COOKS BUDGET $2.6 MILLION TO SUBSIDIZE AIR NEW ZEALAND

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Airline wants more to keep Rarotonga on its network

By Helen Greig

RAROTONGA, Cook Islands (Cook Islands News, Dec. 4, 2008) - Finance Minister Sir Terepai Maoate has confirmed that government will set aside about NZ$5 million [US$2.6 million] for the new Los Angeles flight agreement with Air New Zealand that starts next April.

This is likely to be included in the supplementary budget to be tabled in parliament later this week.

Last week Tourism Minister Wilkie Rasmussen announced that an agreement has been reached that will see the risk share deal continue until March 2010.

Government has already allocated NZ$2.9 million a year to the service, but the airline recently asked for more.

Sir Terepai says cabinet approved the budget required for the LA service as demanded by the airline.

The service has been underperforming due to a range of factors such as rising aviation fuel prices. At one point government looked likely to cancel the service and Rasmussen told CINews that government would not pay more for the deal.

In March Air NZ told government that it was unlikely the airline would be in a position to operate a second service between December and March as planned.

Government recently sought advice from independent economic consultants on the impact of the direct LA/Rarotonga flight on the local economy.

This advice apparently highlighted that northern hemisphere visitors are crucial to the viability of the tourism industry.

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