew Crawford said the cancellation was an ‘‘inevitable development’' in its review of its regional network and 370 flights.

“Post-Covid, the combination of staggering jet fuel costs, a weak exchange rate, increasing landing fees and CAA charges, wage pressures, high interest rates, and the dramatic international escalation in the costs of servicing engines have been crippling,’' said Crawford.

‘‘This coupled with ongoing supply chain disruptions has been brutal for us, as it has been for Air New Zealand. We currently have two aircraft grounded awaiting parts, with no known delivery dates.”

He said Air NZ - which has also trimmed its domestic operation - had the Government as its majority shareholder to support the business, unlike Sounds Air and other regional aviation players.

“Sounds Air has twice been encouraged to apply for funding packages designed to support regional development and advised by Government officials of our strong fit with the funding criteria, for the then Provincial Growth Fund and more recently the Government’s ‘Regional Infrastructure Fund.

‘’We have twice had these proposals overturned.”

Crawford said Sounds Air’s shareholders can no longer personally fund all its regional aviation routes, hence the cancellation of the Westport service.

”There is ample evidence around the world where Government’s support regional aviation as an essential public service and we will continue to advocate for the kind of partnerships that are required to support regional development and the way of life that regional NZ deserves.”

Regional development minister Shane Jones said he had explored a dedicated fund for regional aviation when he was last in power between 2017 and 2020.

‘‘Then I was dispatched to an unwanted sabbatical for three years,’' he said.

He said aviation connectivity was very competitive.

‘‘I thoroughly understand the the cash flow and the operational pressures that a number of the companies are under. The (new) fund, however, is predominantly dedicated towards hard infrastructure.’'

Many new projects covered by fast track legislation were in the regions and likely to lead to more demand for travel.

He would take up options for funding regional air connectivity with Transport Minister Simeon Brown.

‘’We are sadly navigating a set of dire economic conditions and I don’t want to create expectations that I have no mandate to deliver upon, but it’s a worthy topic that we should sink our teeth into.’'

Sounds Air started the route when Air NZ withdrew in 2016.

Buller District Council Mayor Jamie Cleine said Originair will start its services on January 3.

Originair will operate an 18-seater British Aerospace Jetstream aircraft. Originair also operates services from Nelson to Palmerston North, Hamilton, and Wellington.

Tania Armstrong, Originair’s customer service manager, said the airline will offer services to and from Westport six days a week, providing more than 11,200 seats annually.

“Morning flights will connect Westport with Wellington from Monday to Thursday, while afternoon services on Fridays and Sundays will cater to leisure travellers, aiming to grow the weekend market between both destinations. These weekend flights alone will offer over 3700 seats per year.”

The airline’s CEO, Robert Inglis, was pleased to be adding Westport to their regional network.

“We are looking forward to helping grow both business and leisure travel to the Coast. The initial flight schedule reflects current passenger demand, but we are prepared to increase services, including connections to Nelson, as the region’s needs evolve.”

Cleine said he recognised the challenging market conditions that have impacted the route.

Tourism in Buller is experiencing steady growth, with visitors staying 330,800 nights in the year to June 2024, an increase of 8000 guest nights from the previous year.

Total tourism expenditure in the district rose by 14.6%, reaching $94 million—up $12 million—exceeding the national growth rate of 1.8%, according to economic consultancy Infometrics.

Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.