Govt seeks airline options

Tuesday September 03, 2013 Written by Published in Economy
Air New Zealand will continue providing long-haul flights from Los Angeles and Sydney to Rarotonga until 2018. 13120574 Air New Zealand will continue providing long-haul flights from Los Angeles and Sydney to Rarotonga until 2018. 13120574

The government is reaching out to international airlines that may be interested in providing long-haul air travel services to the Cook Islands.

Cabinet, the Ministry of Finance and Economic Management (MFEM), and the Cook Islands Tourism Corporation (CITC) are working together to seek expressions of interest from commercial international aviation companies for the provision of long haul services to Rarotonga from international destinations.

Currently, Rarotonga is being serviced from Los Angeles and Sydney by Air New Zealand – which has underwritten contracts with the Cook Islands government that ensure a degree of profitability for the NZ-based carrier.

The contracts provide weekly, non-stop long-haul access to the country, provide millions of dollars in economic stimulus, and assist in diversifying markets currently servicing tourism and associated industries.

With the contracts set to expire in October 2014, the government is currently looking to secure the offering of services for a period of four years from November 2014 through to November 2018.

“This prospective four year partnership represents a significant business opportunity for an established reputable operator to work with the Cook Islands Government,” reads an MFEM release.

“Expressions of interest do not have to mirror the existing arrangements. They should be focussed on helping the Cook Islands achieve its fundamental goals of growth and diversification across global tourism markets.”

The deadline for firms to provide MFEM with expressions of interest is close of business on Friday.

Last week, MFEM released preliminary details on a report by NZ-based firm Covec Economics, analysing the contracts providing long-haul flights to and from Los Angeles and Sydney.

Covec’s researchers found the LAX-RARO route increased gross domestic product (GDP) between $6.6 million and $7.7 million per annum from the period 2010 to 2012, with a forecasted increase of $5.8 million for 2013.

The report says there could be a reduction of as many as 12,000 visitors a year if the LAX-RARO route is not underwritten in 2014.

The SYD-RARO route failed to produce positive results, decreasing GDP between $0.3 million and $0.9 million per year from 2010 to 2012, with a forecasted pitfall of $0.7 million for 2013.

The effects on GDP were derived after subtracting the actual cost of the underwrite, which hit roughly $10 million for the 2012-13 fiscal year according to MFEM officials.

According to government documents, $13.6 million has been set aside in the 2013-14 budget for the contracts, which commenced in the 2010-11 fiscal year.

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