South Pacific island governments are finally taking steps to stem the flow of red ink that has bedevilled most of their tiny national airlines for the past decade.
At presstime, aviation officials from the dozen isolated nations were studying a comprehensive new report designed to set them back on the road to profitability.
The study was conducted by a task force of former airline officials set up last year after a joint meeting of South Pacific leaders, concerned about mounting debt among their recession-hit flags.
One carrier, Western Samoa's Polynesian Airlines, faced bankruptcy, with debts of around $15.5 million because of over-ambitious planning. Solomon Airlines had been losing $400,000 a month and others, including Air Nauru, Air Vanuatu and Air Marshall Islands were also struggling to overcome losses.
An International Air Transport Association report found the region's traffic could only support three B737s, but island nations were operating nine. Pride led them to ignore reality and embrace the prestige of having their own jet operations.
Now the report by the islands' own task force makes two crucial points aviation analysts have long recognised:
There is not enough traffic to allow most of the tiny nations involved to fly passenger jets on a 'go-it-alone' basis;
Due to the disparate scheduling demands of the countries involved a single multinational South Pacific carrier is not feasible.
The answer pushed by the report is bilateral cooperative arrangements under which two nations share aircraft and costs. Ironically, debt levels have already forced several island states to act, both pre-empting and endorsing the task force's findings.
Honiara-based Solomon Airlines is heading back into the black after ending the full-time lease of a Boeing 737-400 from International Lease Finance Corporation. It has leased a B737-300 from Qantas for just three days a week and even then it shares the capacity with the Australian carrier. The arrangement also meets government needs because it is painted in Solomon's livery.
Solomon also has separate seat-share arrangements with Air Niugini, Air Vanuatu and Fiji's Air Pacific, rationalising capacity throughout the airline's network. In another deal Air Pacific, one of the region's few airlines to have remained profitable consistently, has joined with Royal Tongan to lease a B737 from Ansett Worldwide Aviation Services, in the first deal of its kind in the South Pacific.
The deal suits both; Air Pacific needed 2,000 extra hours of capacity annually, not enough to warrant a lease on its own, while the Tongan carrier was looking for over 1,000 hours. Air Pacific managing director Andrew Drysdale believes other island nations will soon become involved in similar arrangements.
Solomon's managing director Jim Bradfield says: 'Cooper ation comes in lots of forms. I think the extreme that people have talked about regarding a single carrier serving all of the island nations is an academic's dream.
'I think you can show that it will be feasible on paper, but when it gets down to the real world the differing needs of the nations, the differing strengths of the nations, and the fact that in many cases they are in competition for the same tourists, would make it an impractical thing to happen and that is why it has never worked.'
'I think you can show that it will be feasible on paper, but when it gets down to the real world the differing needs of the nations, the differing strengths of the nations, and the fact that in many cases they are in competition for the same tourists, would make it an impractical thing to happen and that is why it has never worked.'
Source: Airline Business
