The Aircraft Are Ageing.
The Finance Is Broken.
And Wollongong Is Paying the Price.

There's a number worth sitting with: USD $20 million. That's the cost of a new ATR 42 turboprop — the kind of workhorse aircraft that connects regional communities like ours to the rest of Australia. A used SAAB 340 is cheaper, somewhere between USD $2 million and $3 million, but it comes with a hidden cost: ageing airframes, expensive spare parts, and maintenance bills that only grow over time.

This is the financial reality facing the regional airlines that serve airports like Wollongong. And right now, there is no affordable path through it.

The Fleet Problem Is Real — and Getting Worse

Operators want to invest in newer, more reliable aircraft. The problem isn't ambition. It's capital. Regional aviation is viewed as high-risk by medium-to-long-term lenders, which means finance — when it can be sourced at all — comes at punishing commercial interest rates that make fleet renewal unworkable for a small operator on thin margins.

The cruel irony is that newer aircraft are up to 25 percent more fuel efficient, which would reduce operating costs and help keep fares down over time. The investment pays for itself. But when the upfront capital requirement runs to tens of millions of dollars at commercial rates, the maths simply doesn't work.

So the fleet gets older. Maintenance costs rise. Those costs flow into ticket prices. And passengers — the people of the Illawarra — pay more for a service the operator is struggling to sustain.

What Happens When the Economics Tip Over the Edge

In New Zealand, the situation has already reached a breaking point in several regions. Airlines found it more financially attractive to sell aircraft into the international market than to keep running domestic services. That's the logical endpoint of a broken funding model: operators don't just cut routes — they liquidate the assets, and once fleet capacity is gone, recovery is slow and costly.

"Since Covid it's just been an absolute nightmare trying to keep the costs under control in regional aviation. The pressure on these airlines is extreme. Regional aviation in this country has been decimated and there's more to come."

— Andrew Crawford, Managing Director, Sounds Air (New Zealand)

Australia has already seen a version of this with Rex Airlines, where hundreds of millions of dollars in emergency federal support was ultimately required. Intervention at crisis point is always more expensive than prevention.

New Zealand Has Acted — Australia Should Take Note

Last year, the New Zealand government stopped waiting and moved. It made $30 million in concessionary loans available through its Regional Infrastructure Fund, specifically to help regional airlines manage debt, maintain aircraft, and continue operating routes vital to regional communities. Eligibility required airlines to demonstrate genuine financial pressure and limited access to affordable capital — exactly the conditions facing operators across Australia today.

Critically, this was not a bailout. The loans required repayment, came with governance conditions, and were explicitly described as targeted, temporary relief — not an ongoing subsidy. The NZ government's own language was precise: the aim was to provide meaningful relief on cost pressures while ensuring responsible use of public funds.

Even so, the NZ experience offers a cautionary note: the fund helped stabilise some operators, but routes are still under threat. The lesson for Australia is to act earlier, act more broadly, and build a durable mechanism rather than a one-off intervention.

What We Need From Canberra

The Regional Aviation Association of Australia has put a clear proposal before the Productivity Commission: a Regional Aviation Investment Fund, financed by redirecting a modest share of the Passenger Movement Charge — revenue already generated by aviation that currently flows into consolidated government revenue. No new taxes. No new levies. Just a smarter use of money the industry already produces.

The fund would provide low-interest loans and government-backed guarantees that make fleet renewal financially viable for operators who want to invest but cannot access capital at commercial rates. It would also support workforce training, maintenance investment, and relief from the compounding burden of airport charges and regulatory fees.

For Wollongong, this matters directly. The airlines that serve our community are not large corporations with deep balance sheets. They are lean operators making difficult decisions every day about whether ageing aircraft are worth keeping in service. A government loan facility at reasonable rates doesn't ask them to do the impossible — it gives them a fighting chance to do what they already want to do: keep flying.

The Cost of Doing Nothing

Fewer services, higher fares — and eventually, no services at all. That is the trajectory without intervention. New Zealand saw that risk clearly and moved. The Productivity Commission inquiry is the right moment for Australia to do the same.

Wollongong deserves to be connected. The Illawarra economy depends on it. And the people who live here — patients, workers, families — shouldn't have to pay the price for a funding problem that government has the tools to fix.