Kia Orana Air Terminated After Frustrating Delays in Cooks Islands

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Concerns over investor result in ‘indefinite’ hold on air services

By John Woods

RAROTONGA, Cook Islands (Cook Islands News, May 5, 2012) – Kia Orana Air, the low-cost domestic airline first proposed in mid-2008, is now grounded indefinitely.

Managing director Mark Lusby announced yesterday that he has abandoned the venture.

This follows approval to operate the airline business in January 2010 and protracted delays attributed to the economic downturn and recent problems in finding a site for an operations base and hangar at Rarotonga International Airport.

"After a year of final development, we have decided to terminate the business partnership with our investor as there are too many serious questions about our investor for us to proceed," Lusby told Cook Islands News.

"We have pulled the plug now rather than getting too far down the track with the start-up process of the airline."

He said that because there has been so much interest in and anticipation of the new airline, he needed to "put the project indefinitely on hold in the interests of the Cook Islands."

Lusby said he had advised the Business Trade Investment Board (BTIB) and instructed them to commence with the de-registration process of the investor’s foreign investment approvals, effectively terminating the partnership.

The investor in question is an American businessman named Leif Andersson, who recently moved to live in Rarotonga with his Russian wife and young child. Andersson has declined interview requests from Cook Islands News, but is believed to have a background in foreign money exchange.

BTIB chief executive Terry Rangi said a meeting has been scheduled with Andersson and the BTIB board is due to meet on Monday evening when the matter will be discussed.

"We have to look at the whole situation," Rangi said. "We sympathize with the project not going ahead."

Lusby, a commercial pilot who now plans to take up employment offshore while he regroups and reviews his airline scheme, has an air service license to operate a 19-seat Beechcraft 1900D aircraft between Rarotonga and the outer islands. The aircraft is used by numerous airlines around the world including Air New Zealand and is noted for its flight speed, ability to fly at high altitudes, and its ability to operate well on short runways.

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