Clear Skies For Air Tahiti Nui

"We were thinking the New York service would be easy to develop, and maybe the Australian service would be harder, but it has turned out to be exactly the contrary," says Air Tahiti Nui Chief Executive Officer Nelson Levy. While the load factor on the Sydney-Papeete flights in December was 83 percent-the airline's highest-on the New York route it is around just 35-40 percent.

Nelson Levy, CEO of Air Tahiti Nui (Photo: Courtesy Air Tahiti Nui)

Levy says the weak showing in New York is due in part to the fact that there is much more competition for North American tourists, who can also easily and more cheaply travel to the Caribbean and Europe.

Levy was in Sydney late January to meet tourism leaders and agents, and announce the airline's intention to launch a third weekly flight between Sydney and Papeete commencing March 26.

While the Sydney service is strong, Levy says they're going to have to be patient with the North American market. He says after launching the New York service they learned that all new airlines on that sector take at least 12 to 18 months to really become established. "People there have told us not to panic," Levy says. But the airline is making changes to get new traffic, including introducing connections once a week from New York to Paris.

The New York service has also been hit with technical problems, with several flights being cancelled. One irate passenger wrote to Pacific Magazine questioning whether the cancellation of his January 14 flight and others was genuinely due to engineering problems, or whether they were cancelled "because there weren't enough passengers."

Levy says it was the former. "In late December and early January we had technical problems on the ground. This happened while another another aircraft was in a scheduled "C check" (regular maintenance) so we had two planes out at the same time and had to cancel some flights." Air Tahiti Nui operates five Airbus A340-300 to seven destinations, the others being Paris, Los Angeles, Auckland, Tokyo and Osaka.

The Sydney-Papeete flights will also connect to Los Angeles within two hours and New York within one hour from late March. Levy says this "hub" concept will help address their high fuel costs. "That's a major headache," he notes. "We've completely restructured the airline to ensure we come back to profitability. We think fuel will continue to be very expensive. But we have to adapt ourselves to the situation."

High fuel prices were blamed for the airline's December 31 deficit of some 2 billion French Pacific francs.

French Polynesian finance minister and Air Tahiti Nui board member Jacqui Drollet says "the airline is not in danger at all" despite the deficit, and the airline's new Managing Director, Eric Pommier, agrees. "Air Tahiti Nui has a cash flow of more than 1.8 billion French Pacific francs. There are no worries to have."

Levy expects Pommier, who was previously chief executive officer at the Bank Socredo, Tahiti's largest bank, to bring some new skills to the airline.

"He comes from the finance side, our skills are much more commercial than finance."

In 2005, Australia was the fifth largest source market for Tahiti, and Levy believes it will jump to fourth this year with between 12,000 to 15,000 visitors, behind the U.S., France and Japan, and overtaking Italy.

Air Tahiti Nui's marketing and promotion in Australia is quite different from other Pacific island destinations, using distinctive graphics rather than the usual imagery of sandy white beaches.

"It's much more artistic and creative. It's a piece of art itself," Levy says

He says the Tahitian tourism sector is also seeing a great deal of investment in accommodation. In Bora Bora, forthcoming openings include three new high-end resorts, a St. Regis with 120 rooms, a new Intercontinental with 80 rooms and a Four Seasons. Moorea is also experiencing increased infrastructure investment.

This looks to be a year of consolidation for Air Tahiti Nui. A decision on whether to purchase a sixth Airbus has been put off until the end of March.

And other markets? Levy says while some preliminary research into the potential of China has been done, it's a very fragmented market.

"Maybe it is too early for China for the South Pacific, but maybe in the next five to 10 years we can look at it."

Levy doesn't see a threat from any low-cost operators, unlike other South Pacific destinations. "We can compete, even with a full-service airline," he says. "With a minimum flying time of seven hours we're unlikely to see low cost operators; it's a bit too far."