1

SUMMARY

PUBLIC POLICY ON TERRITORIAL

CONTINUITY IN NEW CALEDONIA

Fiscal year 2019 and beyond

Examined and approved by the territorial audit office on September 3

rd

, 2025

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Warning

This summary is intended to facilitate the reading and use of the report of the territorial audit

office. Only the full report binds the territorial audit office. The answers, if expressed, of the

administrations, organizations and local bodies concerned are included after the full report.

The public reports of the territorial audit office are available online on its website:

www.ccomptes.fr/fr/ctc-nouvelle-caledonie.

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TABLE OF CONTENTS

1

AN ABSENCE OF STRATEGIC FRAMEWORK FOR THE TERRITORIAL

CONTINUITY POLICY

..................................................................................................

4

2

A POLICY PROMOTED BY THE AGENCY RESPONSIBLE FOR AIR SERVICES

IN NEW CALEDONIA, AN INSTITUTION WHOSE OPERATIONS ARE

FRAGILE

...........................................................................................................................

5

3

AID FOR CITIZENS FOR COUNTRY CONTINUITY, A POORLY REGULATED

SYSTEM WITH RISING COSTS

...................................................................................

6

4

FINANCIAL

SUPPORT

FOR

LOW

TRAFFIC

AIR

ROUTES

WAS

INTERRUPTED IN THE FACE OF CRISIS

................................................................

8

5

AID FOR THE RENEWAL OF AIRLINE FLEETS HAS TAKEN VARIOUS

FORMS

............................................................................................................................

10

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The territorial audit office has included in its 2025 program an investigation into the territorial

continuity policy in order to examine its financial sustainability and its suitability for the needs

of the population and, in particular, the nature, cost and efficiency of the measures

implemented and their possible limitations. This investigation is part of a joint piece of work by

the financial jurisdictions on the exercise of the right to mobility.

The territorial continuity policy addresses issues of social and territorial cohesion. It is

particularly relevant in New Caledonia, given the territory's geographical situation, which is

characterized by its insularity and the uneven distribution of population, activities and services,

despite efforts to redress the balance.

The office focused its audit on territorial continuity by air, given the importance of air transport

in New Caledonia, a sector characterized by a high level of public intervention. The audit was

opened with New Caledonia and its public institution, the New Caledonia Air Transport Agency,

for the 2019 financial year and subsequent years. It did not concern the action of the provinces.

It corresponds to a coordinated control as provided for in article R. 262-117-1 of the code of

financial jurisdictions according to which "

the observations resulting from the coordinated

control of several bodies under the competence of the regional chamber of accounts and

appearing in its program may give rise to a single report of provisional observations

".

1

AN

ABSENCE

OF

STRATEGIC

FRAMEWORK

FOR

THE

TERRITORIAL CONTINUITY POLICY

Under the provisions of the Organic Law of 19

th

March, 1999 on New Caledonia, the latter is

responsible for domestic air services, while the French State is responsible for services

between New Caledonia and mainland France. However, this distribution is not rigid: Until

2020, New Caledonia was responsible for processing applications under the State's scheme

to support territorial continuity with mainland France.

In line with this distribution of powers, and based on the objective of social and territorial

cohesion, territorial continuity policy is expressed in two main ways: aid to reduce the cost of

air travel for citizens, thereby facilitating their travel, and aid granted to airlines for the operation

of some low-traffic routes, in order to maintain a satisfactory level of service to island or

geographically remote areas.

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Map n° 1: Organization of the network of low-traffic lines as planned in 2017

Source: presentation of the civil aviation directorate of October 10, 2017

However, this policy suffers from a lack of a formalized strategic framework. The overall

transport and mobility plan for New Caledonia, finalized in 2015, which provided for a

comprehensive approach to mobility issues, was never adopted by Congress, and its most

structural actions, such as the merger of airlines and the transfer of commercial traffic from

Nouméa-Magenta aerodrome to La Tontouta international airport, were not implemented.

However, several steps have been taken to better structure New Caledonia's exercise of its

powers, such as a draft deliberation on transport and mobility policy and a project to set up a

public service delegation for domestic air services, but these have not been successful. The

definition of a strategy for air services in the territory, which the territorial audit office had

already drawn attention to in previous work, therefore appears essential. This strategy must

be submitted to congress for adoption, which must receive an annual report on its

implementation.

