Tā te Kāwanatanga tautoko i te rāngai waka Government support for the transport sector

The effects of the COVID-19 global pandemic continue to impact international aviation and New Zealand’s international connectivity has been drastically curtailed. Building on the success of the IAFC, and with the prospect of a recovery in international travel now in sight, the Government has set up a new scheme to support air services through to the end of October 2021, with the potential for an extension to March 2022.

The key objectives of the scheme are to:

• retain air connectivity with New Zealand’s principal trading partners,
• enable continued essential passenger movements,
• retain important air connections to the Pacific,
• retain air connections to key routes and hubs important for tourism recovery,
• maintain core capability, capacity and competitiveness within the New Zealand aviation sector to provide a platform for an efficient and competitive market when international air travel recovers;

This scheme ensures a predictable and regular schedule of air services to safeguard New Zealand’s international connectivity. Continuing support through to the end of October 2021 helps to maintain critical air connectivity.

Beehive release: Govt keeps international flights flying and airfreight flowing(external link)

Providers will be selected for support through an open and competitive process. We published the Request for Proposals on 22 March and applications closed 5pm, 15 April.

Applications have now closed. 

The Government has agreed to extend the IAFC scheme to the end of April 2021. Phase 2 of the IAFC scheme was originally scheduled to the end of March 2021. The one month extension gives businesses that rely on airfreight and airlines stability as the Government reviews its support for international air connectivity during the COVID-19 recovery.

Funding for the extension will be provided under the original IAFC funding appropriation. Since it was established in May 2020, the scheme has supported over 4,800 flights in and out of New Zealand carrying over 93,000 tonnes of airfreight.

Air New Zealand, Cathay Pacific, China Airlines, China Southern, Emirates and Malaysia Airlines will continue to provide airfreight capacity under the IAFC Phase 2 extension. As well as the flights supported by the scheme a number of airlines and carriers continue to operate airfreight services independent of the scheme.

Maintaining a network that delivers effective international air connectivity is vital for New Zealand's social and economic wellbeing, and is critical for the COVID-19 recovery.

The Government is reviewing New Zealand’s critical air transport requirements for the future to ensure appropriate levels of air connectivity are maintained and the Government is getting value for money from the IAFC scheme. Further announcements are expected in the coming weeks.

Prior to the COVID-19 pandemic, 80% of New Zealand’s airfreight was carried in the belly-hold of passenger aircraft, with the remaining 20% carried by cargo-only freighters. Pre-COVID there were approximately 550 international passenger flights into and out of New Zealand per week.

Border restrictions, implemented in March, significantly reduced passenger services resulting in a collapse of international airfreight movements due to the pandemic. The collapse in international air travel meant New Zealand’s ability to import essential products, such as medical supplies, and export high value cargo was put at risk. As a small and geographically isolated island nation, international air services are vital to sustain New Zealand’s connectivity for trade and passengers.

In March 2020 Government set aside $600 million for an aviation relief package as part of the $12.1 billion COVID-19 support package. Of the $600 million, $320 million was allocated to provide short term funding support to airlines and other aviation carriers to ensure capacity is provided on key international airfreight routes – the IAFC scheme.

The main objective of the IAFC is to maintain capacity for critical imports (such as medical supplies) and high value exports through the Covid-19 response and early recovery period.  The scheme requires importers and exporters to pay for their freight on a commercial basis and aims to help the sector recover as quickly as possible.

Phase 1

Contracts were awarded under Phase 1 of the scheme in April, restoring capacity to the market. Since it was established, the IAFC scheme has enabled over 3,700 flights in and out of New Zealand carrying 70,000 tonnes of cargo.

The first phase of contracts ran to the end of November 2020.

Phase 2: 1 December 2020 to 31 March 2021

In September 2020, the Government agreed to extend the IAFC scheme until the end of March 2021.

We ran a second RFP process recognising that the first procurement round was done at a challenging time for the aviation sector and delivered to accelerated timeframes.

Airlines and carriers were invited to submit proposals to participate in Phase 2 of the IAFC scheme on 30 September. The RFP closed 5pm, 28 October. Proposals for Phase 2 of the scheme were assessed against a specific set of criteria by the evaluation panel.

The Ministry of Transport has appointed Air New Zealand, Cathay Pacific, China Airlines, China Southern, Qantas and Malaysia Airlines. These providers are successfully operating under Phase 2 of the scheme. Any subsequent provider appointments will be announced on the website as contracts are finalised. 

Beehive release: Next stage of airfreight scheme keeps critical freight flowing(external link)

As well as the flights supported by the scheme a number of providers continue to operate outside of the scheme. Exporters and importers should consult with their preferred freight forwarder to identify the most appropriate air service for the requirements.

Eligibility criteria

Applicants must contribute to our primary and secondary objectives.

Our primary objectives:

• Ensure the supply of critical imports, particularly medical supplies, and
• Maintain air connectivity with key trading partners, ensuring our exports that travel by air still make it to those markets.

Our secondary objectives:

• Maintain air connectivity with key tourism markets to enable fast recovery when border restrictions and isolation requirements are relaxed or lifted.
• Support the long-term competitiveness and sustainability of the aviation sector in New Zealand, given its importance to trade, business, employment and travel in New Zealand.
• Preserve connections to New Zealand’s key international partners, including the Pacific islands

We must be satisfied that, without Government support, the airfreight capacity would not be provided or would only be available at a cost that undermined the objectives.

The ETC scheme provides support for transport providers in the short to medium term. The scheme’s goal is to ensure capacity, regional connectivity and essential services continue in the wake of COVID-19.

Who can apply

Airports, airlines, aviation support services and non-aviation transport services (land and maritime) can all apply for the ETC funding by checking their eligibility and requesting an application form from the Essential Transport Connectivity Team.

We consider applications for ETC funding support on a case-by-case basis.

Email: ETC@transport.govt.nz

Eligibility criteria

At a high level, applicants are expected to:

• have exhausted all other sources of funding support, including the Government’s COVID-19 Economic Response Package, bank loans, support from shareholders and so on
• taken all available and reasonable operational and commercial measures to ride out the impact of COVID-19 or adjust the size of their business
• meet specific requirements for airports and airlines, aviation support services and non-aviation transport services.

Airports and airlines must be able to show they support regional connectivity and are key to the recovery of domestic or international aviation.

Aviation support services must be able to show they are essential to the aviation sector and that without it, the operation and recovery of the aviation system would be significantly impeded.

For non-aviation transport services there can be no substitutable service now or in the short term, and if the service fails, there must be a low probability of a market resolution within a reasonable timeframe.

Non-aviation services must also:

• support economic activity, including maintaining the core transport network and critical supply chain
• support inclusive access including enabling all people to access social and economic opportunities, or
• be critical for emergency and resilience purposes.

Most taxi companies, rental car companies, tourism operators and aviation operators who do not run scheduled services will not be eligible. Tourism operators may be eligible for the Ministry of Business, Innovation and Employment’s tourism recovery package.

Tourism recovery(external link)