{"id":450650,"date":"2026-05-29T06:23:09","date_gmt":"2026-05-29T06:23:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/450650\/"},"modified":"2026-05-29T06:23:09","modified_gmt":"2026-05-29T06:23:09","slug":"budget-2026-air-nz-welcomes-aircraft-lease-tax-relief-but-aviation-industry-body-warns-skills-gap-persists","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/450650\/","title":{"rendered":"Budget 2026: Air NZ welcomes aircraft lease tax relief but aviation industry body warns skills gap persists"},"content":{"rendered":"<p class=\"rGEveXCr\" style=\"display:none\">In dry leases, the lessor or owner of the parts typically provided parts but did not provide crew, maintenance or insurance.<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">Minister of Revenue Simon Watts said the previous tax had been applied haphazardly. <\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">\u201cNew Zealand businesses leasing aircraft and parts from overseas suppliers are often required to withhold non-resident contractors\u2019 tax of up to 20%,\u201d he said.<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">\u201cBut the tax is disproportionately high, and it is applied inconsistently.\u201d<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">He said the old tax had been aimed at the lessor, but in practice was passed on to local businesses. <\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">Watts said that had been bad for the New Zealand economy. <\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">\u201cRemoving the tax barrier to the leasing of aircraft, by exempting aircraft operating leases from the non-resident contractors\u2019 tax, supports the Government\u2019s wider programme of removing barriers to economic growth.\u201d <\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">Air New Zealand said the change announced in the Budget would reduce the tax costs of leasing aircraft and engines from offshore. <\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">\u201cThe amount of any reduction would depend on the terms of the lease,\u201d an Air NZ spokesperson told the Herald.<\/p>\n<p>Engineering shortage<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">Meanwhile, the Aviation Industry Association (AIANZ) said it was disappointed no support for more aviation engineering training places was announced. <\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">\u201cIt is a lost opportunity to support a sector that is short of more than 300 engineers,\u201d AIANZ chief executive Simon Wallace said.<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">He said <a href=\"https:\/\/www.nzherald.co.nz\/business\/companies\/airlines\/permanent-aviation-council-members-announced-high-tech-and-regional-airlines-get-represented\/VWDMRPTLGRB67OWZSFJSSJIJDE\/\" target=\"_self\" rel=\"nofollow noopener\" title=\"https:\/\/www.nzherald.co.nz\/business\/companies\/airlines\/permanent-aviation-council-members-announced-high-tech-and-regional-airlines-get-represented\/VWDMRPTLGRB67OWZSFJSSJIJDE\/\">the Aviation Council<\/a> had been raising workforce issues with the Government.<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">\u201cAnd for more than two years now, the AIANZ has put forward a strong evidence case to support more investment in an area that is critical to the Government\u2019s economic growth agenda.\u201d<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">Wallace said New Zealand last year would have to keep relying on the <a href=\"https:\/\/www.nzherald.co.nz\/nz\/politics\/pm-jacinda-ardern-fronts-post-cabinet-immigration-announcement-expected-miq-ombudsman-report\/R2Z5SQEGJVC7FJYW2MRMTX3DVI\/\" target=\"_self\" rel=\"nofollow noopener\" title=\"https:\/\/www.nzherald.co.nz\/nz\/politics\/pm-jacinda-ardern-fronts-post-cabinet-immigration-announcement-expected-miq-ombudsman-report\/R2Z5SQEGJVC7FJYW2MRMTX3DVI\/\">Immigration Green List<\/a> to fill shortages. <\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">The Green List was established in 2022 to provide pathways to residency for people in professions deemed critical for the country.<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">\u201cOur vocational training institutes are turning away young New Zealanders from a vocation that offers an attractive career pathway,\u201d Wallace said.<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">The AIANZ has also <a href=\"https:\/\/www.nzherald.co.nz\/business\/companies\/airlines\/aviation-engineering-shortage-why-more-young-kiwis-arent-signing-up\/DG5RVFFBYBDHPAVNZT3FRBVKZM\/\" target=\"_self\" rel=\"nofollow noopener\" title=\"https:\/\/www.nzherald.co.nz\/business\/companies\/airlines\/aviation-engineering-shortage-why-more-young-kiwis-arent-signing-up\/DG5RVFFBYBDHPAVNZT3FRBVKZM\/\">raised concerns about a shortage of engineers<\/a> to fix aircraft in general aviation, across agriculture, contracting and search and rescue. <\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">The Herald last August heard from Salus Aviation, which described a shortage of engineers for helicopters and planes. <\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">Salus also said it was having to look overseas for engineers to staff overhaul workshops.<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">The Government at the time said no options would be ruled out to better train, recruit and retain highly qualified people in these roles.<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">Associate Minister of Transport James Meager today said $69m was being invested into doubling the number of places in trades academies.<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">That and some other inititiaves could help the aviation sector, he said.<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">Meager said Top of the South Trades Academy had partnered with Nelson Marlborough Institute of Technology last year to deliver an aviation engineering programme. <\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">\u201cThis investment will allow those opportunities in other parts of the country and support growth in the aviation sector.\u201d<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">He said the Budget also invested $15m into industry skills boards to develop at least eight new industry-led secondary subjects focused on a specific industry. <\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">\u201cThis could include engineering pathways to align closely with real-world labour market demands,\u201d Meager said.<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">He said the Aviation Council\u2019s workforce working group was developing advice on how to address these issues, including for engineers.