GIFF JOHNSON
One thing that has been demonstrated by the work of RMI’s Aviation Task Force is that increasing airline connections needs start-up funding to make possible new service on often thinly traveled routes.
Pre-Covid, the Aviation Task Force’s discussions with Nauru Airlines led to an agreement to launch new service connecting Majuro to Brisbane, Australia.
The RMI government approved a start-up subsidy of $500,000 to Nauru Airlines to cover potential losses during the initial 12 months of operation. Ultimately, the RMI provided $390,000 to the airline to offset passenger and cargo revenue shortfalls. The flight itself proved so successful that Nauru added a second weekly island hopper flight.
While the service needed subsidy support at the outset, the renewed Nauru Airlines flights injected over $200,000 into the Majuro economy over a one-year period aside from aviation fuel sales that averaged about $3,000 a week, according to the Task Force.
Employees of the Parties to the Nauru Agreement, United Nations programs and other regional programs saw travel time to Majuro greatly reduced and savings of up to 50 percent on airfares, the Task Force said.
The arrival of Covid in March 2020 forced a halt to the Nauru Airlines service that would extend for nearly three years. The current Nauru Airlines service resumed in late 2022 with the financial backing of the Australian government, which provided a similar subsidy as the RMI had done several years ago.
During Covid, airline discussions continued with the Aviation Task Force exploring options.
“The ATF conducted surveys indicating a critical need for a second airline to service the Majuro-Honolulu route, a corridor vital for RMI citizens and government officials, medical referrals requiring urgent travel, and boosting economic activities through tourism and commerce,” said a report issued earlier this month by the task force.
Talks on establishing additional air service linking Majuro to Honolulu have been held since last year with Fiji Airways and Nauru Airlines. Currently United Airlines is the sole carrier serving Majuro from Honolulu.
“Both airlines submitted proposals but requested start-up funds to mitigate potential losses, given they would be competing with the long-established service of United Airlines,” said the report.
The ATF has sought RMI government support, so far unsuccessfully, for $1.3 million to underwrite costs for one of these air carriers to start a new service connecting Majuro with Honolulu.
The ATF says benefits of a second air service would include revenue for the local economy through ground handling, landing fees, catering, fuel sales, and supply services. A new service would also generate “significant savings on RMI government travel expenses,” the report said.
Although so far the ATF’s funding request to support new air service to Honolulu has not been endorsed by Cabinet, the task force said it remains committed to pursuing the plan.
The Aviation Task Force, which is representative of local businesses, sees the importance of a second air carrier for the Honolulu route to:
- Enhance accessibility to essential services and opportunities abroad.
- Stimulate economic growth by increasing tourism and facilitating trade.
- Reduce dependency on a single carrier, fostering competitive pricing and better services.
“While financial constraints have impeded progress, the potential benefits of improved air connectivity make it a worthy pursuit,” said the ATF report. “Collaborative efforts between the government, private sector, and international partners are essential to turn these aspirations into reality.”