An extension to the Government’s bailout of air freight operators has come under fire for failing to attach environmental conditions
In March 2020, with domestic and international air travel collapsing and New Zealand’s borders coming under layers of increasingly robust restrictions – first a ban on travellers from Wuhan, then all of China, then a requirement for everyone entering the country to self-isolate for 14 days and finally a full closure of the border – the Government bailed out the airline industry.
This came in two packages: A $900 million loan facility for Air New Zealand which was only drawn on from September and a $600m relief package for the rest of the aviation sector.
Airline bailouts in other countries came with strings-attached. Air France received an NZ$11.64 billion bailout in exchange for commitments to reduce emissions and test biofuel blends – although these conditions were not legally binding. Austria’s aid and loans to its national carrier came with emissions reduction stipulations, a price floor on new tickets and a requirement to end domestic flights that cover existing rail routes.
With greater power comes greater responsibility – so what conditions should the Government be attaching to airlines’ strengthened position? Click here to comment.
Although New Zealand researchers have since found our strings-free airline bailouts were a “missed opportunity”, Transport Minister Michael Wood announced on Monday that a further $172m would extend the $600m general relief package, with an eye towards bolstering air freight. No climate strings accompanied this new funding, either.
Wood said that Government stimulus had shored up 6,000 flights carrying over 120,000 tonnes of cargo and that airfreight capacity remained at 90 percent of pre-Covid-19 levels. He defended the climate impacts of the funding in a statement to Newsroom, saying the scheme was designed to maximise efficiency.
“Our scheme incentivises airlines to carry high freight loads, and to carry passengers and freight on the same aircraft. Approximately 90 per cent of pre-Covid freight volumes are now being carried on around one-quarter of the number of pre-Covid flights, which is a significant reduction in emissions,” he said.
“We are already working with our national carrier to help tackle climate change, for example, Air New Zealand has been supportive of a biofuels mandate to reduce emissions from every flight until zero carbon options become viable.”
However, Green Party transport spokesperson Julie Anne Genter said the new funding should have had climate strings attached.
“We agree with the Government’s support to the aviation sector at this time, given it is obviously hugely important in terms of getting freight in, maintaining the industry and retaining jobs,” she said.
“However, these bailouts need to come with strings attached. In this situation, this should involve things like companies having emission reduction plans in place and living wage for employees and contractors. In the long-term, we need to move to a carbon neutral supply chain with alternative fuels for the aviation sector and developing higher-speed regional rail here in Aotearoa, as we have proposed.”
David Hall of AUT’s The Policy Observatory, one of the researchers who analysed the climate impacts of New Zealand’s stimulus, said he was disappointed in the lack of climate conditions on the new money.
His previous research found that of the 44.6 percent of energy-related stimulus that was fossil fuel-related, just one twelfth came with so-called “green strings” – such as funding for new roads which would incorporate a cycle way. By comparison, while clean energy-related spending made up 54.5 percent of energy stimulus, just one-quarter was unconditionally green. The remainder involved some fossil fuel infrastructure, such as public transport spending where public transport has not been fully decarbonised.
“Not just airlines but the wider aviation sector was massively disrupted by the Covid pandemic and national governments have had to step in to prop up this infrastructure while the pandemic has frozen international travel – or at least severely limited it,” Hall said.
“There are some countries which have undertaken policy innovation where they’ve added green strings to at least make those investments somewhat conditional and to use the window of opportunity to exert influence on how the aviation sector emerges out of the pandemic.”
While New Zealand may not have had the time to put green strings in place during the initial bailouts, which came months before those of Austria and France, it has had nearly a year to plan for the top-up. Moreover, the Government is now operating without the potential “handbrake” of New Zealand First and has just declared a climate emergency in December.
“It is disappointing. I would like to see some sort of requirement being involved in this. It would be really interesting to see mandated emissions reductions for the sector, especially because this isn’t going to Air New Zealand, per se, it’s going to the airfreight carriers and so on,” Hall added.
“There is an opportunity there to bring some of the sector which is not so prominent in our thinking, which is a bit outside of our general awareness, into our wider climate strategy.”
Paul Callister is a senior associate at Victoria University of Wellington’s Institute for Governance and Policy Studies who has done work on decarbonising aviation. He expressed similar disappointment at the lack of green strings in the new funding.
“There should be some strings attached if they can. You could imagine there could be a whole lot of ways they could do it – they could even give the subsidies that are running the most efficient planes across the board,” he said.
“My overall opinion is that I think [the Government has] put aviation in the too-hard basket in New Zealand and they’re just not really wanting to discuss it, because they think we’re too far from anywhere and we can’t do anything about it. I’d really like to see them put the airlines on notice.”