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

A new report suggests the increase in domestic air fares may be due to a lack of the right planes.

In particular, airlines don't seem to have access to suitable 19-50 seat passenger aircraft.

Air New Zealand has abandoned some of their regional routes - but the gap in the market hasn't been filled.

Air Chathams chief commercial officer Duane Emeny speculates further.

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Episode Transcript

Speaker 1 (00:00):
A new report reckons the increase in domestic airfares maybe
due to a lack of the right kind of planes.
In particular, airlines apparently don't have access to suitable nineteen
to fifty seat passenger aircraft. In New Zealand has abandoned
some regional routes, but the gap in the market hasn't
been filled yet. Now Dwayne em Andy is the chief
commercial officer for air Chathams and is with us. Now, Hey,
Dwayne Good, is this the problem? You guys don't have

(00:23):
these right kind of planes.

Speaker 2 (00:25):
Ah, No, we do. We do, they're just not making
them anymore. So we're using older aircraft. And with older aircraft,
you know, it becomes a bit more maintenance intensive and
you've got to reinvest in them, so it starts to
cost a lot.

Speaker 1 (00:37):
Why don't they make them anymore?

Speaker 2 (00:40):
That's good question. There are a few operators like ATR
still produce new aircraft. I think Dawny has got a
new variant coming out that's in that sort of thirty
seat category. But yeah, I guess everyone's starting to look
sort of ten years down the track and see what
the new generation aircraft going to look like and putting
a lot of investment into that.

Speaker 1 (01:01):
Okay, see, but so they are still making them. They're
making these planes. Do you need these planes?

Speaker 2 (01:08):
Yeah? I think they serve a really important role, especially
in remote regional connectivity. But I guess what's also happening
is that you're seeing bigger airlines, especially looking at centralizing
in larger regional hubs, using larger aircraft, potentially at less frequency,

(01:28):
but filling those planes up lower seat cost of They
can do that and that's quite effective for them. So
obviously the net result of that is some of the
smaller regional ports, especially in New Zealand, just aren't serviced
as frequently as they used to be, in some cases
not at all.

Speaker 1 (01:47):
How much trouble are you guys in financially given what's
going on with the recession.

Speaker 2 (01:53):
Yeah, I mean it's challenging for aviation businesses at the moment.
I think for us really it was, you know, we
had a pandemic and now we've got a recession. It's
just working through that. You know, we're very well supported
by our bank, so we're very fortunate for that. But yeah,
it's really really tough. I mean, thirty six percent increase
in direct operating cost cost of capital is very high

(02:17):
for us, and then it's our ability to keep reinvesting
in our business at a time where you're just just
not making the money, so very very challenging, and of
course that's why we're having these conversations with both central
and local government just to see how we can retain
some of these really key services.

Speaker 1 (02:32):
Yeah, is anybody actually wanting to help you out?

Speaker 2 (02:37):
Well, I think I think they do. I think they do,
but it's just a mechanism for how you do that
because it really just doesn't exist in the zones at
the moment. So a lot of the conversations really are
around you know, what would be the best mechanism to
ensure that we can at least maintain what we have
and then you know, develop something further which enables it

(02:58):
to actually grow. So I think, you know, in the
last probably eighteen months, there's been some really positive conversations.
I think that having someone like Minister Meaga coming into
the role has been really quite good because he understands it.
He comes from Timuru, you know, he's seen the impact

(03:20):
of some of these regional connectivity issues, so he can
sort of really speak from the heart in terms of
what he thinks needs to happen and really drive his
ministry to work on that. So, you know, I've got
some optimism, but you know, something really does need to change,
and I think there really needs to be a bit
of a circuit breaker to say, hey, let's help these

(03:42):
guys out now while we work out this longer term picture.

Speaker 1 (03:45):
Be honest with me, Right, everybody loves to have a
crack at air in New Zealand, but is there anything
we can actually do? I mean, do you actually want
a market study? Would it actually achieve anything? Is there
anything that actually needs to change there? Or are they
just doing business like they should?

Speaker 2 (03:59):
No, I don't think anything. I don't think a market
study would change anything. You know what I've read from
what he new Zion's put out in the media, also
what they said to the Select Committee recently, we totally
agree with. I mean, the cost of running smaller turbo
proper aircraft regionally is really really high and therefore their
fears need to be quite high too. So you know,

(04:22):
if you want to waste your time money on a
market study, fill your boots. But it's really not going
to change anything.

Speaker 1 (04:27):
Yeah, Dwayne listen, beast of luck with it because I
love what you guys do. Duane m Any, Chief Commercial Officer,
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