Plans put on hold as a result: Campbell

Elenoa Baselala
Fiji’s national airline, Air Pacific, continues to make changes to its business almost daily to remain airborne—the price it has to pay for the December 5 overthrow of the government by the military.

The airline has been forced to hold or change some of the plans it made befor11e the coup. For example, it was to mount additional weekly flights to Auckland, Sydney, Brisbane and Christchurch, but they have not been progressed because of the coup d’etat.

“The effect of the coup on Air Pacific has been the same as the rest of the tourism industry in Fiji. 

“The number of customers has fallen dramatically and as a consequence our loads and revenues have been severely impacted.

“This has produced loss making situations on many routes. Coupled with high fuel costs, the airline is struggling to break-even. 

“Concurrent with the negative impact of reduced business and revenue, we have had to increase marketing expenditure and cut prices deeply in an endeavour to stimulate visitor arrivals to the country. 

“This investment is producing slow results and although we are not back to a normal level of booking intake at this stage, we are seeing some signs of improvement.

“We had planned to swap over from Boeing 767 to Boeing 747 on some of our Melbourne services but have now cancelled that capacity upgrade. 

“We normally operate three flights a week to Tokyo but from January we have reduced that to two flights per week until mid-June when we expect the Japanese market to reflect recovery as it moves into the normal peak Northern Summer period. 

“The Tokyo route is not showing the rate of recovery expected and so we are reviewing whether we will return to three or retain two flights a week in the foreseeable future. 

“Overall, we have not cancelled many flights but we have often substituted a smaller for a larger aircraft, for example using a B767 for a B747 or a B737 for a B767, which has the effect of reducing the operating costs whilst maintaining integrity of the schedule from a customer services perspective,” Campbell said.

Late last month, the airline announced its code share arrangement with Air New Zealand for the Los Angeles route. This is a permanent arrangement.

Campbell told ISLANDS BUSINESS that Air Pacific has never made a profit on the route since 1999 and the loss was in multiple of millions of dollars annually.

It had continued to service the route as part of network offering and to ensure connectivity for Fiji for trade and inbound tourism purposes with this significant market. 

“Over the past two years with the escalation of fuel costs, losses have worsened. 

“Discussion with Air New Zealand revealed they were also concerned at the on-going loss making nature of the route. 

“The principle reason is that business on the route is highly seasonal and predominantly leisure-based with relatively low airfares and very limited freight. 

“The revenue available does not meet the fully allocated costs of operations.

“Our calculations are that the rate of loss will be reduced with codeshare co-operation through seasonal smoothing, growth of traffic and improved traffic flows from Europe /United Kingdom.

“The airlines will conduct an annual review of the codeshare arrangement and may fine tune it over time. But we have entered into a long-term relationship in an endeavour to jointly build the route to the mutual benefit of Fiji as a destination and the airlines’ economics.

“We constantly have services under review...we make changes to flights quite literally on a daily basis within this fine tuning process,” Campbell told ISLANDS BUSINESS.

A further factor is that the normal level of business class travellers, (diplomatic, NGO, government, military and general corporate business) on the airline’s routes, particularly between Fiji and Australia and New Zealand has been much reduced. 

The result, Campbell says, is that the normal volume of business class and higher level economy class fares has shrunk dramatically and they are primarily carrying heavy discounted tourism and VFR (Visitors, Friends and Relatives) traffic which has an impact on the average revenue per flight and yield per passenger.