Government Steps In With $30m Loan Package to Safeguard Regional Air Routes

The Coalition Government has unveiled a support package aimed at protecting at-risk regional air services, with up to $30 million in concessionary loans made available from the Regional Infrastructure Fund. The initiative, announced by Regional Development Minister Shane Jones and Associate Transport Minister James Meager, is designed to stabilise small passenger airlines that are struggling to maintain operations in the face of mounting pressures.

Why Regional Air Services Matter

Regional air links are considered vital to the economic and social wellbeing of communities across New Zealand. For many smaller towns and rural centres, limited road and rail options mean that local airports provide the only fast and reliable connections to essential services.

“Reliable air services are critical for the economic and social wellbeing of regional New Zealand. They enable access to healthcare, education, business, and whānau,” Minister Jones said. He stressed that without intervention, some regions could face isolation, leading to knock-on effects for local economies and population retention.

Pressures on Small Airlines

Small regional carriers have faced increasing challenges since the pandemic. They continue to grapple with rising operational costs, limited access to affordable capital, and fluctuating passenger numbers. These issues have already led to reduced services in some regions, and in extreme cases, the complete withdrawal of air links.

Jones noted that “without this support, some communities risk losing vital air connections that underpin regional development.”

How the Support Will Work

The assistance is not being presented as a bailout but rather as targeted relief. Loans will be concessionary, meaning they are offered on more favourable terms than market rates. According to Associate Transport Minister James Meager, the loans are designed to help with specific financial pressures such as aircraft leasing, maintenance, and debt refinancing.

“The aim is to stabilise the sector and support regional routes in the short to medium term. This is not intended to meet all the airlines’ capital needs but to provide targeted relief,” Meager explained.

Digital Transformation and Interlining

In addition to direct financial support, Cabinet has approved funding for technological upgrades that could reshape how small carriers integrate with larger airlines. Known as “interlining,” these digital improvements will allow regional carriers to link their booking systems with those of major airlines.

This means passengers will be able to book a single itinerary covering multiple airlines, while also enjoying streamlined baggage-handling processes. The changes are expected to make regional flights more convenient and attractive to travellers.

“Streamlining bookings and baggage-handling between the smaller carriers and the bigger players in the aviation sector will make it much easier for the travelling public to plan and book their preferred routes in one go,” Meager said.

Protecting Regional Connectivity

Both ministers emphasised that the government’s intervention is a one-off measure rather than an ongoing subsidy. The goal is to preserve regional capacity and prevent the erosion of local air services before it becomes irreversible.

Jones pointed out that “once fleet capacity is lost, recovery is difficult and costly. We’re acting now because a combination of factors, including the ongoing after-effects of the pandemic, are placing exceptional pressures on the sector.”

The loans will be administered through Kānoa – the Regional Economic Development & Investment Unit. Applications are expected to open shortly through the Grow Regions website at www.growregions.govt.nz.

A Modest but Meaningful Intervention

The package is being framed as a modest yet impactful measure to safeguard regional connectivity, reflecting the Coalition Government’s broader commitment to ensuring that smaller communities remain linked to the national economy.

“This Government is committed to ensuring that all regions, not just the main urban centres, remain connected and included in the national economy,” Jones concluded. “This is a one-off, modest but meaningful intervention that will help prevent further service loss and protect regional connectivity.”