We Say 2

More bad times have descended upon some sectors of Oceania's civil aviation business. Worst off is Tonga, whose efforts to go big internationally with an aircraft that was too expensive and unsuitable gave the government-owned Royal Tongan Airlines with too little funding and unwise management, and no hope of success. Tonga is now dependent for its entire international air links on three foreign airlines: Air New Zealand, Polynesian Airlines and Air Pacific.

Royal Tongan Airlines' accumulated losses are 20 million pa'anga, about US$10 million. The collapsed international venture cost several million dollars. This is a huge loss for a weak economy the size of Tonga.

Kiribati's new government has just abandoned attempts by the government-owned Air Kiribati to operate an expensive leased prop-jet on flights to Fiji and, as it turned out eventually, to really nowhere else. The experiment, launched by the previous government, cost millions of lost dollars. Once again, Kiribati is left dependent on Air Nauru.

Samoa's government is resigned to the fact that having had to pump S$19.5 million into Polynesian Airlines last year, it will need to put millions more into the airline this year.

Air Vanuatu is beset by constant political interference but is scraping along. Air Marshall Islands is reduced to running international trips to Kiribati and Nauru with a small aircraft able to carry less than 20 passengers. Air Tahiti Nui and Air Caledonie International exist‹thanks purely to heavy territorial and French government financial support. They should make it into the black eventually. Air Niugini is at last coming good because it is being left alone, almost, by politicians whose interference hobbled its management. Solomon Airlines is recovering from a near death experience because it is able to ride on the RAMSI money wave‹the money and expertise being put into the restoration of the Solomon Islands government system and economy.

By now every Pacific Islands government should be fully aware of the perils of operating an airline without adequate funds, expertise or, of course, without an adequate market. The Royal Tongan and Air Kiribati disasters are "told you so" stories. Kiribati had friendly advice from the regional aviation industry, which, if heeded, would have avoided its subsequent heavy loss.

The Tongan adventure was regarded by the regional industry from the outset as having no credibility whatsoever.

Samoa's airline is well run. Its need for extra cash from the government arises from pure bad luck caused by such international events as global alarm about terrorism that were completely beyond its control.

Polynesian Airlines is a classic case of Pacific Islands national airline dilemma. Its losses have cost Samoan taxpayers tens of millions of dollars, but without Polynesian where would Samoa be? At the mercy of the whims of the now intensely profit-minded foreign carriers ready in their own commercial interests to instantly drop Samoa from their routes.

Last year, Polynesian got another big injection of S$19.5 million from the government.

As airline's chief, John Fitzgerald in an interview said: "Naturally, like every airline that is undercapitalised, we would like more. But we do understand the restrictions of small islands economies like Samoa. We don't like asking government for money. We know that every dollar we take out of the system is the dollar they need for education, for example. However, we believe the airline adds value and with tourism dollars earned in small islands countries, eventually that dollar will be re-distributed to the other sectors we're taking money away from.

"We recognise that small islands states really cannot afford national carriers. But they have the problem that they also cannot afford not to have a national carrier, because they'll be held to ransom by other main carriers. That is a difficult equation to balance, and the way they've balanced it sometimes is the way Air Pacific did; they brought in a big brother in the form of QANTAS, which has 46% of Air Pacific. The government of Samoa has proclaimed its willingness and openness to sell up to 49% of Polynesian.

"Obviously, in the current airline market, nobody is being knocked over by a rush to buy airlines."

The Pacific Islands Forum Secretariat is about to produce a report on whether a regional airline, catering for several countries, can be launched successfully and maintained as a continuing success as the regional Pacific Forum Shipping Line eventually became to be. Several difficult management and operational problems would need to be sorted out. But ultimately it boils down to whether Pacific Islands governments are able to swallow national pride, set jealousies aside, and as shareholders allow a regional airline to be run not necessarily as an entirely hard commercial enterprise, but certainly as a reasonably profitable one.

Prospects for achieving that miracle do not look encouraging. Ironically, given the financial catastrophe Nauru's leaders have dumped their country in, the vehicle with the best prospects of success as a central Pacific regional airline appears to be Air Nauru.
Oh, and another thing. Looking at regional airline wreckage, Pacific Islanders can take comfort in knowing that they are not alone.
Think of the hundreds of millions of dollars it cost New Zealand taxpayers to save Air New Zealand. Wasn't Ansett ruined by Air New Zealand too?