Aviation is booming in New Zealand, with the industry now generating $2 billion in annual revenue and making up nearly one-third of New Zealand’s GDP.
In the last two years, the Government has allocated $1.9 billion to support the sector, according to a new report by the National Airports Council.
The council has just released its annual report on aviation funding and it paints a rosy picture.
The sector’s growth is largely driven by increased demand and lower cost, the report says, and the government’s investment will help New Zealand become the best aviation hub in the world.
The report notes that the growth is due in part to the introduction of low-cost ticketing, which is creating a new market for airlines.
The airport council estimates the industry will grow by about 9 percent in the next five years, but says there are still a lot of uncertainties about the sector.
“The sector will remain challenging for the foreseeable future, particularly for the small airlines who need to operate in a rapidly changing aviation environment,” the council said in its report.
“In the short term, the industry is likely to remain reliant on low-price fares for revenue generation.”
The government says it’s committed to funding a wide range of aviation activities, including new passenger infrastructure, infrastructure support, airport management and air navigation.
The Aviation Industry Association says the Government should not ignore the sector because of its growth.
“I think the Minister is absolutely right to be focused on this sector and I think the Government is wrong to be focusing on this industry,” the association’s chief executive, Michael Brown, told reporters.
“It’s not going to stop them from investing in new infrastructure, it’s not a question of what can be done now.
It’s a question about how we plan to sustain that investment and continue to grow the industry.”
Brown also criticised the Government for prioritising air traffic control, which he said could be used to fund other aspects of the aviation sector.
Airports are expected to receive a total of $3.4 billion from the Government over the next four years, and Brown said that was a “massive commitment”.
The Government’s announcement will see New Zealanders pay up to $3,200 to take a flight, but the council warns the extra money will not be enough to keep the industry on track.
“We think that there’s a huge need to be investing in aviation infrastructure to support and increase demand in New Zealander skies,” Brown said.
“There’s a lot more that we need to invest in our aviation infrastructure.”
Read more: New Zealand is becoming the best destination for aviation in the OECD