Originally Posted by
zanzibar
Time will tell and I imagine the operator will react to market needs. Pretty basic business principle, really.
You're out of touch, Nauru Airlines has 3, possibly 4, passenger aircraft and the ability to mount a quick rescue should it be required.
IIRC Our Airline (as Nauru Airlines was known at the time) some time back (early 2012?) ceased the service that Norfolk Air had leased it for. The Our Airline service was not subsidised as such but funded by the Norfolk Island Administration (NIA) until the NIA decided to withdraw from any airline involvement. The Australian government, in its wisdom, offered a subsidy to operate SYD-NLK and they have been paying that subsidy to Air New Zealand since. Had they paid that subsidy to the NIA then the Norfolk Air service may well have continued without the loss of dozens of local jobs that it provided.
Ah no, I worked for a company that attended the briefing. The Commonwealth I believe was sick of 'deals' being done for air services so along with agreeing to subsidize it, it put it out to tender and Air NZ came back with the best cost/benefit. I assume NZ operate it on the back of a AKL-SYD flight but not sure.
However, it was done properly with a tendering process.
When OzJet did it they made a mistake compared with their other contracts, they agreed to fund the ground handling and charge a fee which had a notional amount for ground handling and catering but then with weather nearly always delaying services, ground handlers charge 50 or 100 percent extra depending on the amount of notice and with weather it's normally less than that required in standard contracts (and fair enough, you can't expect a ground handler to pay people to sit around all day just in case).
O7's other contracts like Airlines PNG were much better structured in that APNG 'owned' the ground handling and catering contracts and paid them directly and just leased the aircraft and crew on and ACMI basis for an hourly rate. Had O7 done this with NLK, they likely would have increased the sustainability of the operation but the NLK Administration would have gone bust earlier. To be fair, the NLK contract was quickly put together after the O7 all J Class domestic service to keep the airline operating and it was a foothold in the ACMI/Charter market which kept the airline operating. The lesson was learned with later contracts. I am not sure but I assume one of the reasons O7 lost it was because they wanted to do it similar to the CG arrangement when the contract renewal came up and that was rejected.
It was probably marginal until they let someone go in there and start touting business class and all these extras which blew the costs out as well (not talking O7, but Norfolk).