$5.7m Grants Rescue Regional Airlines
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Regional airlines are getting a $5.7 million government lifeline as jet fuel and aviation gas costs bite hard.
Regional Development Minister Shane Jones and Associate Transport Minister James Meager announced Monday that the money will come from the Regional Infrastructure Fund as working capital grants — covering day-to-day costs like fuel and wages for carriers operating domestic regional routes.
The trigger is a dramatic spike in fuel prices. "Significant pressures, including the price of jet fuel and aviation gas increasing by more than 50 percent since March, have created problems for the operators providing much-needed regional connectivity," Jones said.
Grants will range from $300,000 to $1.2 million, scaled to each airline's annual passenger volumes and flight movements. The money comes from what remains of the RIF's regional air connectivity package set up in 2025, under which the government has already advanced nearly $26 million in loans for aircraft acquisition, fleet maintenance and debt refinancing.
The conditions are straightforward: keep services running. "These grants for day-to-day costs such as fuel and wages are being provided with an expectation the airlines will maintain their current service levels, as was the case with loans from the regional air connectivity package," Meager said.
For Southland, Stewart Island Flights sits directly in the frame. The carrier — the only scheduled air link to Stewart Island — received a $640,000 loan earlier in the package for aircraft refurbishment, and would be eligible for a working capital grant under the new round.
Jones was careful to frame the intervention as limited in scope. "I want to emphasise that this support is temporary, targeted and proportionate. This funding will help maintain service levels and preserve essential regional routes that might otherwise be vulnerable."
He was blunt about what's at stake for people in smaller centres. "We are providing realistic, practical support so regional airlines can maintain essential connections for remote and regional communities, giving people in those areas access to specialist health care, family, and business opportunities."
Meager added that the grants would "provide some financial relief over the next 12 months and demonstrates the commitment of the Government to the regions, to their airlines, communities and businesses."
The full list of loans advanced under the package to date: Air Chathams $17.2 million to refinance debt; Sounds Air $4.5 million for fleet upgrades and debt refinancing; Island Air $252,000 for fleet maintenance; Golden Bay Air $1.1 million for debt refinancing and essential maintenance; Stewart Island Flights $640,000 for aircraft refurbishment; and Sunair $2.08 million for new aircraft, fleet maintenance and debt refinancing.
Working capital grant allocations have not yet been confirmed for individual airlines.