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“Wait and see” approach to domestic operations

MEDIA RELEASE

April 01, 2008 Christchurch, New Zealand: The Kiwijet Airline Company will take a “wait and see” approach to the development of domestic operations over the next six months.

Our decision to delay launching operations is based on several factors including the global economic slowdown, fuel cost, availability of qualified staff as well as the addition of new routes from Pacific Blue, and the withdrawal of Ozjet from Palmerston North.

First of all we had planned to work with Ozjet to develop Palmerston North as a regional gateway. Kiwijet had been in discussions with Ozjet over the past four months to feed its planned services in Palmerston North utilizing the airport as a small hub with direct connections to points north and south. This outcome was very unfortunate for all concerned including staff that have lost their jobs. The main reason that Ozjet was forced to withdraw was mostly due to the aggressive pricing of the national carrier in the market, and the government’s “use it or lose it” stand regarding the airport’s international status as well as a change of Ozjet’s ownership.

During the next few months we will see massive changes in the global economy as it relates to the US Dollar and the price of oil as well as the US and New Zealand elections. Our financial advisors have been correct in their analysis of current trends in the economic, and geo political situation. We believe that a much better economic picture will be visible in the fourth quarter of this year as the global economy awaits the result of the US elections which directly influences key share and currency markets in New Zealand not to mention the national election this November. All these factors will determine if Kiwijet can proceed with launching operations.

We will use this time to move forward with completion of our manual system, and prepare to apply with NZCAA for a New Zealand AOC (Air Operators Certificate) by early next year. We have secured funding that will carry us through December. All parities in our investor group have agreed to a “wait and see” approach to the project, and will continue to support the project.

On January 22, 2008 while attendending the 5th annual Asia Pacific low cost airlines congress Kiwijet’s chief executive Mr. Patrick Weil pledged to senior directors of Virgin/Pacific Blue that Kiwijet would not enter markets that Pacific Blue is developing which includes possibly two new cities in the south and two in the north. We are committed to that pledge; and if there is a conflict with our plans we will work around them. Our mission is to offer a low cost alternative to the national carrier’s stranglehold on the regions. We feel that Pacific Blue is doing an excellent job in New Zealand by brining down the cost of air travel, and keeping the national carrier honest.

A recent report by an Australian aviation think tank has showed that Pacific Blue’s entry into the domestic market is having a substantial impact on the national carrier, and more people are taking to the skies than ever before. We are able to continue with the project as a result of this and similar reports. Kiwijet is also looking at the development of a cargo operation to provide two British Aerospace Bae 146-200QT’s Quiet Trader aircraft for companies such as DHL and Fed Ex for example. We have confidence that this market currently exists which could launch Kiwijet sooner rather than later. We will keep the media posted on this as it develops.

No changes are on the table at this time as we still plan to launch operations with four British Aerospace RJ-100’s to seven cities.
However we may change plans for a city in the south if Pacific Blue enters that market which is likely. We would add seasonal services during the winter months to Wanaka from Auckland and during the summer months to the Bay of Islands from Christchurch.

Our actions are a conservative business approach to the current realities of the airline industry. We know that there are many critics out and about in the media as well as our friends at the national carrier. All we can say is that we are not going away anytime soon. As a direct result of Kiwijet getting out in front of the media last year New Zealanders and visitors alike have reaped the benefits of a new wave of low cost air services within the country. We will keep an aggressive optimistic attitude towards competition in New Zealand for the foreseeable future, and we won’t rest until “All Kiwis will fly”


ENDS

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