A $600m package will pump cash into a government-owned air traffic control company, freeze New Zealand’s border fees and assist airlines in paying government fees and charges in the wake of the Covid-19 pandemic outbreak.
Transport Minister Phil Twyford announced the package in Queenstown on Thursday morning, saying more initiatives were coming to “keep critical air freight flowing and our airports open”.
Large sections of the package were dedicated to helping airlines pay fees to government-owned entities.
The largest portion of the package is a $163m financial boost to airlines so they can pay passenger-based government charges, along with another $37m to pay government-owned Airways Corporation.
“The view I take is the Government is taking some good early steps to basically keep the system in shape.”
Airways, a state-owned enterprise (SOE) that runs air traffic control operations at New Zealand’s airports, will also get a direct cash injection of $70m as part of the $600m plan.
Airways operates a national network of air traffic control centres located at New Zealand’s larger airports.
Airports NZ chief executive Kevin Ward told Newsroom in an interview that airports and Airways relied on fees connected to passenger and flight volumes to stay in operation.
“The view I take is the Government is taking some good early steps to basically keep the system in shape,” Ward said.
“Some of the parts of the system are government-owned, like Airways, some of the parts are local government- and privately-owned and we’re all in a similar situation.
“A lot of us depend on the volume of flights and passengers for our revenue and Airways are in that situation, their charges are on a flight-by-flight basis, and so are the airports.”
Ward said he understood the $163m for airlines was largely for fees charged by the Ministry for Primary Industries, the Civil Aviation Authority, and Aviation Security Service, which were collected from the airlines rather than passengers.
Fees charged at the border by those agencies and Airways would also be frozen for 12 months as part of the package.
Airways reported last week that it was in good financial health at the end of last year, with profits up 20 percent year-on-year for the six-month period ended December 31, 2019. It was forecast to pay out a $13m dividend at the end of June, 2020.
Last Friday it reported its full year profit forecast remained in line with its budget despite airlines paring back flight schedules.
Twyford said airlines and airports were taking a major hit from Covid-19 and the package was about helping to keep money in their pocket.
“These first steps are designed to ensure the essentials of the aviation system continue to run, help keep airlines in New Zealand and encourage them to increase services faster during the eventual recovery,” Twyford said.
“We are also committing to working with the sector and the CAA to ensure there is no red tape stopping airlines ramping services back up when international conditions improve.
“I’ve been speaking with industry leaders frequently and will continue to be in regular contact to make sure they have the support they need.”