The Press FRIDAY, OCTOBER 18, 1963. S.P.A.N.Z. Given Time But Not Money

Press, Volume CII, Issue 30265, 18 October 1963, Page 10

The Press FRIDAY, OCTOBER 18, 1963. S.P.A.N.Z. Given Time But Not Money

The Government is acting wisely in giving South Pacific Airlines of New Zealand time but not money. That is the effect of the agreement that, over the next two years, while the company is trying to establish itself, the payment of airways dues, will be deferred. If the Government has some security for the eventual payment of this debt it will be better off than if the company ceased operations now and did not incur further liability to the State. The fact that the dues have probably been fixed too high (to the embarrassment of the National Airways Corporation) is not relevant at this stage, because any charges would apparently be too high for S.PAJI.Z. The State should not use its resources to prop up uneconomic businesses, which, as the Government learned at the Whangarei glassworks, can be expensive. It is in the national interest, however, for it to give S.P.A.N.Z. a further chance to pay its way. The independent airline provides an element of potential competition; it serves some small centres that would otherwise lack air con-

nexions or have them provided by an unwilling N.A.C. under political pressure; and through association with the Ansett interests in Australia it helps bring tourists to New Zealand. Air services to other small towns operated by N.A.C. are also unprofitable; but the loss on them is met from the revenue of the profitable trunk routes. If N.A.C. were required to extend its operations to all points covered by S.PA..N.Z. either fares would have to rise or the taxpayers’ return on the investment in the national line would be reduced. Much will depend on how well the small towns and their districts support S.PA..N.Z. Good patronage in passengers and parcels may give the company the revenue it needs, besides demonstrating that the Government was right in deferring its claims. The potential business may not be large enough to justify the existence of a subsidiary, competing airline; but no harm will be done by allowing S.P.A.N.Z. and its supporters time to show that they are right in believing that it is. The company’s shareholders are the people who take the risk if they are wrong.