2

A POLICY PROMOTED BY THE AGENCY RESPONSIBLE FOR AIR

SERVICES IN NEW CALEDONIA, AN INSTITUTION WHOSE

OPERATIONS ARE FRAGILE

A public institution created by congress resolution N°128 of 20

th

November 2000 with the aim

of guaranteeing sustainable, regular air services adapted to the territory, the New Caledonia

Air Services Agency (ADANC) has been, since the expansion of its remit in 2016, the main

instrument for implementing New Caledonia's territorial continuity policy. It is the almost

exclusive shareholder of Air Calédonie International (Aircalin), which ensures territorial

continuity with mainland France. Until July 2025, however, it did not hold any stake in Air

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Calédonie, the main operator for domestic flights in the territory, which was mainly owned by

New Caledonia. By a deliberation taken on the 21

st

of July 2025, the shares held by New

Caledonia were transferred to the agency. The consolidation of the shares of the two

companies under the same shareholder should enable the overall and consistent management

of the territory's air service issues.

The agency benefits from an allocation of tax revenues (general consumption tax) for the

performance of its duties, amounting to CFP 1.9 billion in 2024, compared with an average of

CFP 2.7 billion per year between 2019 and 2023. As a result of the decrease in its allocated

resources and a significant increase in its expenses, following the support granted to airlines

in difficulty, its financial situation, which had been comfortable until 2023, deteriorated in 2024,

calling into question its ability to continue its interventions in favor of air transport at the same

level as before.

The territorial audit office notes that the governance of this agency, whose organization

remains very limited, has several weaknesses, as illustrated by the recurring lack of a quorum

for board meetings and the vacancy of the vice-chair position between 2021 and 2025.

The project to transform the New Caledonia Air Transport Agency into a transport and mobility

agency covering all modes of transport, which has been discussed on several occasions in

recent years, has not yet materialized. According to the territorial audit office, this major change

will require the agency's board of directors to function more effectively and its organization to

be upgraded.

Although provided for in its founding deliberation, the agency has not yet adopted an

establishment plan. In addition, its relations with New Caledonia needs to be better regulated

by strengthening the scope of the agreement on objectives and resources binding the two

entities, which must be submitted to the board of directors for approval and monitored annually

on the basis of indicators linked to the expected financial and operational objectives.

3

AID FOR CITIZENS FOR COUNTRY CONTINUITY, A POORLY

REGULATED SYSTEM WITH RISING COSTS

A flagship measure of New Caledonia's territorial continuity policy, the country continuity

assistance scheme was created by a decision of the congress on the 9

th

of January 2012, in a

context of crisis, and was initially designed as a transitional measure. It aims to facilitate travel

for residents of island communities (Loyalty Islands, Isle of Pines and Belep) to the mainland,

with the public authority covering part of the cost of the ticket.

This scheme, which has been financed by the New Caledonia Air Transport Agency since

2016, contributes significantly to the number of passengers using Air Calédonie, the main

airline providing domestic services. Between 2019 and 2024, journeys made using a ‘

country

continuity

’ voucher accounted for an average of nearly one

-third (31 %) of all journeys made

by the airline to the Loyalty Islands and the Isle of Pines, rising to 42 % in 2024.

The country continuity assistance scheme has undergone several regulatory changes aimed

at limiting the number of journeys assisted or the amount covered by the public authorities.

Based on an examination of the terms and conditions for subsidizing a single journey between

the Loyalty Islands and Noumea, the territorial audit office notes that, if the amount of the aid

paid by the agency has been maintained at 5,300 CFP francs since 2018, from 2021 the

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amount remaining to the charge of the beneficiary becomes variable. The rate of assistance

per ticket for this type of journey is 40 %, the share borne until 2020 by Air Caledonie having

been transferred from 2021 onwards to the user. However, despite these adjustments, the cost

of the scheme has continued to rise, representing a total of 2.9 billion CFP francs for the public

authorities between 2019 and 2024.

Graph n° 1: Financial cost of the country continuity assistance scheme

Source: territorial chamber of accounts according to the civil aviation directorate

Indeed, the number of transport card holders, whose issuance entitles them to receive

assistance, has increased significantly, exceeding the eligible population as shown in the

population census data. The procedures for obtaining the card, in particular the acceptance of

accommodation certificates, have facilitated abuse, making it difficult to verify the actual

residence of beneficiaries. Compounded by the lack of effective control measures, this

situation has resulted in unjustified additional costs for the New Caledonian Air Transport

Agency, estimated at 100 million CFP francs per year in 2023 and 2024. The possibility,

provided for in the deliberation of the 9

th

of January 2012, to delegate the issuance of transport

cards to municipalities, which could have facilitated better control, has not been implemented.

