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Air New Zealand announced yesterday it would close services from three towns - Kaitaia, Whakatane and Westport - and shut down subsidiary Eagle Airways as part of a revamp of its regional services.
The airline is investing an additional $100 million in planes for more popular routes but from April the airline will suspend these services: Kaitaia-Auckland; Whakatane-Auckland; Whangarei-Wellington; Taupo-Wellington; Westport-Wellington and Palmerston North-Nelson. Hamilton-Auckland will also be suspended, from February 2016.
The 19-seat Beech 1900 aircraft operated by Eagle was the smallest in the Air New Zealand fleet but had the highest cost per seat to operate because the fixed costs of operation are distributed across fewer passengers, the airline said.
"This has led to Eagle Airways, which operates the 19-seat fleet, losing $1 million per month for the past two years, or the equivalent of $26 per one-way passenger journey," said Air New Zealand chief executive Christopher Luxon.
The airline would introduce a range of new regional fares which promised to cut the cost of travel by an average of 15 per cent.
The decision has angered Whakatane mayor Tony Bonne, particularly after the council and the Government had jointly invested $180,000 on new airport lighting following the airline's request.
Mr Bonne said the national carrier had previously denied having any plans to cancel flights from the district, even when he asked them outright if a dramatic increase in airfares six months ago was a move to drive customers out of Whakatane Airport and to Tauranga or Rotorua. The increase had resulted in the mayor having to shell out $1000 for a return flight from Whakatane to Wellington to attend an urgent meeting.
"It is a blow to business, to us, our council. But our council has got the attitude when one door closes another door opens ... This was a well-oiled propaganda machine that has been working on this for the last 18 months without coming clean."
Former New Zealand politician Sir Michael Cullen, who lives in Ohope, travels to Wellington several times a week in his roles on the board of KiwiBank and as New Zealand Post chairman. He said he will now have to leave home at 4.30am to travel to Tauranga Airport to get a direct flight to Wellington and would not be home until 10pm.
"Without wanting to sound the least paranoid, Air New Zealand has been pricing the flights out of Whakatane at such a level that a number of people going to Wellington have already been driving over to Rotorua or Tauranga because the flights are much cheaper from there," Sir Michael said.
Tauranga-based Sunair Aviation chief executive Dan Power has already said his company could take over the Whakatane to Auckland route and planned to meet with the district council within the next few days.
Prime Minister: Overall, it's good news
Commenting on Air New Zealand's regional shake-up, Prime Minister and Tourism Minister John Key said it was " a somewhat bitter sweet announcement".
But overall it was good news.
On the one hand, there would be a lot of frustration in Whakatane, Kaitaia and Westport, he told reporters in Beijing last night after the Apec summit.
"On the other side of the coin, what Air New Zealand have announced is a significant fare reduction programme which is permanently enshrined.
"If you take a couple of regional sector flights, I think the maximum you can pay at any one time is $250 so that's good news."
Air New Zealand would be flying bigger planes to the regions and that meant the likelihood of lower prices.
"And they are going to fly bigger planes, which will be more capacity and the high likelihood they will have lower prices.
"So overall for the regions, it is a pretty good news story. But for those three particular areas I think they will be quite disappointed."
Mr Key said he was briefed by Air New Zealand last week it was going to happen.
Mr Key said that while it would be disappointing news for three sectors, Air New Zealand was listening to concerns from the regions about high prices - "the likes of Kerikeri to Gisborne having to pay $800 for a fare."
- additional reporting Rotorua Daily Post
Blow to region
Kaitaia father-of-six Campbell Crooks, 54, flies to Auckland regularly for work.
As a member of JNL's Northland Mill management team, he used Eagle Air's Kaitaia regional service about once or twice every fortnight.
News the Far North service would be cut was disappointing, he said.
"It's just inconvenient. We have to travel to Kerikeri then."
The drive to Kerikeri took just over an hour, with a 40-minute flight to Auckland, Mr Crooks said.
While the extra travelling would mean less time with his family it was the potential damage to the Far North region which really concerned him.
"There has to be some balance in terms of maintaining some reasonable infrastructure in communities of this size."
The Crooks have lived in Kaitaia for about 13 years.
By Nikki Preston and Grant Bradley of The New Zealand Herald