Cook Island PM Mark Brown to Mike Pero: 'We invest in success not failure'

Businessman Mike Pero has parked his Pasifika Air project for good. Photo / Getty Images

The Prime Minister of the Cook Islands has defended his government's decision not to provide financial help for businessman Mike Pero's flightless Pasifika Air project.

Mark Brown also hit back at suggestions his government shouldered blame as the reason the proposed airline didn't get off the ground.

Brown said he was "surprised" and "very disappointed" by a Cook Islands News story last week that Pero pulled the plug on Pasifika Air because he couldn't get a waiver or discount on landing fees at their international airport.

"Especially as he [Pero] told me himself that there were eight factors which prevented him from moving ahead with the proposed airline at this time," Brown told the Cook Islands Parliament.

"Mr Pero has thanked me for the support I gave the proposal."

Pero, a millionaire real estate identity, had aimed to have Pasifika Air flying later this year as part of a New Zealand-Cook Islands travel bubble. It was proposed last year, then parked in April, revived in May and this month parked again - for good.

Pero cited "too many obstacles coming up out in front of us".

The airline was to fly services direct to the Cook Islands from Wellington and Christchurch – cutting out the extra cost of flying via Auckland.

Brown said Pero had been in discussion with Cook Islands government agencies, including the Airport Authority and Ministry of Finance and Economic Management (MFEM) and had asked for a landing fee exemption of 1-2 years.

But the Authority agreed instead to one-month exemption, 50 per cent discount on the second month, 25 per cent off the third with full landing fees applying from the fourth month onwards.

"The current landing fee for flights ex NZ is $1800 per flight – less than $10 per passenger," Brown said.

An artist's impression of Pasifika Air's 737-800 planes. Image / Supplied

Brown said the Cook Islands government was largely supportive of the concept of additional flights from New Zealand and opening up the NZ airline market to further competition in time.

But his government did not invest in any initiatives be they start-ups or existing, without proper analysis and well-developed financials.

"The Government will invest in smart business which has in our own analysis real likelihood of success, not failure," said Brown.

"However, whatever support the Cook Islands government provided one airline through financial subsidies it must provide all airlines to ensure a level playing field.

"Increased competition at some stage in the future once visitor arrivals are more consistent would be useful if it resulted in reduced ticket prices and opened up our market to more visitors.

Currently, the Cook Islands government doesn't subsidise flights, or provide landing fee discounts, for travel out of New Zealand.

"Our policy to date has been that we don't offer waivers or discounts for landing fee discounts for travel out of NZ. And if we did it for one air carrier, to be fair and even-handed, we would have to do the same for all carriers coming in."

Brown said his government was a big supporter of the private sector and the strength of this commitment in recent times is best demonstrated by the financial support they have given Cook Islands businesses these past 15 months.

"In general, this Cook Islands government supports businesses to stand on their own two feet without the need for government handouts or subsidies. This is especially true for new ventures given the government's difficult fiscal position currently caused by the Covid-19 pandemic."

Cook Islands Prime Minister Mark Brown. Photo / Getty Images

Pero today told the Herald; "the lack of support from the Cook Island government was only one of eight factors and was not the critical reason."

However, Pero was critical of the governments' decision not to make some concessions for his new airline.

"I did not expect anything different to any other new player starting a new service," Pero said.

"It is very customary to make some concessions, especially first year to assist a new service get started. Especially given the potential revenue was likely to be $150 million per annum."

He said Air New Zealand paid little in the way of fees when they started flying to the Cook Islands, while Virgin (and Pacific Blue, prior) got start-up concessions.

"I think the wrong decision was made here," Pero said.

Pero said the "reference to only $10 per passenger may not sound much but that is a million dollars a year just to land in Rarotonga."

"The NZ airports were happy to waive their first year's fees just to help get another airline in the skies.

"There's also a huge number of other expenses in operating an airline."

According to Pero, the Cook Islands would have got $2000 per passenger, in their average stay in the country.

"Pero met with MFEM on only one occasion and to date he has not provided them with a business case or any actual proposal. Pero never clearly articulated to MFEM exactly what support he was hoping to get from the Cook Islands government," Brown said.

Pero told the Herald: "The Prime Minister was supportive in principle however I am not sure my proposal never got passed on to him by MFEM people, led by [Garth] Henderson."

"Henderson said there would need to be a process that would include an EOI (Expressions of Interest) for all airlines with regards part of my proposal. Five of us were present in the meeting on the 6th of May. I followed up with an email, that same day, and also a second email the following day explaining the points that might be necessary to create an 'Expressions of Interest' paper. To this day I have had no response."