Budget 2026: Aviation Industry welcomes tax relief but skills shortage remains a major concern
The Aviation Industry Association of New Zealand has welcomed aspects of Budget 2026, particularly the Government’s decision to introduce a permanent exemption from non-resident contractors’ tax on offshore dry leasing of aircraft parts. The change is expected to reduce costs for airlines such as Air New Zealand and improve access to critical aircraft components.
However, AIANZ Chief Executive Simon Wallace says the Budget falls short in addressing the sector’s most pressing challenge — a significant and ongoing aviation engineering skills shortage.
Simon described the absence of targeted investment in aviation engineering training as a “lost opportunity,” noting the industry is currently short of more than 300 engineers. Despite repeated advocacy over the past two years, AIANZ says the Government has not provided dedicated support to expand training pathways in this critical area.
“Our vocational training institutes are turning away young New Zealanders from a career pathway that offers strong opportunities,” Simon said. “At the same time, the industry continues to rely heavily on immigration pathways, such as the Green List, to fill essential roles.”
AIANZ also highlighted skills shortages across general aviation, including in agricultural aviation, contracting, and search and rescue operations. Companies are increasingly being forced to recruit engineers from overseas to meet demand.
While the Government pointed to broader investments — including $69 million to expand trades academy places and $15 million for industry-led training initiatives — Simon stressed that these measures do not sufficiently address the specific needs of aviation engineering.
In addition, AIANZ expressed concern about delays in distributing funding from the $30 million regional airline support package announced in 2025. Wallace noted that only a small portion of the funding has reached operators, despite urgent financial pressures across the regional aviation sector.
Overall, while Budget 2026 delivers some positive changes for aviation operators, AIANZ maintains that meaningful investment in workforce development is critical to supporting the industry’s long-term growth and resilience.