Latest / Best of Business / Duane Emeny: Air Chathams chief commercial officer offers theory as to why domestic flights have gotten pricier

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Duane Emeny: Air Chathams chief commercial officer offers theory as to why domestic flights have gotten pricier · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talks B Follow
• 0:12
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• 0:16
  Speaker 2: A new report reckons the increase in domestic airfares maybe
• 0:19
  Speaker 2: due to a lack of the right kind of planes.
• 0:21
  Speaker 2: In particular, airlines apparently don't have access to suitable nineteen
• 0:25
  Speaker 2: to fifty seat passenger aircraft in New Zealand has abandoned
• 0:29
  Speaker 2: some regional routes, but the gap in the market hasn't
• 0:31
  Speaker 2: been filled yet. Now, Dwyane em Andy is the chief
• 0:34
  Speaker 2: commercial officer for air Chathams.
• 0:35
  Speaker 1: And is with us.
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  Speaker 2: Now, Hey, Dwayne Good, is this the problem? You guys
• 0:39
  Speaker 2: don't have these right kind of planes?
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  Speaker 3: No, we do. We do, they're just not making them anymore.
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  Speaker 3: So we're using older aircraft. And with older aircraft, you know,
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  Speaker 3: it becomes a bit more maintenance intensive and you've got
• 0:51
  Speaker 3: to reinvest in them, so it starts to cost a lot.
• 0:54
  Speaker 2: Why don't they make them anymore?
• 0:57
  Speaker 3: That's good question. There are a few operators like ATR
• 1:02
  Speaker 3: still produce new aircraft. I think Dawnia has got a
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  Speaker 3: new variant coming out that's in that sort of thirty
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  Speaker 3: seat agree, But yeah, I guess everyone's starting to look
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  Speaker 3: sort of ten years down the track and see what
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  Speaker 3: the new generation aircraft is going to look like and
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  Speaker 3: putting a lot of investment into that.
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  Speaker 2: Okay, see, but so they are still making them. They're
• 1:20
  Speaker 2: making these planes. Do you need these planes?
• 1:24
  Speaker 1: Yeah?
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  Speaker 3: I think they serve a really important role, especially in
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  Speaker 3: remote regional connectivity. But I guess what's also happening is
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  Speaker 3: that you're seeing bigger airlines, especially looking at centralizing in
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  Speaker 3: larger regional hubs, using larger aircraft, potentially at less frequency,
• 1:45
  Speaker 3: but filling those planes up lower seat cost of They
• 1:48
  Speaker 3: can do that and that's quite effective for them. So
• 1:53
  Speaker 3: obviously the net result of that is some of the
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  Speaker 3: smaller regional ports, especially in New Zealand, just aren't serviced
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  Speaker 3: as frequently as they used to be, in some cases
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  Speaker 3: not at all.
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  Speaker 2: How much trouble are you guys in financially given what's
• 2:06
  Speaker 2: going on with the recession.
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  Speaker 3: Yeah, I mean it's it's challenging for for aviation businesses
• 2:12
  Speaker 3: at the moment. I think for us really it was,
• 2:16
  Speaker 3: you know, we had a pandemic and now we've got
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  Speaker 3: a recession. It's just working through that. You know, we're
• 2:21
  Speaker 3: very well supported by our bank, so we're very fortunate
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  Speaker 3: for that, but yeah, it's really really tough. I mean,
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  Speaker 3: thirty six percent increase in direct operating cost cost of
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  Speaker 3: capital is very high for us. And then it's our
• 2:35
  Speaker 3: ability to keep reinvesting in our business at a time
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  Speaker 3: where you're just just not making the money, so very
• 2:41
  Speaker 3: very challenging, and of course that's why we're having these
• 2:43
  Speaker 3: conversations with both central and local government just to see
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  Speaker 3: how we can retain some of these really key services.
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  Speaker 2: Yeah, is anybody actually wanting to help you out?
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  Speaker 3: Well, I think they do. I think they do, but
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  Speaker 3: it's just a mechanism for how you do that because
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  Speaker 3: it really just doesn't exist in he' yone at the moment.
• 3:02
  Speaker 3: So a lot of the conversations really are around you know,
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  Speaker 3: what would be the best mechanism to ensure sure that
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  Speaker 3: we can at least maintain what we have and then
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  Speaker 3: you know, develop something further which enables it to actually grow.
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  Speaker 3: So I think, you know, in the last probably eighteen months,
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  Speaker 3: there's been some really positive conversations. I think that having
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  Speaker 3: someone like Minister Meager coming into the role has been
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  Speaker 3: really quite good because he understands it. He comes from
• 3:34
  Speaker 3: to Muru. You know, he's seen the impact of you know,
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  Speaker 3: some of these regional connectivity issues, so he can sort
• 3:41
  Speaker 3: of really speak from the heart in terms of what
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  Speaker 3: he thinks needs to happen and really drive his ministry
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  Speaker 3: to work on that. So, you know, we've got some optimism,
• 3:52
  Speaker 3: but you know, something really does need to change, and
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  Speaker 3: I think there really needs to be a bit of
• 3:57
  Speaker 3: a circuit breaker to say, hey, let's help these guys
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  Speaker 3: out now while we work out this longer term picture.
• 4:02
  Speaker 2: Be honest with me, right, everybody loves to have a
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  Speaker 2: crack at air in New Zealand, but is there anything
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  Speaker 2: we can actually do? I mean, do you actually want
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  Speaker 2: a market study? Would it actually achieve anything? Is there
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  Speaker 2: anything that actually needs to change there? Or are they
• 4:13
  Speaker 2: just doing business like they should?
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  Speaker 3: No, I don't think anything. I don't think a market
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  Speaker 3: study would change anything. You know, what I've read from
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  Speaker 3: body Zion's put out in the media, also what they
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  Speaker 3: said to the Select Committee recently, we totally agree with.
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  Speaker 3: I mean, the cost of running smaller turbo proper aircraft
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  Speaker 3: regionally is really really high and therefore their fears need
• 4:35
  Speaker 3: to be quite high too. So you know, if you
• 4:38
  Speaker 3: want to waste your time money on a market study.
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  Speaker 3: Fill your boots, but it's really not going to change anything.
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  Speaker 2: Yeah, Dwayne, listen beast of luck with it because I
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  Speaker 2: love what you guys do. Duane m Any, Chief Commercial Officer,
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  Speaker 2: Air Chathams.
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