Departure Taxes and NZ Holding Countries to Ransom

Two tourism related news stories have been playing out in the NZ
press over the last few days.

The first centred around complaints that the country’s national carrier Air New Zealand has been holding small Pacific Island nations to ransom – demanding millions of dollars more in grossly inflated subsidies for the privilege of accepting their services.

The small pacific island nations are heavily dependent on Air NZ flights for both for tourism and trade, which would suffer drastically if flights are withdrawn.

The islands of Samoa and Tonga are facing cuts in services from next week unless they cough-up more to keep Air New Zealand interested.

The Cook Islands has already agreed to the demands and will increase their payment from $2 million to $5 million. Their tourism minister Wilkie Rasmussen said his country had agreed to a new joint venture, to be signed within two weeks and said that the “flights were important to secure access to visitors from North America, the UK and Europe.”

According to the NZ Herald, Samoa’s Deputy Prime Minister Misa Telefoni has said Air New Zealand is holding his country to ransom and he has “approached rival airlines about flying the Los Angeles route through Apia and Tonga.”

The second news story concerns a massive storm of protest from New Zealand over Britain daring to introduce a 4-tier departure tax based on distance travelled (a form of carbon tax) with passengers on long haul flights to countries such as New Zealand hit the hardest.

Fears are that hiking the departure tax from the present equivalent of $113 to $240 will cause a massive drop off in visitors to NZ and have serious consequences for the NZ tourism industry, already hit by a fall in numbers due to the recession.

The irony of the two situations is not lost on some people.

On one hand the NZ government leaps onto its high horse about its tourism industry being threatened by high departure taxes and is worried that other countries will follow suit, whilst on the other its national carrier is squeezing small island nations whose small, tourism based economies are heavily dependent on Air NZ flights.

Before John Key sits down to talk to Gordon Brown he needs first to sort out what’s going on in his own back yard.

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