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Airlines unfazed by open sky
As if pilot poaching is not bad enough, airlines of the Pacific now have to contend with the new annoyance of cabin crew pilfering.
Fiji’s national carrier Air Pacific confirms it has already lost 15 of its crew members in recent months due to lucrative offers from Middle Eastern operators. Other airlines in the region like Air Niugini, Air Tahiti Nui, Air Calin, Air Vanuatu and Our Airlines are also bracing for the new phenomenon.
Arabian-based Emirates Airlines particularly has reportedly stepped up its recruitment drive in our part of the world, extending this from Boeing 737 pilots to cabin crews.
Emirates is believed to have opened a flight attendants’ training school in New Zealand.
Recently regional airlines had to grapple with pilot loss as captains and first officers were being lured overseas by more lucrative offers. Air Pacific and Air Niugini particularly complained about the huge loss incurred as they had invested heavily in training its crew.
There is a particular shortage of Boeing 737 captains as more and more airlines including those in the Middle East fly the Boeing’s ‘working horse,’ its 800 series.
As a counter-measure, Air Pacific had to rely on hiring on short-term basis pilots for its two Boeing 737 aircraft with most of them based in Auckland, Brisbane and Sydney—three of the carrier’s major destinations.
Offering to pay its staff in US currencies, regional airlines say they are not in a position to match the new competition.
Emirates, for instance, says it offers flight attendants a starting salary and allowance of nearly US$2000 a month.
In addition, its employees are entitled to full medical coverage, bonus and return air tickets to their home country each year.
Reflective of its global recruitment drive, its official website proclaims that its employees represent 100 nationalities and speak over 80 languages.
This new challenge was discussed on the margins of the annual conference of ASPA (the Association of South Pacific Airlines) held in Sydney early December.
The two-day conference at the Amora Hotel in Sydney’s CBD further confirmed the airlines in the Pacific remained unconvinced that an open sky policy, advocated through PIASA (Pacific Islands Air Services Agreement), will solve all the islands’ aviation woes.
ASPA has said all along that open skies will not produce more good than the existing bilateral air agreements islands of the Pacific currently have.
Economics not treaties drive aviation in the region, ASPA members argued.
Such a position didn’t stop Seiuli Alvin Tuala from advocating the need for PIASA at the ASPA conference in Sydney.
Tuala is the aviation adviser at the Pacific Islands Forum Secretariat which has been mandated by the civil aviation ministers of the Forum member countries to implement PIASA.
As a qualified jet pilot and lawyer, Tuala said he understood the airlines’ opposition to opening up the Pacific airspace.
But, he said, PIASA was introduced for its social benefits and not to protect the interests of the airlines.
“When you see how an open sky policy has forced fares between Singapore and Malaysia to drop to as low as 45 cents, then you get to see the benefits of having PIASA in the Pacific,” said Tuala.
“We are thinking of small and remote islands like Niue and Tuvalu who have been crying for reliable and cheaper services all these years.”
PIASA, he said, is now in force after Niue became the sixth member country to ratify the agreement in mid-2007.
He said a recent AusAID-funded report confirmed that the full benefits of PIASA would not be realised if Fiji continues to reject requests to ratify the open sky policy.
ASPA delegates however rejected Tuala’s claims, saying islands routes cannot be compared to that of Singapore and Malaysia.
“If you wish Vanuatu to start preparing for 45 cents paying passengers, then you should also start planning to open soup kitchens in Port Vila,” says Ted Drew, Air Vanuatu’s general manager sales and marketing.
“Vanuatu happens to be a third world destination with first world pricing, that’s the niche we have found for ourselves.”
Air Pacific’s CEO John Campbell wanted to take up Tuala’s challenge that Fiji’s national carrier’s sister airline Pacific Sun mount a daily Suva to Apia service using an ATR-42 aircraft.
The Samoan national believes the route will be a lucrative one given the number of Samoans who prefer Suva as a shopping destination.
Campbell in a tongue in cheek remark offered to do a daily service with Apia but on the condition that Tuala’s employer underwrote it.
Pacific Sun’s rival and Suva-based Air Fiji has reportedly studied the same route and found it to be unfeasible.
