Reliable air connections are a key part of Taupō’s tourism strategy. Photo: Supplied.

Air New Zealand's regional boss is apologising for a high cancellation rate on the Taupō to Auckland route but also warns it is losing money.

By Dan Hutchinson

Speaking at the Taupō Tourism Summit, General Manager – Regional, Iain Walker acknowledged the airline's cancellation record on flights into Taupō.

"Our cancellation rate is not where we want it to be. It can do better. We're focusing on that with the team."

He says regional flights are not straightforward, and they need to sell more than 80% of seats to break even.

For every 10 crew they have rostered across the business, they need to have three crew waiting on standby just in case something goes wrong.

But it is high fuel and maintenance costs that are the central problem.

He told delegates that on a fully loaded Q300 turboprop — the aircraft type serving Taupō — that only one or two seats are generating a profit.

"As soon as we're below 48 seats sold at the moment, we're losing money on the flight," he says, noting that the morning service on the day of the summit (August 20) carried just 38 passengers.

Load factors on the route are averaging about 70%, well short of the mid-to-late 80% threshold Walker says is needed to justify more services.

There are positive signs with inbound international tourism growing.

About 7,000 international traveller seats were recorded on the route over the past year — but those visitors account for only 15% of passengers. Domestic travellers make up the remaining 85%.

"We are losing money on the route, that's for sure," he says, saying the airline has kept fares lower than fuel costs would otherwise demand in order to maintain connectivity for the community.

The airline has recently restructured to reduce costs, with about 10% of office staff departing.

Iain pointed to a forthcoming fly-fishing documentary being produced in partnership with local operators as the type of initiative being used to attract North American visitors to the Taupō region.

He also highlighted a new multi-stop booking tool that allows travellers to build customised itineraries across New Zealand online.

Charter flights are another way to connect the district, and the airline is in discussions with tour operators — particularly golf and fly-fishing groups from North America — about bespoke charter routes connecting regional destinations like Taupō.

"We know that if the region's successful, we're successful as well."

Forward bookings for December and January look strong, driven largely by international visitor demand.

In a question to Iain, local architect Robert Montgomery says he has been involved in property development around the Taupo district for about 20 years.

There has been a number of hotel proposals over that time, but a “common theme” that kept coming back is investors’ concerns about international connections into Taupō.

“Where do you see that going? I mean, obviously it's a sort of a chicken and the egg situation.”

Iain says they have seen demand patterns change quite a bit.

Previously, people would land in Auckland and want to get on a flight immediately, but they are seeing, particularly tour groups, wanting to do a bit of a road trip around the Upper North Island.

“It’s not just focusing purely on the flight itself; How do we attract people to the region?”