Earn your Keep Or Shut Down, Air Kiribati Told

Air Kiribati ATR-72...at Nadi Airport.

The honeymoon's over, it's time to earn your keep or shut down. That's basically in a nutshell the hard-hitting message given by Kiribati's new president, Anote Tong, to the one-year-old national carrier, Air Kiribati. Airline's chief executive Baraniko Baaro admitted he has yet to hear personally from Tong. But he did say that indications he'd been given through the civil aviation minister was that the airline must earn its keep. "The indication from the minister is that we must generate revenue," Baaro said.

"Our intention is to at least strike a break-even or better still, produce a marginal profit."

Baaro and his management team had responded swiftly. From September 1, airfares on Air Kiribati got a 35 percent hike.

From the introductory fare of AUS$1000 Nadi-Tarawa return which many skeptics described as an airfare hugely subsidised by the Kiribati Government, travellers will now have to fork out AUS$1350 for the sector. The fare is the same irrespective if you board their Nadi or Suva weekly flight aboard the French-leased ATR-72 aircraft.

In an interview with Islands Business during his first week in office, Tong had promised to conduct a review of the airline's operations. He was concerned about the A$8 million loss Air Kiribati had incurred since it began operations more than a year ago.

"We propose to review the operation of the ATR-72 which on preliminary evaluation is definitely not viable," Tong had said then.

Total losses sustained by the ATR-72 service since its inception up to the end of May this year amounted to more than A$8 million.

No rational government can justify operating an international air service at a huge loss given our economic situation and the fact that another operator is already serving the same sector.

"There can be no doubt that both services are currently running at a loss." To widen its revenue base, Air Kiribati, it's believed, is also seriously pursuing extending its Kiribati-Fiji service to another island destination. Baaro declined to confirm this, saying the matter is being taken up on a government-to-government basis.

Baraniko Baaro...looking for more revenue-generating avenues.

He said he would be in a position to comment once negotiations begin between the respective authorities.

If the national carrier does get the green-light to fly to a third destination, Baaro is hopeful the new service would bring the extra revenue Air Kiribati needs to at least break-even.

In addition, the extra service will ensure a better utilisation of the leased aircraft, instead of spending most of its time lying idle on the tarmac.

On its long-term plan to fly to Kiritimati (Christmas) Island, Kiribati's easternmost island, Baaro said the airline is still keen to provide a link between the island and Tarawa.

"But for now, we can't mount a flight to Kiritimati since we will have to wait until the airport and its fuel depot are upgraded." Travellers between the two locations have to fly through Nadi and Honolulu for now.

For a time, Air Kiribati was interested in adding a stopover in Nauru for its Majuro (Marshall Islands)/Tarawa service. But the idea was abandoned following strong objections from Nauru.