Fyfe flies kite on air route subsidies
June 18th, 2009
Air NZ looks to be heading for a showdown with free marketeers in the Govt with CEO, Rob Fyfe, floating the idea of the Govt potentially subsidising international routes if they become economically marginal as tourist numbers are knocked by the economic downturn. However, Fyfe’s plan has an element of the free market to it – the subsidies should be available to foreign airlines as well, by opening them up to a competitive bidding process.
Fyfe explains his rationale for subsidies. “We are saying to the Govt that if a route should be supported then the Govt should actually put that route out to bid and see who needs an incentive to fly it.” He believes there is no reason why foreign airlines should not qualify for the subsidy and claims this is a better option than the Govt investing directly in the airline, of which it already owns about 75%. Fyfe has been extremely vocal in his criticism of the Govt’s lack of support of tourism despite the Govt planning to spend more on tourism promotion. Officials are working on proposals for a $60m fund to promote NZ overseas during the economic downturn. There are also proposals for a “grab-a-seat” style promotion giving international tourists access to cheap tickets to NZ.
The seats would cost no more than $500, as long as people stayed a week. But neither of the proposals was funded in the May Budget much to Fyfe’s annoyance.
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