Rarotonga extends Air NZ flights deal

JOSH MARTIN
Last updated 05:00 27/03/2014

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Rarotonga has extended its multimillion-dollar contract with Air New Zealand to provide flights to the Cook Islands from Australia and the United States, but New Zealand's foreign affairs minister has guaranteed New Zealand aid money is not going to the airline.

New Zealand gives about $29 million a year in aid to the country. Cook Islands Finance Ministry head Richard Neves told Television New Zealand last November that up to 13 per cent of its operating budget went to subsidise Air New Zealand's direct international flights to Sydney and Los Angeles under a contract.

The new four-year contract between the Cook Islands and Air New Zealand is worth $13m a year. The previous contract, which runs until October, has the Cook Islands paying Air New Zealand a similar amount, Neves said. Last year the Cook Islands Government put the four-year contract out to tender.

Foreign Affairs Minister Murray McCully said no New Zealand aid money would go to Air New Zealand but did not say how the aid money would be separate from the Cook Islands government budgets. He said the Cook Islands finance ministry took "expert advice on the costs and benefits of the arrangement".

Tourism is the single biggest foreign exchange earner for the Cook Islands, representing almost 70 per cent of GDP.

"Air links between Rarotonga and Sydney and LA are vital to the economic well-being of the people of the Cook Islands," McCully said from Vietnam.

Air New Zealand said it carried about 200,000 people to Rarotonga from Auckland, Sydney and Los Angeles in 2013, but would not say how full flights on the Australian and American services were.

The airline said its long-term goal was to make the routes commercially sustainable.

Air New Zealand manager for the Pacific Islands Peter Walsh said the airline's latest safety video, which featured Sports Illustrated bikini models in the Cook Islands, had helped to cast a global spotlight on the tropical beauty of the islands.

"The agreements ensure that visitors from both the northern hemisphere and Australia have convenient travel options that allow them to experience this island paradise in person."

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- BusinessDay

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