Troubled times for Air Tahiti Nui

French Polynesia's national airline, Air Tahiti Nui, is becoming burdened with mounting financial losses as it battles to fulfill the purpose for which it was started.

The airline was launched in the 1990s to preserve steady links with French Polynesia's main tourism markets, Los Angeles and Japan, after major French and American carriers began withdrawing or curtailing their French Polynesian service frequencies.

While Air Tahiti Nui wins awards for the quality of its cabin service, the cost of operating them is now financially a heavy one.

Its troubles are compounded by the slow growth, and in some years the contraction of French Polynesian visitor arrival figures.

Assisted by French government tax breaks the airline has built up a fleet of five Airbus 340 long-range jets for services to Japan, Australia, New Zealand, Los Angles, New York and Paris.

Los Angeles, New Zealand and Australia are doing so-so, but hardly brilliantly. The Japanese route is stagnant. The New York and Paris trips are disappointments with passenger loads of only 25-35%, way below the 70% minimum from day one needed for profit.

Observers say the New York service begun in 2005 was a misjudgement. The airline announced the service and expected Americans to jump aboard it from day one, lured by Tahiti's ultra exotic image. That hasn't happen. Now, in what South Pacific Tourism was told was yet a riskier decision, the airline opened a New York-Paris service in March. This route is one of the world's most competitive. If the airline is counting on help from the exotic French Polynesian brand for raking up business, it may again be badly disappointed.

In January, Air Tahiti Nui announced a US$17 million current loss it blamed on high fuel prices. What are its accumulated losses? Probably more like US$30 million and maybe more.

Air Tahiti Nui has shelved the purchase of a sixth 294-seater Airbus A340 since it is already equipped with far more seats than it can fill.

It is talking about the Airbus 350, still in the design stage but predicted to be 20-25% leaner on fuel burn. Would the French government finance such a US$100 million plus purchase?

It wasn't happy about funding the fifth jet. In April or May, French Polynesia's government and local private investors will be asked to produce several more million dollars investment to keep the airline going.

Air Pacific, Fiji's national carrier, is far more happily situated but is resigned to significantly lower profit this year, primarily due to high fuel prices.
It is 51% Fiji Government owned. Qantas, a powerful Australian airline, has a 46% stake.

In 2004/05 Air Pacific carried a record 595,019 passengers and made a record a F$35.9 million operating profit. Shareholders got a dividend and employees a bonus.

Unlike Air Tahiti Nui, the Fiji carrier has had to stave off competition from Australian and New Zealand cut price airlines.

While it was forced to cut its Australian and New Zealand route fares, its volume of business is not only holding up but also increasing

One of Air Tahiti Nui's handicaps is that its main markets are 10 or more hours flying time distant from Papeete.

Air Pacific's two big money makers, Australia and New Zealand, are just three or four hours away and in Fiji nearly everyone speaks English.

Air Pacific is spreading its businesses. It owns 35.9% of the Sofitel Resort & Spa, a F$80 million resort that opened in December as a project the airline initiated when it realised that its growth was being strangled by a shortage of good hotel rooms.

Years ago, it scrapped its domestic flights in Fiji and partially withdrew from the region. Now it plans to re-engage in the Fiji domestic trade with a subsidiary airline. It is moving back into the regional scene.

It recently returned to the Solomons and is paying more attention to Tonga, Vanuatu and Samoa. Last year it opened a subsidised service to Christmas Island that will soon be extended to Tarawa, another former port.

Air Pacific's chief executive John Campbell says the airline has rethought the Pacific Islands. It will consider operating on any regional route that makes adequate money.

Deeper into Micronesia, the Cook Islands, even French Polynesia? Perhaps Campbell has in mind the possibility that some other small airlines will follow Royal Tongan to the grave or become severely contracted, like Samoa's Polynesian Airlines.

Air Pacific might eventually evolve to what it was once intended to be - the sole, more or less, South Pacific regional airline.

Extra flights to meet forecast and seasonal demand were announced by Air Pacific in February. They will increase network cover to 17 destinations in 11 countries and offer 2.3 million seats to and from Fiji annually.

The extra flights include a fifth weekly Boeing 747-400 services to Los Angeles during the June-September peak period, extra flights for New Zealand (Auckland and Christchurch) season peaks; extra Boeing 737 Sydney season peak flights; and an eighth Brisbane weekly flight.

Air Pacific, noting the termination of a Pacific (Virgin) Blue Melbourne/Nadi service from April, said it would maintain its four weekly Boeing 767 services and upgrade two of them to Boeing 747 aircraft in winter months.