Why should Ratepayers subsidise this or any private business?
This loan was made in mid-2020 by the then council for unknown reasons, except that the then Mayor wanted the airline to serve Paraparaumu after he said Air NZ’s departure in 2018 was good riddance.
There have been big costs to Ratepayers:
First the interest cost. KCDC borrows a lot from the NZ Local Government Funding Agency and over the last 6 years the rate it has paid has varied between 3.78% and 5% currently. If the half-way point of these two interest rates — 4.39% — is taken as an average, then $500,000 x .0439 x 6 = $131,700 of interest cost to Ratepayers for the benefit of Air Chathams.
But that’s not all: Gemini AI says:
Since June 2018, the Kapiti Coast District Council (KCDC) has provided Air Chathams with roughly $1.3 million to $1.5 million in total financial support, consisting of destination marketing grants, a COVID-19 support grant, and a $500,000 interest-free loan. [1, 2, 3, 4]
Destination Marketing Grants: Eight distinct grants totaling about $759,000 intended to promote the Kāpiti-Auckland route and local tourism. [1, 2]
COVID-19 Support Grant: A one-off $20,000 relief grant given during the pandemic. [1]
What benefit has come from these extremely generous grants to Kapiti Ratepayers? It’s quite likely senior KCDC staffers have flown to Auckland and back to meet with their consultants; otherwise some business people in both places will have done the same — but how many tourists? Why would tourists want to fly from Auckland to Kapiti and back?
Tourists who visit Kapiti are most likely to that overland (car, campervan or train) as part of a longer trip taking in other parts of the North Island.
The 34/36-seat Saab 340 twin-engine turboprops that Air Chathams was using are much slower than the B-737 or A-320 jets that fly from Wellington to Auckland (maximum cruising speeds of 524 km/h verus 890 km/h respectively); how many would have preferred the former to the latter?
Air Chathams ceased its Auckland to Paraparaumu service on 31 July.