Air Chathams has missed the due date to repay a $500,000 Kāpiti Coast District Council loan.
By Justin Wong of Local Democracy Reporting
The airline’s chief executive, Duane Emeny, said the loan would be repaid and asked for a 10-business day extension to work out a payment plan, but warned there was “a significant risk” to the direct Paraparaumu to Auckland service if the council chose to declare the loan in default.
The council agreed to the interest‑free loan in November 2020, during the Covid‑19 pandemic, to help the airline restart flight operations. It came on top of a separate $20,000 Covid‑19 support grant.
A proactively released response to a Local Government Official Information and Meetings Act (LGOIMA) request in late 2025 said the council agreed to extend the original repayment date of November 22, 2025 to May 2026. In response to a separate LGOIMA request earlier this month, the council said the repayment date was “end May 2026”.
“Air Chathams’ argument is that we’ve continued to provide an air service for five years through the most challenging times in regional aviation, and the money that we’ve lost in doing that is significantly more than the money that you’re owed,” Emeny told Local Democracy Reporting on Wednesday.
“That’s your decision as a council to make and, if that’s the case, then we’ll work through it. But what I would say is there’s a significant risk to the air service continuing if they choose that path.”
Mayor Janet Holborow said on Wednesday it would be inappropriate for her to comment as negotiations were continuing.
On Tuesday a council spokesperson said officials were in “active discussions” with Air Chathams on paying the loan but did not elaborate, citing LGOIMA provisions that it could jeopardise negotiations and for commercial reasons.
Other Covid-related assistance the airline received from North Island councils included a $350,000 loan from Whakatāne District Council, a $30,000 marketing budget and a $500,000 loan from Whanganui District Council.
The airline asked the Whakatāne District Council last May to write off its $350,000 loan as part of a wider financial package that included waiving 12 months of landing fees at the publicly owned airport, entering a profit‑and‑loss sharing arrangement on the Auckland route, and a further $3m loan to buy a new Saab 340.
The airline later withdrew the request for the new aircraft loan.
Whakatāne councillors agreed to waive the landing fees but rejected the rest of the package, though some left the door open to consider alternatives, including converting the loan to airline shares – a clause written into the loan contract.
In April, the Government loaned Air Chathams $17.2 million through the Regional Infrastructure Fund to refinance debts. Emeny said that was to service interest-bearing debt, which meant the councils’ interest-free loans did not qualify.
After Air New Zealand pulled the plug on the Kāpiti Coast–Auckland route in 2018, the district council subsidised Air Chathams to run the direct flights through grants to promote the Kāpiti Coast as a destination and by covering the costs of the vital airfield flight information service, which provided pilots with weather and traffic information to operate safely.
– LDR is local body journalism co-funded by RNZ and NZ On Air.
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