Furthermore, although the aforementioned deliberation stated that the country continuity

subsidy was incompatible with the subsidies granted by the provinces under a social transport

subsidy scheme, no information sharing measure between local authorities was put in place

to ensure compliance with this provision.

The delegation of the management of the scheme to Air Calédonie, through successive annual

agreements, has also contributed to the agency's dependence on the airline providers with

regard to the availability and reliability of information. The agency's resumption of the

management of the scheme from 2025 onwards is likely to improve data control and

monitoring, but additional regulatory measures are needed to ensure more rigorous allocation

and to avoid the financial abuses observed. At the time of the

office’s

audit, a draft bill reforming

the country continuity assistance scheme had been drawn up but had not yet been submitted

to congress. In the meantime, the rights of users holding a transport card issued in 2024 had

been extended until the 31

st

of August 2025 on the basis of a simple government

announcement, without any regulatory basis, a situation that carries legal risks. The

deliberation on the new terms and conditions for the country continuity assistance scheme was

adopted by congress on the 29

th

of July 2025. It provides for transitional adjustments to the

supporting documents required for the allocation of transport cards and the number of journeys

subsidized, pending a more comprehensive reform planned for 2026, which will incorporate

new criteria for the allocation of assistance. The introduction of means tests for eligibility for

476

394

371

514

636

554

0

100

200

300

400

500

600

700

2019

2020

2021

2022

2023

2024

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the scheme and tighter controls to ensure that only eligible residents receive assistance would

allow for better financial control of the scheme. Targeting assistance at travel for specific

purposes (employment, education, health, etc.) should also be considered. The establishment

of agreements with local authorities to involve them in the implementation of the scheme could

help to limit abuse. Finally, clear and transparent communication on eligibility criteria and

control procedures is essential to ensure the fairness and sustainability of the scheme.

4

FINANCIAL SUPPORT FOR LOW TRAFFIC AIR ROUTES WAS

INTERRUPTED IN THE FACE OF CRISIS

The support mechanism for low-traffic air routes is also a key tool in New Caledonia's territorial

continuity policy. It aims to maintain structurally loss-making domestic air links such as inter-

island services, Nouméa-Koné, Nouméa-Koumac, Koumac-Bélep and Nouméa-Touho. The

aim of this policy is to mitigate the constraints of insularity and remoteness, facilitate access to

employment and public services, support tourism development and promote territorial

rebalancing.

Between 2019 and 2024, New Caledonia Air Transport Agency allocated nearly 1.435 billion

CFP francs in direct subsidies to domestic airlines, including 857 million CFP francs to finance

services in the North Province (60 %) and 578 million CFP francs for inter-island services

(40

%).

Graph n° 2: Distribution of budgeted and paid subsidies by province between 2019

and 2024

Source: territorial audit office

The Loyalty Islands province supplemented the funding for inter-island services by granting Air

Loyauté financial compensation of nearly 325 million CFP francs. The total public subsidy thus

amounts to CFP francs 1,760 million for a total traffic of 64,413 passengers, representing an

average public subsidy per passenger of CFP francs 27,314 between 2019 and 2024.

However, significant disparities exist between routes in terms of infrastructure (compliance,

safety, runway length), passenger numbers and public aid per passenger. Some routes have

a very low occupancy rate, and consequently, a high average amount of public aid per

passenger. The territorial audit office notes that in 2019, the reference year (excluding the

568

917

1 485

578

857

1 435

0

200

400

600

800

1 000

1 200

1 400

1 600

Loyalty island province

North province

Total

MF CFP

Paid compensation

Budgeted compensation

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impacts of the health crisis and the May 2024 riots in New Caledonia), the average annual

occupancy rate was 28 % for the Nouméa-Koné route, 42 % for inter-island routes, 45 % for

the Koumac-Bélep route and 11 % for the Nouméa-Touho route. By way of comparison, in

2019, the average occupancy rate for domestic traffic in Polynesia was 75 %. As a result, the

average amount of public aid per passenger is high, exceeding 124,000 CFP francs per

passenger for the Touho route in 2019-2020, before the route was discontinued.

Graph n° 3: Average compensation per passenger paid by the agency per service

between 2019 and 2024

Source: territorial audit office

These discrepancies raise questions about the relevance of the service offered in relation to

other possible modes of transport, particularly road transport. Furthermore, the use of annual

agreements for granting of public aid, without any guarantee of continuity over time, does not

offer sufficient visibility to operators and users.

