Z Energy CEO Mike Bennetts writes to GAA:
Our decision to exit the Taumarunui Aero Club by closing our Jet and Avgas facilities was not one that we made lightly, nor without appropriate consultation with those most affected.
For some years now, the site has been running at a financial loss to both Z and our previous owners Shell. In order to preserve the contingency role the site plays in the general aviation market, we (as Z) have continued to supply Avgas fuel to the site, maintain a healthy level of stocks, and ensure all of the equipment is continually operational and environmentally sound.
In the middle of last year, it was apparent that the existing tanks were nearing the end of their useful lives and there was an increasing risk that continued use could compromise our safety and environmental standards. When we looked at the lowest cost replacement option, we were faced with a $180,000 capital investment into a site that is already operating at a loss and with nothing on the horizon that would indicate increased sales volumes or improved economics.
Rather than just exit promptly, in the middle of 2012 we engaged with the Aero Club and other frequent users to share our dilemma with them. In doing so, we eventually agreed that we would leave the Avgas facility in place until March 2013 so that the club could host the NZ Air Safari. To leave the tanks in situ beyond this date would be a compromise to our safety and environmental standards.
I realise this “economic rationale” does little to alleviate your concerns. This decision was debated vigorously amongst my aviation team and sits alongside other decisions we have made to invest $1.7m in airfield tank replacements elsewhere (in both the North and South islands) and a further $1.3m in upgrading the card readers across all of the country.
Unfortunately Taumarunui is an exception to that overall programme as the economics are so very poor, sales at that location are less than 600 litres per week (0.005% of our national Avgas volume) and there is no upside in sight. We actually intend closing three other sites like Taumarunui out of our national network while investing in all of the remaining 40 sites.
We have discussed our intentions with all of the major stakeholders and nothing has arisen that would cause us to change what is clearly a difficult decision, given the impact it has for the general aviation community. These stakeholders include the Civil Aviation Authority (CAA) as we wanted their perspective, especially on the safety considerations for pilots like yourself. They confirmed it is not CAA’s place to comment on our business decisions and only commented that the pilot is accountable for their own safety.
As such we will be closing the site at the end of March 2013 with the rest of our nationwide network of 40 sites remaining fully operational and environmentally sound.
In the event that another supplier (like BP) wishes to take over the site then there are existing protocols to manage that type of option. They are welcome to contact Tom Hewitt who manages our Aviation business.
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