Council scraps Sydney flight funding - dumps departure levy


15 October 2014


The Rotorua District Council has finally taken the “international” out of the local airport with the scrapping of Air New Zealand’s direct Sydney flights from the tourist town. For travellers, however, there is a silver lining with the council announcing the removal of the $5 departure levy, which will be absorbed into landing fees from 1 February 2015.


Although the Airport chief excutive Alastair Rhodes said private international charter flights will continue to fly in and out of Rotorua, the decision to no longer fund Air New Zealand’s service does change the council’s strategic direction.


The council had spent $1.923 million in 2012/13 to “grow the business” buoyed by news that Air NZ had thrown in the towel on its flights to Brisbane from Hamilton.


At that stage, the council agreed to commit further funds of up to $3 million over two years within the Economic Development activity to provide for joint venture marketing.  The council approved $1 million in the 2013/14 budget and included up to $2 million for the 2014/15 Annual Plan.

However, the announcement yesterday will result in an unwinding of the airport assets in an effort to get the airport finances under control.

In a statement, airport chief executive Alastair Rhodes said the proposed transfer of assets to Rotorua Airport and the suspension of the Rotorua-Sydney flights are in line with the airport’s business strategy to improve transparency, accountability and ultimately, the commercial performance of the operation 


The council decision to discontinue funding the Trans Tasman service, led Air New Zealand to cease the flights from April next year, the statement said.


"There have been a number of positive developments at the Airport in the past 18 months including the Q300 upgrade on the Auckland-Rotorua route, good high season forward bookings, greater community engagement, new tenants, the removal of the departure levy (to be absorbed into landing fees from 1 February 2015) and the Airport’s involvement in the Famously Rotorua campaign.


"These latest developments will help us achieve our objective of becoming a commercially viable operation that is focused on ensuring efficient and effective air connectivity to support the region’s economic and growth development."


The proposed asset transfer would see the Airport’s operations and the Council’s asset ownership consolidated into a single entity, Rotorua Regional Airport Ltd, with the Council remaining a 100% shareholder of the Airport.


Mr Rhodes says the proposed asset transfer would have no impact on the Airport experience, but would allow streamlined operations and financial management, providing more clarity in reporting to various stakeholders.


He says the suspension of the Trans Tasman flights is the right decision to allow the Airport to focus on delivering better services and a greater return to Rotorua and the wider Bay of Plenty region.


The last Trans Tasman flight will be on April 25, 2015, with a schedule change between 31 March to 25 April, seeing the flights take place on a Tuesday and a Saturday.


"The New Zealand aviation market has changed significantly in recent years, resulting in airlines shifting Trans Tasman flights away from regional hubs to major ports. Rotorua’s close proximity to Auckland means it is also difficult for the regional Trans Tasman route to be justified with airlines.


"Ultimately it is the airline’s decision on where to fly and obviously this must be commercially sustainable. Each party has made their respective decision in relation to the flights - Air NZ, Rotorua District Council and the Airport - and we all acknowledge that the Trans Tasman schedule is not viable in today’s operating environment.


"We need to focus our network efforts on where we have a competitive advantage - building strong North to South Island tourism links and looking at opportunities to develop a direct Rotorua - Queenstown service. Our focus for the coming year will be on strengthening these links to provide better access for locals and businesses, as well as building stronger alliances with airports such as Auckland, Christchurch and Queenstown."


Mr Rhodes says Air New Zealand will liaise directly with any passengers who may be affected by the cessation of the Trans Tasman flights.


Originally published by Contributor: Fuseworks MediaFuseworks Media


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