Between 2019 and 2024, the New Caledonia Air Transport Agency also provided significant

direct support to Air Calédonie to help it break even. This support amounted to a total of

2,634 million CFP francs between 2019 and 2024, including commitments entered into until

2027 for the repayment of instalments on a loan guaranteed by the State.

In total, the agency's financial commitment to domestic air services in New Caledonia can be

estimated at 7 billion CFP francs since 2019 (combining aid for territorial continuity measures

and the direct aid mentioned above).

The deterioration in local public finances requires better targeting of public aid for air services

in order to verify their ability to generate leverage for public and private actors and to meet a

real need among users, which may, conversely, lead to favoring road or sea transport in some

cases. These choices must be informed by an air service strategy that is integrated into a more

comprehensive vision of transport and mobility in New Caledonia, supported by New

Caledonia and accompanied by an action plan guided by monitoring and performance

indicators.

The establishment of multi-year agreements with air carriers to support low-traffic routes

deemed to be a priority will provide greater visibility of revenues, enabling companies to plan

their investments and ensure the stability and sustainability of the service offered to users.

According to the territorial audit office, these agreements could form part of a public service

delegation for domestic air services in New Caledonia, a procedure that would enable the

selection of the most effective and innovative bids, while ensuring transparency in the

allocation of public funds and fairness in the awarding of contracts.

16 082

25 035

124 281

56 566

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

Inter-îles

Koné

Touho

Koumac-Bélep

Compensation per passenger

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5

AID FOR THE RENEWAL OF AIRLINE FLEETS HAS TAKEN

VARIOUS FORMS

New Caledonia and the New Caledonia Air Transport Agency have repeatedly intervened to

support airline fleet renewal programs. These interventions have taken various forms:

subsidies, capital contributions and loan guarantees. They demonstrate the significant support

provided by the public authorities to the aviation sector in New Caledonia.

However, the dual intervention of New Caledonia and the New Caledonia Air Transport

Agency, even though the latter was designed as a tool for financing the aviation sector,

undermines the transparency of public aid.

While aircraft acquisition projects are part of each airline's specific commercial strategy, the

fact that New Caledonian airlines are overwhelmingly publicly owned requires New Caledonia

to be particularly vigilant with regard to the financing plans associated with these acquisitions

and the off-balance sheet commitments that result from them. In May 2025, several projects

to acquire new aircraft (Aircalin and Air Loyauté) were under review.

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The territorial audit office issues two legal reminder and five performance recommendations

aimed at ensuring greater control and transparency of the travel expenses of the elected

officials of New Caledonia and the provinces.

LEGAL REMINDERS

Legal Reminder No. 1.

(ADANC): Indicate in annex to the preliminary budget and the

administrative account the participation of the agency in the capital of the companies Aircalin

and Air Calédonie, in accordance with the budgetary and accounting instruction M52 (deadline:

2026).

Legal Reminder No. 2.

(ADANC): Endow the agency with an establishment project in

coherence with the objectives and means convention with New Caledonia, in accordance with

articles 8 and 10 of the deliberation of November 20, 2000 on the creation of the agency

(deadline: 2026).

RECOMMENDATIONS

Recommendation No. 1.

(reiterated) (New Caledonia): Define a strategy for air service in New

Caledonia to implement the principle of territorial continuity, submit it for adoption by the

congress and report to it annually on its implementation (deadline: 2026).

Recommendation No. 2.

(ADANC): Ensure compliance with the provisions of deliberation

n°128 of November 20, 2000 governing the operation of the board of directors (deadlines for

convening, drafting of minutes and summary reports of meetings) by sensitizing the directors

to the necessity of assiduity at its meetings and filling the position of vice-president (deadline:

2025).

Recommendation No. 3.

(New Caledonia and ADANC): Conclude a new convention

regarding objectives and means, specifying the conditions for the exercise of all the missions

of the agency for air transport in New Caledonia, the expected financial and operational

objectives and associated indicators, and ensure an annual follow-up (deadline: 2026).

Recommendation No. 4.

(New Caledonia): Implement a condition of resources in order to

benefit from the policy of aid for country continuity and consider targeting the aids on trips

corresponding to specific purposes (deadline: 2026).

Recommendation No. 5.

(New Caledonia): Implement multi-year conventions for low-traffic

air routes within the framework of a public service delegation for the domestic air service of

New Caledonia (deadline: 2027).