NEW AIR SERVICES UNDERSTANDING WITH THE UNITED KINGDOM PROVIDES FOR DAILY SERVICE

Transport Minister Jenny Shipley is hailing new air services arrangements with the United Kingdom as an exciting development in trade and tourism terms.

"Daily air services between New Zealand and the United Kingdom with full traffic rights may now be offered by the airlines of the two countries under a Memorandum of Understanding officials signed with United Kingdom negotiators last week.

"Currently Air New Zealand operates to London-Heathrow via Los Angeles five times per week while British Airways code shares on four Qantas services per week connecting at Los Angeles with its own services between London and Los Angeles.

"Apart from the economic boost that this has the potential to provide for New Zealand, the Understanding is very significant in that it is a clear sign that the new UK Government recognises the special characteristics of what is the longest air route in the world.

"The UK earlier this year surpassed the United States to become the third largest source of tourists to New Zealand after Australia and Japan.

"The Government has recognised for a long time that it is often difficult to get seats on flights between New Zealand and the United Kingdom, and securing this deal has been a high priority for our air services negotiators.

"In addition, under the new Understanding an unlimited number of flights may now be offered between the United Kingdom and New Zealand for direct carriage between the two countries, including own stopover traffic. This means that a New Zealand airline could offer an unlimited number of flights from Auckland to London via Los Angeles, for example, but if services were more than daily, the airline would only be permitted to carry passengers that it had itself carried into Los Angeles, either in transit or stopping over there. The airline would not be able to sell seats for carriage solely between Los Angeles and London on any such additional flights.

"While such extra flights may not be commercially viable if operated with the same aircraft flying all the way through from New Zealand or the UK, this will provide significant opportunities for our airlines as they seek to expand commercial alliances involving code sharing.

"The Understanding also provides for a limited beyond rights exchange. This would, for example, facilitate the use of London as a gateway for code share services by New Zealand airlines into Europe. Such services, however, will be dependent on future air services negotiations with other European countries and commercial decisions by the airlines concerned.

"In addition, the Understanding removes the requirement to file freight tariffs with governments, thereby reducing the compliance costs that the airlines face, and recognises the importance of having a liberal approach to the approval of charter flights. A UK-based charter airline, Britannia, has been providing services to New Zealand via Australia every summer since 1989," the Minister said.

Mrs Shipley says the two sides have agreed to meet again before April 1998 with a view to further liberalisation of the air services arrangements between the two countries.