Increasing regional mobility choices for all Kiwis

The days of cheap flying are ending. Some regions now struggle with providing regular air links to major centres. In response, there have been several calls for subsidies to aviation.

But there are better ways for Aotearoa New Zealand to support greater mobility choices.

Once it was possible to catch a train from Auckland to Tauranga, from Wellington to Napier or to New Plymouth, from Christchurch to Dunedin. There were night trains and overnight ferries. Not that long ago there were seven long distance trains per day passing through Palmerston North station. All backed up by an extensive network of buses carrying not only passengers but freight. But no longer. Now to get from the regions to major centres most people have to rely on cars or planes.

Cars and planes are important providers of mobility in all parts of the world. But in most advanced economies there are other options too. In countries such as the UK, Finland and Switzerland there are extensive train networks, backed up by high quality bus services. Our neighbour Australia still retains a basic long distance train network and is investing in improving train services including investigating high-speed rail. Australia’s long-distance buses are more comfortable than ours, for example having onboard toilets.

The networks in Australia allow easy travel from small towns. They also cater for those in both big or small urban areas who cannot or do not want to drive longer distances. Trains are also better setup to cater for those with disabilities, as can suitably designed buses.

To provide frequent air services to all our regions is costly. If the industry gets serious about decarbonising and switches to more expensive alternative fuels, or purchases new electric planes, costs are likely to go up. The era of cheap flying is already coming to an end.

But many people are still demanding cheap flights.

Using taxpayer money to subsidise aviation is not the answer. Instead, a new approach is needed to mobility planning in Aotearoa New Zealand.

The issue of expensive domestic fares comes up regularly, especially around holiday periods. In early April 2025 a father in Tauranga received much media attention about the cost of flights in the holiday period to take his university attending daughter back to Wellington. RNZ reported that the father had complained to the Commerce Commission about Air New Zealand's prices after working out it was cheaper to bus to Auckland, Uber to the airport and get a Jetstar flight to Wellington than to fly direct from Tauranga on Air New Zealand. This story continued to generate even more interest over the subsequent week, with many people complaining not only about the cost of flights, but also the lack of services to regional New Zealand as well as frequent cancellations. The prime target was Air New Zealand.

Some commentators called for an inquiry into the cost and frequency of flights to our regions. Others questioned whether dynamic pricing should be abandoned, thus reducing the cost of travel at peak times (but no doubt lifting nonpeak fares). Others suggested there should be more competition on regional routes. Not surprising, there was some call for government action to bring prices down.

RNZ subsequently reported that ‘[t]he government is not ruling out underwriting the expansion of small regional airlines to help maintain routes and keep the price of flying competitive.’ After talking with the Airports Association and small airlines, the associate Minister for Transport James Meager said he did not rule out supporting small airlines to buy aircraft or giving support to regional airports .

He added "I'm not comfortable with it being the domain of the wealthy and I'm not comfortable with forcing people to make decisions to drive six or seven hours to get their family to a service, to a funeral, to a wedding because they can't afford to pop them all onto a quick flight."

When reporting on the Tauranga story, the journalists did not seem to realise there still remains one much cheaper alternative. The InterCity bus. Only $72 for a standard fare to Wellington.

A wider transport lens

The lack of discussion of alternative forms of travel reflects a wider issue. Mobility problems tend to be seen in isolation. If a broader lens was used which focussed on achieving greater mobility choices for all New Zealanders, at an affordable price, the need to reduce emissions, reducing dependency on imported fuels in an increasingly unstable world and a goal of developing an energy efficient transport system, then we would look beyond aviation solutions.

The need to reduce emissions from both driving and flying is clear. For example, Aotearoa New Zealand ranks 4th in the world for per-capita domestic aviation emissions. Decarbonisation goals have been weakened by Air New Zealand and there are no government policy initiatives to reduce emissions with the work of the group Sustainable Aviation Aotearoa on hold.

There was a missed opportunity to take a wider look at mobility in New Zealand. In 2022, in the final year of the previous Labour led government, a Parliamentary Passenger Rail inquiry was launched. Its terms of reference were:

• Investigating possibilities and viability of passenger rail in underserved communities, those with prior rail links that have been disestablished, and those currently advocating for improved rail links;

• Gaining insights into viability of passenger rail sitting alongside KiwiRail’s freight network;

• Evaluating existing inter-regional passenger rail, such as the Capital Connection, and how these services work between local and regional councils and central government;

• Gaining insights into the integration of regional rail into existing local public transport networks;

• Investigating the climate and emissions reductions possibilities of passenger rail, and how this links to VKT (vehicle kilometres travelled) reduction targets in the Emissions Reduction Plan, and including electrification between regions; and

• Investigating potential rail expansions and investments in specific areas, such as Tauranga (following a recent report on the re-introduction of passenger rail) and the Lower North Island (following a business case funded at Budget 2021).

While the TOR mentioned reducing vehicle kilometers travelled, it did not explicitly mention rail as a possible alternative to flying.

The public supported the inquiry by submitting 1,752 submissions, mostly from private individuals but many from businesses, government agencies and community groups including one prepared by The Future is Rail.

