World airline summit: Should NZ carriers get handouts to save routes?

“Airline margins are very tight, and the economics are even more challenging when it comes to regional connectivity.”

Iata’s Asia-Pacific zone includes some big and densely populated markets.

Then there is New Zealand, where regional routes have recently faced extreme strain, and there is no fully state-owned airline.

This week, Air Chathams’ decision to suspend Auckland-Kāpiti Coast flights led a local airline group to call for a national conversation about the connectivity the country expected.

“An airline isn’t by definition a national infrastructure service provider, not in the same way that maybe you would argue, the postal services or something like that,” Hee said at the Iata annual general meeting.

“It’s not that airlines specifically need a handout, or they need some special support, but is there a business case for airlines to operate on a particular service?

“If there isn’t, then airlines are acting very reasonably within their normal commercial decision-making framework by not operating.

“But if there is a national need to connect those communities, then that should be funded by the state.”

Air New Zealand is 51% state-owned. Hee suggested for such a mixed-ownership model, subsidies were unlikely to get much support.

“Unless it’s a fully state-owned airline, I actually don’t think that the ownership structure should play into that conversation at all.”

But he did add that many countries regarded some bus or train services as essential to connectivity and supplied them with public funding.

Air New Zealand chief executive Nikhil Ravishankar and Qantas International & Freight chief executive Cam Wallace are among those at the Iata AGM.

On skills shortages affecting pilots, engineers and air traffic controllers, Hee said a variety of solutions would be needed.

Some might seem to just involve old-fashioned marketing.

“Manpower in general, and skilled manpower, is a theme that the aviation industry will need to navigate over the years to come. Training is important, as is the role of ensuring that aviation is continued to be seen as an attractive career.”

But he said airlines needed a variety of partners to build the “pipeline” from identifying shortages and ensuring training spots were available.

And while AI and robotics might often be seen as a threat to jobs in some sectors, Hee said they could help fill skills shortages in aviation.

He said new “mega airports” were coming to the Asia-Pacific, and airports were very manpower-intensive operations.

“We’ve looked at different schemes, working with airport partners to try and encourage better use of biometrics, for example.”

Those projects typically meant airlines had to work with regulators and other parts of the sector to make more efficient use of airport space.

“There are already airports working on things like robotic assistance in areas such as backhandling, in areas such as ramp work.

“All of these things could have incremental improvements in productivity and also reduce the strain from shortages in the short-term.”

Hee said Asia-Pacific airlines had shown resilience in the face of surging jet fuel prices.

And he said the region was driving much of aviation’s global growth, with annual passenger numbers expected to triple by 2025.

But speakers at the Iata summit so far have indicated that if the fuel price crisis led to consolidation, meaning some airlines folding, that would come as little surprise.

The Iata AGM continues this weekend.

It will be the last one for Willie Walsh as Iata director-general.

The former Aer Lingus and British Airways chief executive will take over as chief executive of India’s IndiGo.

His successor at Iata is yet to be announced.

-The Herald travelled to Brazil courtesy of Iata and Latam Airlines.

John Weekes is a business journalist covering aviation. He previously covered consumer affairs, crime, politics and courts.