We Say - Part 2 of 4
We Say - Part 2 of 4
Almost all the Pacific's airlines are wholly or majority government owned. Skeptics, who jump immediately to the natural conclusion that the sad plight of government-owned airlines is the inevitable consequence of their ownership, are only partly correct. Undesirable political interference, coupled with inept management, is certainly a cause of ruin.
A great regional visionary flop was revisited by the Forum Economic Ministers Meeting (FEMM) at Port Vila last month. The ministers wondered: Why is it that the Pacific Islands don't have a regional airline? There are numerous other useful regional institutions, just one of them being the Pacific Forum shipping line, owned by a consortium of the region's governments.
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What inspired the Port Vila meeting to air the regional airline issue was the condition of the regional airline business. After an era of mostly moving away from operating ruinously in the red, ruinous not only for themselves, but for the entire national economies supporting them, many of the region's airlines have gone back to it.
Who would enjoy life as the chief executive of Air Niugini, Solomon Airlines, Air Marshall Islands, Air Nauru, Air Vanuatu, (encumbered as it is by losses of Vanair, a domestic carrier), Royal Tongan Airlines, Air Caledonie, or Air Tahiti Nui? Do the bosses of Air Tahiti Nui, Polynesian Airlines and Air Kiribati slumber untroubled?
What countries are troubled by total dependence on just two or, even worse, just one foreign airline intent on exploiting its monopoly for every cent extractable from it?
Almost all the Pacific's airlines are wholly or majority government-owned. Skeptics, who jump immediately to the natural conclusion that the sad plight of government-owned airlines is the inevitable consequence of their ownership, are only partially correct.
Undesirable political interference, coupled with inept management, is certainly a cause of ruin. But it is also a fact that the business of profitably operating a jet or turboprop aircraft in a region in which costs are unavoidably extremely high, distances are long and passenger-loads light, is a very difficult thing to do. High fares for such air services are another inevitable fact of life. Since comparatively few Pacific Islanders can afford the fares, the custom base that airlines must depend on for revenue is yet another inevitability; a small one.
Another fact is that for some airline owners, being a government, making a profit is not the first priority, although it would be fine to do so. The priority is having any kind of an international air link since no local private investor, or foreign airline, is prepared to accept the financial risk of running one. Niue is a classic case of what happens to a country without an adequate air service; no tourism and little of anything else.
And so the Pacific's airlines struggle on. Wouldn't they do better as one? What about Air Pacific? Isn't the Fiji carrier, still more than half government-owned, doing pretty well again after a temporary 2000/2001 blimp caused by a coup and that World Trade Center incident? Indeed so.
Wasn't it supposed to be THE regional airline back in the '70s, with several other shareholder governments in it (they still are)? Indeed so.
So what went wrong?
Well, other governments felt that Fiji was hogging the deal - jobs, destinations and service priorities, and tourism promotion. And so it was, but then Fiji was picking up the tab. Also, other governments wanted prestige as well as having a national airline while meeting national priorities.
So everyone went their way and the large amounts of money everyone lost and are still losing is history. Would the creation of another regional airline have any chance of success? Probably not, only for the same reasons that produced the first failure, but because the cost of operating the number of aircraft needed to meet what everyone wanted of it would be prohibitive. At one point the Pacific's airlines were running, usually empty, about three times the number of jets business-minded airline people said were needed for the custom available.
Things haven't really much changed. Could they? Probably not, unless large amounts of national pride can be swallowed.
Members of the Association of South Pacific Airlines believe that the way forward is by code-sharing, training equipment and risk sharing arrangements where these are feasible. These can at least reduce costs and for airlines flying in the most difficult circumstances contribute towards a break-even result, and even a small profit.
Few of the Pacific's airlines are in business for profit. They exist as an indispensable national social service. Air Pacific is an exceptional case, but at one time its condition was as parlous as that of any other of the region's struggling airlines now. Other airline owning governments can learn much from it.
Another of the few success stories is Air Rarotonga, 25 years old next year. This Cook Islands carrier is entirely privately owned. Is that another message?