<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">\u201cI expect an update on this work following the next Aviation Council meeting in June.\u201d<\/p>\n<p>Regional airline fund<\/p>\n<p><img  alt=\"Air Chathams was announced as the recipient of a $17.2m loan. Photo \/ File\" class=\"article-media__image responsively-lazy\" data-test-ui=\"article-media__image\"\/>Air Chathams was announced as the recipient of a $17.2m loan. Photo \/ File<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">Meanwhile, AIANZ said \u201calmost none\u201d of the <a href=\"https:\/\/www.nzherald.co.nz\/nz\/politics\/government-announces-30-million-loans-to-small-airlines-to-support-regional-routes-approves-funding-for-interlining\/4GX4UXIKUVBNLKFU57LJ6CFNNE\/\" target=\"_self\" rel=\"nofollow noopener\" title=\"https:\/\/www.nzherald.co.nz\/nz\/politics\/government-announces-30-million-loans-to-small-airlines-to-support-regional-routes-approves-funding-for-interlining\/4GX4UXIKUVBNLKFU57LJ6CFNNE\/\">$30 million allocated in September<\/a> last year to support regional airlines had been dispensed. <\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">\u201cThis is most disappointing at a time when this support is so urgently needed,\u201d Wallace said.<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">In late February, <a href=\"https:\/\/www.nzherald.co.nz\/business\/companies\/airlines\/regional-airline-loans-welcomed-but-insidious-cost-increases-may-be-one-reason-for-sense-of-urgency\/premium\/IZTN6ZI6RFGSVJ2FL4LALA7YRU\/\" target=\"_self\" rel=\"nofollow noopener\" title=\"https:\/\/www.nzherald.co.nz\/business\/companies\/airlines\/regional-airline-loans-welcomed-but-insidious-cost-increases-may-be-one-reason-for-sense-of-urgency\/premium\/IZTN6ZI6RFGSVJ2FL4LALA7YRU\/\">Golden Bay Air<\/a> was announced as the recipient of a $1.1m loan. <\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">Minister for Regional Development Shane Jones and Meager in April <a href=\"https:\/\/www.nzherald.co.nz\/business\/companies\/airlines\/shane-jones-james-meager-say-22m-loan-package-will-help-struggling-regional-airlines\/T4XPRQGSWNF6XB3TOWPY3GTMAA\/\" target=\"_self\" rel=\"nofollow noopener\" title=\"https:\/\/www.nzherald.co.nz\/business\/companies\/airlines\/shane-jones-james-meager-say-22m-loan-package-will-help-struggling-regional-airlines\/T4XPRQGSWNF6XB3TOWPY3GTMAA\/\">announced $21.952m for three airlines<\/a>.<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">That included $17.2m for Air Chathams to refinance debt, and $4.5m for Blenheim\u2019s Sounds Air to upgrade its fleet and refinance debt.<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">The Government said Island Air, connecting Tauranga and M\u014dt\u012bt\u012b Island, would get $252,000 for fleet maintenance.<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">The fund administrator is K\u0101noa, the Regional Economic Development &amp; Investment Unit.<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">A K\u0101noa spokesperson today said the unit was trying to progress legal loan agreements as quickly as possible. <\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">\u201cHowever, counterparties must obtain their own independent advice and be satisfied with the terms they are agreeing to.\u201d<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">It said that introduced a layer of complexity compared with more straightforward financial arrangements such as grants.<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">\u201cThe bespoke nature of loans to regional airlines also further increases the complexity of the loan agreements, which can increase the time it takes to finalise them.\u201d<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">K\u0101noa said loan applications needed robust due diligence to ensure Crown funding was used appropriately and taxpayer interests were protected. <\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">\u201cThe timeliness of this process is dependent on applicants providing complete and accurate information,\u201d they added.<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">\u201cOnce funding is approved, even if contracting is still underway, recipients can proceed with confidence that government support will be delivered.<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">\u201cThis allows them to make necessary arrangements in anticipation of the funding being paid.\u201d <\/p>\n<p class=\"rGEveXCr\" style=\"display:none\">K\u0101noa said any payment requests would be processed promptly, as long as relevant approval conditions were satisfied.<\/p>\n<p class=\"rGEveXCr\" style=\"display:none\"><a href=\"https:\/\/www.nzherald.co.nz\/author\/john-weekes\/\" rel=\"nofollow noopener\" title=\"https:\/\/www.nzherald.co.nz\/author\/john-weekes\/\" target=\"_blank\">John Weekes<\/a> is a business journalist covering aviation. He previously covered consumer affairs, crime, politics and courts.<\/p>\n<p>Stay ahead with the latest market moves, corporate updates, and economic insights by subscribing to our <a href=\"https:\/\/www.nzherald.co.nz\/my-account\/profile\/newsletters\/?from=cmp\" target=\"_self\" rel=\"nofollow noopener\" title=\"https:\/\/www.nzherald.co.nz\/my-account\/profile\/newsletters\/?from=cmp\">Business newsletter<\/a> \u2013 your essential weekly round-up of all the business news you need.<\/p>\n","protected":false},"excerpt":{"rendered":"In dry leases, the lessor or owner of the parts typically provided parts but did not provide crew,&hellip;\n","protected":false},"author":2,"featured_media":450651,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[2246,542,68,31844,15033,7800,11357,3013,38114,266,15221,2454,700,82258,111,43,139,69,17711,25470,9361,312,16708,7496,8218,45531,1533],"class_list":["post-450650","post","type-post","status-publish","format-standard","has-post-thumbnail","category-new-zealand","tag-2246","tag-access","tag-air","tag-aircraft","tag-aviation","tag-body","tag-budget","tag-but","tag-gap","tag-government","tag-improve","tag-industry","tag-latest","tag-lease","tag-new-zealand","tag-news","tag-newzealand","tag-nz","tag-parts","tag-persists","tag-relief","tag-says","tag-skills","tag-tax","tag-warns","tag-welcomes","tag-will"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/450650","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=450650"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/450650\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/450651"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=450650"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=450650"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=450650"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}