Airline 'a great Dunedin idea, but . . . '

The Dunedin City Council and the Otago Regional Council should get together to underwrite air services to Dunedin, an aviation expert says.

Former University of Otago air transport research director Dr David Duval said Otago Air was a great Dunedin idea, but not one anybody should go ahead with.

However, Dr Duval, who spent a decade in Dunedin and is now working at the University of Winnipeg in Canada, said the idea was ''exactly the mentality I loved''.

''I miss that.''

But he said there were better ways of dealing with Dunedin's air transport issues.

The honorary Associate Prof of the University of Otago School of Business suggested the two councils should get together to underwrite air services to Dunedin, as the Cook Islands did.

An economic consultant who studied the Cook Islands situation said underwriting might not provide the returns required.

Regional council chairman Stephen Woodhead said he would not recommend his council gets involved in any way, ''certainly not underwriting''.

Dunedin Mayor Dave Cull said a well-developed business case would have to be presented to the city council for it to even look at such a proposal, given the considerable risk involved in financially underwriting anything.

''History is littered with the failures of these things [local airlines], so I'd be very surprised if this council would have the appetite to risk millions of ratepayer dollars on it.''

It also needed to be remembered that Dunedin International Airport was half owned by the city council and its income came from the airlines which used it, so underwriting another service would not offer the best business message to present to airlines, he said.

Earlier this week, Outram farmer and cafe owner Fred Doherty called for the city to ditch major airlines, ''do the job ourselves'' and begin a local air service providing international flights.

Mr Doherty was responding to recent news Virgin had terminated Dunedin's only flights to Sydney and Melbourne.

That left a Dunedin to Brisbane flight as the only international flight from Dunedin.

His ''dream'' was to set up ''Otago Air'' by floating a company to lease a plane and pilots, giving Dunedin direct services to Australian cities.

Dr Duval said the idea was the sort of Dunedin thinking he missed after living in the city for about a decade, until 2010.

But he had not heard of a city going down that path.

Airlines required huge capital, and the profits were ''thin''. Dr Duval wondered whether any investment in the business of flying aeroplanes was ''the best place for people to be putting their money''.

''Is it a good idea? It is an idea.

''Are there better ideas? I think there are,'' he said.

Dunedin had been down the road in the past of airlines coming and going.

''Troublingly, the market is not that big.''

Queenstown and Auckland airports were growing, despite the ''amazing'' tourism product Dunedin had.

Dr Duval said underwriting an airline service was not unusual; it happened around the world.

The region needed to ask ''what is connectivity worth to our economy?''

''What is the value for the district?''

Aaron Schiff, of Auckland firm Covec Economic Consultants, wrote an economic review for the Cook Islands Government of its underwriting of an Air New Zealand service from Los Angeles and Sydney.

The agreements were estimated to cost, respectively, $7.7 million and $4.4 million a year.

The country benefited from the underwriting, which it renewed in March.

Mr Schiff said the key was the change in travel numbers to and from a region from an underwriting.

Those numbers would not increase a lot, unless there was no other relatively easy way to travel to and from the city.

But with connecting flights to other New Zealand airports from Dunedin, there was.

''Having a non-stop service would not make a huge difference.''

Mr Woodhead said he understood ''completely'' the frustration being expressed in Dunedin.

But it was not the role of a local authority to lead the way on such an issue.



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