Whakatāne, New Zealand – Air Chathams faces an uncertain future in Whakatāne as the Whakatāne District Council grapples with the airline’s requests for financial support. While the council has agreed to waive airport fees for the next six months, it has declined other forms of assistance requested by the airline.

Council’s Decision: A Balancing Act

The council’s decision reflects a cautious approach to supporting the airline while prioritizing it’s responsibilities to the broader public. Mayor Victor Luca emphasized this point directly to Air Chathams owner and Chief Executive Craig Emeny and Chief Commercial officer Duane Emeny:

We are not an airline.

Mayor Victor Luca

In addition to the fee waiver,the council has initiated an expressions-of-interest process,inviting proposals from aviation sector companies for business-friendly Auckland and Wellington services. This move signals a proactive effort to ensure air connectivity for the region, regardless of Air Chathams’ long-term plans.

Air Chathams’ Plea for Support

The airline’s representatives attended a council meeting to address questions about their financial support requests, initially made during a closed-door workshop in early March. Air Chathams has warned that the Whakatāne to Auckland route has incurred losses exceeding $1 million since April 2023, prompting a consideration to withdraw from the route.

Their initial requests included:

• Writing off a $350,000 five-year loan, originally provided as support to restart flights during COVID-19 restrictions.
• A 12-month reprieve from landing fees, with a potential extension based on route viability.
• Entering into a 50/50 profit and loss share agreement.
• Providing a loan to purchase another Saab340 aircraft.

Air Chathams has since withdrawn the request for a loan to buy an aircraft,citing changed circumstances that allow them to retain a Saab340 currently leased to Tonga’s lulutai Airlines.The airline had previously planned to sell this aircraft to a Canadian airline, but the sale fell through.

A Potential Solution: Repurposing the Tongan Aircraft

Air Chathams proposed that the aircraft, upon completion of its Tongan contract at the end of June, could be used to restore Whakatāne’s business flights, contingent on council support.

If we could work something out with council than we could bring back that dedicated aircraft.

Air Chathams Representative

An choice proposal was presented to the chief executive and two councilors, but it was not formally presented to the full council for consideration. The details of this new proposal remain unclear.

Duane Emeny expressed confidence in the Saab340’s viability for the Whakatāne route, emphasizing the potential long-term benefits for the region.

We do truly believe that if we can partner with you properly and get this aircraft back on the schedule that people want, that five-to-10 years down the track you’ve got a thriving Eastern Bay of Plenty. You’ve got population growth, business growth, and you’ve got air connectivity to support that. I do think the Government is going to see the value in that very soon and it will benefit you.

Duane Emeny, Air Chathams General manager

Council’s Stance: Advocacy for Central Government Support

Mayor Luca acknowledged the importance of air connectivity for the district but emphasized the limitations of the council’s financial resources.

But we are a public service institution and we’re here to serve the public – all of the public … [Airlines are] a tough business to make money in especially in provincial areas and I do think that, rather than us subsidising, it should be central government that comes to the party with its big checkbook. I think we need to do more along the lines of advocating to them.

Mayor Victor Luca

The council unanimously rejected the profit and loss share agreement and the loan for a new aircraft. While some councilors expressed willingness to consider converting the existing $350,000 loan into shares,others insisted on its repayment.

Councillor Julie Jukes, who was a member of the council when the loan was initially provided, suggested that the original intention was not necessarily for the loan to be repaid.

If I had to be honest, I don’t think we did have any expectation that it was likely to actually be repaid. We needed to keep the airline going and it was hopeful that it would be able to be repaid, which was why it was set up as a loan.

Councillor Julie jukes

Councillors Tu O’Brien, Gavin Dennis, and Ngapera Rangiaho were firm on the need for repayment. Councillor Dennis suggested a repayment plan of $50,000 per year.

It needs to be paid back. it’s ratepayers’ money, not ours. I would be happy for them to pay it off at $50,000 a year.

Councillor Gavin Dennis