Air Pacific’s bigger plans to trigger competition

Dionisia Tabureguci

Is this the one? Air Pacific flew a few key stakeholders on a demonstration flight on board this ATR 72.

The face of competition in the provision of domestic airline services is set to change with the expected entry of the international carrier Air Pacific into the market by the end of the year at the earliest.

No word could be obtained from the current major domestic carrier Air Fiji Ltd on this major development. But it is clear Air Pacific, which is a 51 percent government-owned entity, is ready to expand its operation after making a first publicly visible move last month.

“We have completed due diligence on a particular airline and are involved in negotiations right now. If those negotiations are brought to a successful conclusion, then we will fly domestically by the end of this year.

“If there is a delay, then by early next year, but one way or the other, we are flying domestically,” says Air Pacific chief executive officer, John Campbell.

Last month, Campbell took a few representatives from key stakeholders in the aviation industry on a demonstration flight on board a French made ATR-72 aircraft, which was on its way back to its manufacturing base in Tolouse, France, after maintenance work at French Polynesia.

Some of the digntaries who flew on the ATR 72.

“The manufacturers of this plane made a last minute decision to bring it into Fiji and demonstrate it so we can see the capabilities of flying between Nadi and Suva and into Labasa.

“It’s not an aircraft we’ve decided to purchase but it is one that we have under evaluation along with the ATR-42 (the smaller 42-seat version),” Campbell says.

The company is yet to decide on the routes that it will service. But if negotiations with the local airline—which FIJI BUSINESS understands to be Sun Air (Pacific) Ltd—are successful, it will be purchasing more aircraft to change, over time, the entire fleet it will inherit from the buyout.

“We have to have aircraft in three different size range. One with up to 12 seats for very small runways, one with 20 or more seats for smaller airfields but busier routes, and one of around 40 to 50 seats which will fly what we call trunk routes between Labasa, Nadi and Suva,” says Campbell.

Air Pacific’s plan to go domestic is driven by a few key issues, one of them is to help distribute tourism widely throughout Fiji, which Campbell says is not really happening because some of the existing services do not encourage tourist distribution.

“Some of the planes are too small and don’t have aircondition facilities. Some cannot carry certain tourist baggage so as a consequence, we have found that there are a lot of resorts in the North, in particular, that have less than average occupancy. They are only operating at about 50 percent and 60 percent occupancy rates while the rest of Fiji is pretty well full.

"So, we realised that if we want to fill the available seats on our international aircraft, then we have to move people more widely,” he adds.

For a company whose management wakes up each morning with the realisation that it has to make F$1.5 million just to break even for the day, as Air Pacific chairman Gerald Barrack puts it, this new business would not only expand income base, it would also streamline the overall operations to be more cost effective.

“The cost of fuel gives me a heart attack each morning when I wake up and look at the cost on the computer. The cost of the type of fuel that we use for aviation has gone to US$83 per barrel and it is damaging us and our profitability,” says Campbell.

“Going domestic will help us build the overall load onto those empty seats that we want to see filled in our international aircraft.

"By helping distribute tourism more widely, we hope we will have increased the total number of tourists coming in and in this way, help our international flights.”

At the moment, with fuel cost alone eating out over $3 million from the airline’s weekly earnings, the airline is mitigating the impact of high fuel costs through a number of fuel-efficient measures.

“We’re flying very conservative flight plans and watching the weight of everything that goes into the aircraft to reduce the weight of the aircraft, and in every possible way practice very conservative fuel saving flights,” says Campbell.

Getting the range of aircraft that it has in mind will also help Air Pacific economise on its regional service, which it plans to expand in the new year.

“A lot of our regional operations are on jets that come through Nausori and these are the ones we struggle to put a decent load on to.

"The aeroplanes are just a little too big for some of the immediate points that we serve. So we think the better way is to go with smaller aircraft with a greater number of flights so that we are delivering enough seats for the market and we improve efficiency of service.

"It will also enable us to operate a lot more flights to Nausori than we currently can as a lot of regional travel is done to and from Suva,” Campbell adds.

Once its domestic service begins, Air Pacific is looking at delivering what it says would be better and cheaper service than what is currently offered in the market.

Air Pacific is also looking at purchasing planes from a Canadian-based aircraft manufacturing company.