A report was published in June 2023 with the following recommendations.

If followed up on these recommendations, this would have gone some way towards increasing mobility choices for those living in the regions. Two examples given were reviving the Kamai Express from Auckland to Tauranga and the Bay Express from Napier to Wellington.

But the recommendations were rejected by the incoming coalition government and no further work was undertaken. Since then, government policy documents have not been supportive of passenger rail outside of the metros. Long distance buses are not even mentioned in policy documents.

The only political party keeping the goal of reviving passenger rail is the Greens. In their alternative Green Budget, released on the 14th of May 2025, two key services they support reviving are the Kamai Express and an Auckland to Wellington night train.

Inequalities in mobility options

Despite the Associate Minister for Transport stating that in relation to flying “I'm not comfortable with it being the domain of the wealthy”, it is the better off members of society who fly the most. And while clear data is not available, from personal experience it is the poorer members of society who often rely on long distance buses.

The best New Zealand study illustrating transport inequalities is "Socioeconomic inequalities in greenhouse gas emissions from household travel in Aotearoa/New Zealand".

Despite limited ability to measure it, the study indicates air travel may be the most unequal mode of transport. About one in forty (2.4 %) participants in the least deprived quintile reported taking a plane trip in the last week, compared to one in a thousand (0.1 %) participants living in NZDep quintile 5 (Supplementary Table 2 also confirms large inequities in flying in the last year.) For those living in NZDep quintile 1, air travel emissions from domestic travel were their second largest source of emissions, representing 10 % of their mean weekly emissions.

This would suggest subsidies to aviation to makes fares cheaper would be primarily captured by better off members of society.

Taxpayer and ratepayer support for aviation

Our national airline, Air New Zealand, has received taxpayer bailouts in the past. The last major one requiring over $1bn, was, in 2001.

On the other side of the government ledger, international aviation is exempt from fuel taxes, GST and is not in the ETS scheme.

Domestically, ratepayers and/or taxpayers have paid for airport terminal upgrades. Examples include New Plymouth, the Chatham Islands and Taupo.

Despite Taupo’s nearly $10m upgrade completed in 2023, it has struggled to attract airlines to fly the Taupo to Wellington route with Originair now pulling out. Flights to Auckland are also infrequent.

There have been examples of ratepayers supporting an airline to bring a service to their region, such as Kapiti.

What very few New Zealanders know about is a subsidy to flying, provided through a GST exemption. Through an international agreement all international travel is GST exempt. But it is not only the international flight that is GST exempt. This exemption includes connecting domestic flights. If you can connect to the flight by train the train fare will be subject to GST.

This exemption on connecting flights is not insignificant. Assume that one can get flights to Auckland and back from Palmerston North for $150 each way to connect with an overseas flight. A total fare of $300 should have a GST component of $45. So, in this hypothetical example, there is a loss of $45 per person on this trip to government revenues.

Market dominance and monopolies

Reacting to complaints about high domestic fares, the Commerce Commission has said that a market study into high Air New Zealand domestic fares will not be effective. Commerce and Consumer Affairs Minister Scott Simpson has acknowledged concerns but has ruled out regulating Air New Zealand. The Commission notes that actors driving high airfares structural and economic, beyond just competition issues.

Market dominance is common in the overall transport system. Outside of the metros, KiwiRail is the sole provider of rail transport and privately owned InterCity group is effectively a monopoly supplier of long-distance bus services. Three longer distance rail services, the Masterton to Wellington route, the Capital Connection and Te Huia are all subsidised. Intercity is not directly subsidised but its off-bus infrastructure is generally provided by local government.

When there is market dominance, transport services can be regulated. For example, regulations for Intercity would be useful to ensure it is better suited to carrying disabled passengers. This could be backed by subsidies if necessary.

Future challenges

Flying will not get cheaper. Switching away from fossil fuels will be costly. But decarbonising transport will take place against a backdrop of many other economic and social changes. One important trend is an ageing of New Zealand’s population.

As an example, Hawke’s Bay is projected to be one of New Zealand’s fastest growing areas. In 2018, it was estimated 172,000 people lived in the region. This is projected to reach over 202,000 by 2048, two years before New Zealand is aiming for net zero for emissions. More people mean a greater potential user base for a train.

This population is ageing. In 2001, when the Bay Express ceased operation, just 13% of the Hawke’s Bay population was estimated to be 65 or older. But by 2033, it could be 24% and by 2048 it is likely to be just under one-third. Many will be in their 70s or 80s. While most will be in the larger areas of Napier and Hastings, significant numbers will be in the smaller towns across the region. For example, housing developments are being planned in Waipukurau.

At any age not everyone is able to drive or wants to drive. But at some point in our lives, most drivers will no longer be able to do so. In addition, for those wanting to get from a town such as Waipukurau to Wellington, the time involved in reaching Napier airport, flying from Napier to Wellington airport, then getting into central Wellington is likely to be longer than the train trip.

We need to transition to a low emission, energy efficient transport system that gives maximum mobility to all kiwis – and that will not be achieved by propping up the aviation industry. It will be achieved primarily by investing alternative modes of travel including modern electric trains and buses.