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

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.