For a year, the government refused for approve an application by a New Caledonia-based businessman Bill Ravel to set up a new airline, called Islands.
The administrative court in Papeete has now ruled that the licence be issued, saying the government's inaction was to protect a monopoly held by Air Tahiti.
Radio1 reports that should the government fail to comply within 15 days, it will be liable to pay $US10,000 a day.
