Frequently Asked Questions
Q. why do LOCAL airports need our help?
A. Part of the problem stems back to the economic policies of the 1990s. New Zealand led the world in corporatising its airports in the 1960s. A clause obliging airports to be “operated or managed as a commercial undertaking” was later inserted into the Airport Authorities Act. This is understood to mean that a normal commercial approach is required to funding capital and operating costs from airfield activities.
Yet full commercial sustainability of our airports (and associated air navigation services) is in question in many small airports because of the low volume of flights.
The service decisions by major airlines are made purely on commercial grounds, forcing a downward pressure on airports’ ability to recoup costs.
New Zealand legislation is out of step with that of other countries, where the social benefits of air links to regional towns is recognised. For example, Australia invests at both the national and state level in regional aviation to ensure social cohesion and connectivity
Q. Are local airports about to close?
A. Councils and airports are determined their airports will not close. But this places an unfair burden on local ratepayers who have many competing priorities. Experience suggests that equipment and infrastructure gradually runs down, until failures and unreliability affect airport users. Government support needs to be in place to stop this downward spiral.
Q. why should the government bale small towns out?
A. Small airports face disproportionate costs in delivering essential services.
As in other highly developed countries, New Zealand’s smaller airports face high costs to maintain infrastructure which cannot be fully recouped from their low traffic volumes.
Aviation globally is a highly-regulated industry in terms of both safety and security. For smaller airports, the cost of meeting these requirements cannot reasonably be borne by the lower number of passengers and flights.
Although airports have the ability to set their own charges, there is little scope to increase charges to meet capital and maintenance requirements, and to maintain safe standards.
Often the result is that local government steps in to fill the breach. However, councils have many competing priorities for ratepayers' money and should not be required to divert funds to national transport infrastructure.
No where is this more stark than in the provision of aerodrome facilities (such as landing lights) at smaller airports, many of which have 1960s-era equipment.
Q. is central government WITHDRAWING from ownership?
A. The historic trend is for the government to withdraw from airport ownership. Central government remains a 50% owner of Taupō, Westport, Whakatāne, Whanganui and Whangarei airports. Under these joint ventures, the Ministry of Transport contributed $670,000 between 2011/12 and 2013/14 as half shares in infrastructure refurbishment.
Agreement has recently been reached to transfer the financially-viable New Plymouth Airport to full local ownership.
There is no recent policy commitment regarding divestment or otherwise of the remaining JV airports. As all of them —with the exception of Whangarei— made an operating loss in 2014-15, local councils are unlikely to initiate change.
The JV airports are the fortunate ones - other small airports have no such support from government, despite similar circumstances.
Q. How do airports compare with other modes of transport?
A. Rail, road and maritime infrastructure all receive public funding in New Zealand. Most state highways are Crown assets and due to the strategic importance of national road connectivity, are built and maintained under the National Land Transport Fund, made up of fuel excise duties, road user charges and motor vehicle registration fees.
There are regular injections of equity into KiwiRail for network upgrades while Auckland and Wellington commuter services both recently scored major funding.
Despite the national importance of the air network, there is no consistent or comprehensive central government funding for airports.
Local airports are not for local travel. They connect small towns with larger cities in the same way that state highways do - but without a national funding system.
This highlights a clear inconsistency between transport modes in New Zealand.
We believe air transport is being unfairly discriminated against.
Q.WHAT IS THE FINANCIAL BURDEN ON LOCAL GOVERNMENT?
A. Airport infrastructure is tightly regulated to maintain high safety standards, and must be regularly maintained and closely managed. Many of the costs are irrespective of activity levels. Re-sealing a runway can cost several million dollars.
In addition to runways, taxiways and terminals, airfield and approach lighting is a responsibility of the airport operator, which may contract the service provision to Airways NZ, or arrange the facilities itself.
Due to the low volume of aircraft movements, and its obligation to act commercially, Airways has withdrawn from most of our smaller airports. In some instances this has involved selling the ageing and run-down assets to the airport owner. Replacing airfield lights can cost several hundred thousand dollars.
In contrast to larger airports where investment in new technology is funded by Airways NZ and its airline customers, small airports with fewer users struggle to keep up-to-date.
The outcome is that equipment is often old, out-dated, less reliable, and hard to maintain. Ongoing costs are therefore high, and the replacement of capital assets (or major repairs) is disproportionately costly
Q. WHAT KIND OF OPERATIONS DO COUNCILS FUND?
A. Airport owners, usually councils, must not only financially cross-subsidise their airports, they also face a complex task in maintaining and operating the assets.
Staffing a basic airport with no pressing maintenance issues can run to $250,000 per annum. Much of this cost is associated with 2-3 dedicated staff - ensuring the airport meets all operational and safety regulatory requirements.
The costs of compliance are proportionately greater for regional airports than for major airports – often by a factor of three (12 per cent versus four per cent, on average). The regulatory burden is also growing e.g. new safety management system requirements.
Airports with less than 2,000 regular passenger flights each year are ruled out of Airways NZ's national service levels and pricing structures. Instead, they must reach separate agreements (including payment) with Airways NZ or, more commonly, ensure maintenance of the specialised infrastructure themselves.
This comes at a time when local governments face multiple and competing demands on their limited financial resources.