Aviation Industry Association Conference
Good afternoon and thank you for the opportunity to say a few words today.
This morning you’ve already heard from the Conservation Minister Kate Wilkinson, and I’m sure you would have welcomed her decision on landings at Milford Sound aerodrome.
As we know, the weather already provides a natural limit on the number of flights.
I think it is a sensible, balanced and common sense decision. It shows faith in the aviation industry to come up with solutions.
On that note, I would encourage operators to enrol in the AIA Aircare programme, and to work collaboratively with DOC on mitigating noise levels in National Parks.
Today I’d like to cover some important areas of government work that impact directly on your industry.
The theme of your conference this year is “Innovation and Growth”, and it’s a very fitting one.
The aviation sector has proven itself to be very resilient over the last few years, as we’ve come through the worst recession since the 1930s.
This year we’ve also had devastating earthquakes in Christchurch and Japan, and the recent ash clouds which have caused a lot of disruption and frustration.
But despite all these challenges, the aviation industry in New Zealand remains in good shape.
Our international visitor numbers have held up well. For the year ended May 2011 there were 2.5 million international visitor arrivals, up 1 percent or 25,258 on the previous year.
When you consider that aviation contributes nearly $10 billion to our GDP, we can’t overstate just how important this sector this is.
Aviation connects us with the world, bringing in tourists and business people, and moving imports and exports.
Regulatory reform programme
One of the best things the government can do to support innovation and growth is to reduce red tape wherever possible, while making sure the regulation we have is the best it can be.
Since coming into office we’ve carried out a number of regulation reviews across a range of portfolios.
As part of this, in December last year the Ministry of Transport kicked off a major reform programme.
The aim is to improve the way transport performs this role, and acknowledge that poor regulation can place a real burden on business.
Improving the efficiency and effectiveness of Rule development is a big part of this work. I understand officials from the Ministry will brief you more about this tomorrow.
In any event, I can assure you that John and Irene keep me well informed of regulation issues facing your industry.
The Ministry is currently working on an assessment of the key issues identified by the AIA and I expect to receive recommendations shortly on a way forward.
International air transport policy
The Ministry is also carrying out a review of New Zealand's international air transport policy.
It’s been 13 years since this policy was last examined, and a lot has happened in that time.
We’ve negotiated some of the most liberal and flexible air services arrangements possible with other countries, and many open skies agreements have been put in place.
It has certainly maximised our trade and tourism benefits. Many more tourists have enjoyed our country, more Kiwis have travelled and more people throughout the world have been able to purchase our goods.
At the same time though, we’ve also seen the global challenges of terrorism, pandemics, volatile fuel prices and the worst recession in generations.
Given all of this, we think the time is right now for a review to make sure we are maximising economic development, while being responsive to change.
International Air Passenger Duty
On the subject of international aviation, the New Zealand Government has made a submission to the United Kingdom on changes to its International Air Passenger Duty.
This has placed extracosts on passengers travelling to New Zealand from the UK, and if traveller numbers fall there will be flow-on effects for many parts of the industry.
We’ve worked alongside a number of industry stakeholders in preparing this submission, in a good example of collaboration.
Prime Minister John Key also raised the issue with British Prime Minister David Cameron a few months ago, and we are hopeful of a good outcome.
CAA reviews and change programme
This is also a period of change for the Civil Aviation Authority.
As I’m sure you’re aware, they are tackling a number of challenges – changes to their regulatory approach, modernising their funding, and improving their governance and performance.
The CAA Board’s value-for-money Review has confirmed that New Zealand has some of the safest and most secure skies in the world, but at the same time it has recognised the need for improvements.
Transport Minister Steven Joyce and myself have sent clear signals of our expectations in this area, and we have met regularly with the CAA Board to discuss progress. In addition, we’ve strengthened the Board with four new appointments in the past 12 months.
Ultimately, it is up to the Board to lead and manage the change process along with CAA management, and I’ve sensed a real determination to build momentum and make these changes work.
Further reduced passenger security charges
I’d like to end with two pieces of good news.
From 1 July this year passenger security charges will decrease from $10.22 to $8.00 [GST inclusive] per departing international passenger, and from $4.45 to $3.70 [GST inclusive] for each departing domestic passenger.
Over the last two years, international charges have dropped by a total of $7.00 and domestic charges by just under $1.00.
Of course this won’t reduce the level of security provided at airports, but it will ensure value for money.
The reductions will eliminate a forecast $27 million of accumulated surpluses by July 2013, while leaving the agreed $7.5 million contingency reserve in place to meet any unexpected costs.
While charges will need to be gradually increased again from 2013/14 once the surpluses have been eliminated, there will be an incentive for the Aviation Security Service to keep costs low so that any future increases can be minimised.
Rugby World Cup 2011
Finally, of course, we have just two months to go until the Rugby World Cup kicks off.
It goes without saying that this event is a huge opportunity for New Zealand. We're expecting around 85,000 international visitors, many of them from Australia and the UK - our two biggest existing overseas tourist markets.
These travellers will be moving widely around the country to support their teams. Your industry will have a lot of involvement, whether that’s getting them from game to game, or taking them out for a scenic flight.
Every aspect of what we do as hosts will contribute to the impression visitors have of their time here.
We need to make sure all our visitors receive a warm welcome and have a great time here. This will be a unique opportunity to promote New Zealand around the world.
Conclusion
So you can see that the last 12 months have been a busy period for the aviation industry, and for the government’s role as enabler and regulator.
It’s very important we get all of these things right. A good framework for governance will mean better regulation and only where it’s needed.
It will mean international air policy that supports economic development, a CAA change programme that is well underway, and better value for money for services.
It’s an ambitious list, but we are up for the challenge and I look forward to continuing to work with the industry in achieving this.
Thank you for the chance to speak today and I wish you all the best for the rest of your conference.