New Zealand backs regional airlines with $22 million funding

By Andrew Curran.

The New Zealand Government will lend three regional airlines almost NZD22 million (USD12.9 million) to support air routes and safeguard essential services.

“Regional connectivity is vital to New Zealand’s economic and social wellbeing, but the industry is under pressure, with some crucial routes at risk,” said Associate Transport Minister James Meager.

“That is why we have taken action to help stabilise the sector in the short to medium term.”

Loans for three regional carriers

Air Chathams will receive NZD17.2 million (USD10.1 million) to refinance debt. Blenheim Airport (BHE)-based Sounds Air will receive NZD4.5 million (USD2.6 million) to upgrade its fleet and refinance debt, while Tauranga Airport (TRG)-based Island Air will receive NZD252,000 (USD147,700) for fleet maintenance.

The funding comes from the NZD30 million (USD17.6 million) Regional Infrastructure Fund, established in 2024. This is the programme’s second funding round. Earlier this year, the government announced a NZD1.1 million (USD640,000) loan to Golden Air, based at Takaka Airport (KTF).

The government said the three airlines play an important role in connecting communities to healthcare, employment and business opportunities.

“These loans will help regional passenger airlines manage debt, maintain their fleets, and continue operating the routes important for the wellbeing, resilience and economies of regional communities,” said Regional Development Minister Shane Jones.

“In places like the Chatham Islands, regional airlines are the sole connector for residents to the mainland,” Meager added. “Losing those routes would risk people being cut off from the rest of the country and disrupt the delivery of essential services.”

Airlines welcome the loans

The airlines welcomed the announcement.

“This funding, which has been in the pipeline since last year, is designed to support regional air routes and help safeguard essential air services for the communities we serve,” Air Chathams said in a statement.

“It comes at an important time for regional aviation and will play a key role in strengthening the resilience of our operations as we continue to navigate ongoing industry challenges.”

Air Chathams connects the Chatham Islands with the New Zealand mainland, while Sounds Air operates routes across the Cook Strait.

“Sounds Air is delighted to confirm it has secured support through the government’s Regional Infrastructure Fund, part of which is earmarked to support regional air routes and safeguard essential services for regional communities,” the airline said.

“The funding will assist with avionics upgrades and debt refinancing, helping maintain fleet capability and support ongoing operations across our network.

“This contributes to the continuity of air links between Wellington, Picton, Kāpiti, Blenheim and Nelson, which are vital to regional wellbeing, resilience and local economies.”

Island Air operates services between Tauranga and Mōtītī Island.

Government says it is aware regional airlines face challenges

The government acknowledged that operating conditions for regional airlines have deteriorated, particularly due to rising fuel costs. Several carriers in New Zealand have recently called for government support.

Loan terms were not disclosed, and the government said it is continuing to assess applications from other airlines.

Other regional operators yet to receive funding include Origin Air and Barrier Air.

Photo: Sounds Air

Contact the writer: andrew@aerosouthpacific.com.