Aviation
Crashing And Burning?
Regional Air Agreement May Not Last The Year
| The Secretary General of the Association
for South Pacific Airlines believes the Pacific Islands Air Services Agreement,
better known as PIASA, could be dead and buried within the next couple of months.
ASPA's George Faktaufon says the association has finally got support for a cost
benefit analysis of the agreement. "PIASA has been flogged as the answer to all our air transport ills, but the supposed benefits are unsubstantiated," he says. PIASA was developed to integrate aviation services of Pacific Island Forum members. Signatories are Cook Islands, Nauru, Tuvalu, Vanuatu, Papua New Guinea and most recently, the Solomon Islands. Faktaufon says proponents of the agreement claimed it will generate additional traffic to the region through competition, that it will improve frequency, improve capacity, and cut fares. Faktaufon says they were told "everyone will be happy because competition will drive everything else. "PIASA is a fairly one-sided agreement. It's an economist's dream. It's a utopia," Faktaufon says. "The region didn't ask for it." Faktaufon says it was prompted more as a result of frustration from Australia and New Zealand about the way aid money was being spent, particularly in the aviation sector. "At the moment, governments are joining (PIASA) blindly," Faktaufon says, "so we are happy that AusAID has agreed to fund a study. We believe some countries were coerced into signing." That study will look at the tangible benefits and costs to joining PIASA. Faktaufon acknowledges it will likely show benefits for some island nations that don't have national airlines, such as Tuvalu and Cook Islands. He hopes the results of the survey will be ready in time for a meeting of Forum Aviation officials in Nadi, Fiji in August. Meanwhile, the association is being kept busy monitoring a number of other changes in the sector. ASPA's concerns about the long-term impacts of the movement of low-cost carriers into the region are well documented. Faktaufon says of companies like Virgin Pacific, "we don't know if they are here to stay. When we look at the economic benefits of airlines, we need to look at the total benefits to the islands." He's pragmatic about the pressure sustained high fuel prices are having on the operating costs of airlines. "No matter what you do you can't find economies of scale," Faktaufon says. "We buy fuel in U.S. dollars, but revenue is in local currency. "There are some savings to be made if you are operating wide bodied aircraft on long haul services (for example Air Pacific) but for most regional airlines, they are operating three hour flights on narrow bodied aircraft and they are really struggling to save." Faktaufon cites political interference in regional airlines as a continuing threat to their viability. "What planes they buy, who they hire, what routes they service, it's still a big problem…At Royal Tongan, Polynesian, Air Niugini, Solomon Airlines, Air Kiribati, there have been problems with government interference." Faktaufon takes some hope that with the "good governance" conditionality being "enforced in the region", interference in airlines will stop. Aside from the fairly solid performers in Air Pacific, Air Caledonie and Air Tahiti Nui, Faktaufon points to Air Niugini as an airline to watch. He points to what he sees as the good start made by Air Niugini's new CEO and its operating profit last year, and says "it should do well if government can keep its hands off it." Of the region's other carriers he says Solomon Airlines "is still finding its way," that the future of Polynesian Airlines is uncertain and, with a wry laugh, that Air Vanuatu "has a 26 person board, how would you like that?"
|
