Air corporate welfare

James Meager announced:

Golden Bay Air will be the first airline to receive a loan from funding ear-marked for at-risk regional air routes, Associate Transport Minister James Meager says.

The airline will receive approximately $1.1 million from the $30 million package set aside by the Coalition Government from the Regional Infrastructure Fund (RIF), designed to stabilise the sector and support regional routes in the short to medium term.

I’m against corporate welfare for regional air travel. I’m against corporate welfare for regional rail. I’m against corporate welfare for ferries to Waiheke Island. Commercial reality, not taxpayer subsidies or loans, should determine routes.

“Golden Bay Air’s loan will ensure the regional airline can refinance existing aircraft debt and fund essential ongoing major maintenance checks. This targeted relief will support it to maintain flights from Tākaka to Nelson, Karamea and Wellington,” Mr Meager says.

If there must be corporate welfare, I prefer a one off grant to a loan. If the business is solid, then it can borrow more commercially. If it is not solid, then a taxpayer loans doesn’t cover the core problem. It just leads to a sunk cost fallacy that as they owe us money, we most loan them even more.

The airline has capacity for around 17,000 passengers a year. If they need $1 million they should charge $6 more per flight (which start at $259) rather than sock the taxpayers.

The post Air corporate welfare first appeared on Kiwiblog.