Campbell also rejected the assertion of the AusAID-funded report on the impact of PIASA that Fiji will be the net loser if it stays out of PIASA.
Page 44 of the report says in part that “specifically, the model assumes (there is no econometric evidence to guide calibration here) that the cross-price effect is one half for tourists.
“This means, for example, if Samoa liberalised and Fiji didn’t, then for every two new tourists directly attracted to Samoa by the reduction in prices into that country, Samoa will gain one additional tourist who chooses to switch their holiday from Fiji to Samoa because the air fare to Fiji has not changed.”
Cherry-picking of islands routes, remoteness of some islands, low traffic, high jet fuel prices, lack of air cargo, poor aviation infrastructure and penetration of islands airlines by overseas interests are other factors PIASA has not tackled.
ASPA delegates, for instance, say they will wait to see the day when competition that PIASA is supposed to generate would see airfares between Nadi and Tarawa or Funafuti fall to the ‘45 cents’ margin that Asia had enjoyed.
Another unacceptable provision of PIASA as far as ASPA members are concerned is the possibility of allowing Australia and New Zealand in as members.
Critics say with the involvement of Australian-based airlines like Virgin Blue in Samoa and most probably Vanuatu, Solomon Islands and Papua New Guinea, allowing the two wealthiest countries in the region into PIASA will not be in the best interests of island-based airlines.
—By Samisoni Pareti
Take advantage of PNG’s boom, Fiji told
Papua New Guinea is experiencing an economic boom never experienced before in the last three decades or so, and it wants Fiji to be part of it.
In fact, PNG’s National Development Bank managing director Richard Maru is optimistic the business relationship between the two countries could be developed to greater heights.
While on a visit to Fiji recently, Maru outlined a number of opportunities Fiji investors could tap in PNG such as mining, petroleum, agriculture and gas companies through the purchase of shares in public-listed companies in both the Sydney and Port Moresby stock exchanges.
With Fiji being the front-runner in tourism in the region, PNG is investing heavily in its own tourism industry and Maru believes there is an opportunity for Fiji to also export their services.
“For instance, investing in the beef industry especially in milk and butter production. I understand you have expertise in dairy milk and butter, which we require. At present, PNG produces only 40 percent of its total beef requirements and does not produce dairy products.
“Fiji could invest in agricultural companies like Ramu Sugar Limited, in various oil palm companies that are also venturing into becoming diversified agriculture companies with beef, cashew nut and bio-fuel companies.
“The rest of the world is moving to green fuels with PNG now investing in producing bio-diesel from palm oil.
“This could be a very good opportunity for Fiji as only 10,000 hectares of land is required to have an economic milling operation.
“I believe the greatest opportunity for PNG to contribute to the economic development of Fiji is in the oil palm sector where we have over 40 years experience and have successful world class companies like New Britain Oil Palm Limited.
“If sugar cane can grow in Fiji, I am sure oil palm can also grow here. Already, New Britain Oil Limited has expanded to the Solomon Islands and I am confident depending on the fiscal incentives and a conducive business environment, Fiji can attract a major oil palm company to come and invest here.”
Maru adds that Fiji has been giving the excuse of unavailability of flat land for not pursuing this industry.
He suggests the country’s policymakers seriously rethink their position.
He added that Fiji needs to seriously consider having a second tier micro-bank, something PNG already has, to service the largely unbanked population and allowing them access to micro-credit.
There are also opportunities not only for Fiji but the Pacific as well with PNG’s proposed “tuna capital”.
The PNG Government has just approved a K100 million development at Vidar near Madang for a Pacific-wide tuna processing plant.
“This will include a jetty and wharf for purse seiners, fish market, clod rooms, ice making plants, tuna processing plans and a township with a view to making PNG the tuna capital of the world.
“We already supply 10 percent of the world tuna and the marine park is intended to also be an investment opportunity for other Pacific Island states, and no doubt create employment opportunities for other Pacific islanders,” Maru said.
Opportunities also exist for Fiji to import and market PNG products such as coffee. “We in the Pacific should not give up all our land and continue to be employees or spectators but become owners of businesses so we can receive greater benefits from the use of our resources, including our talents and scarce capital inputs. “Our governments should do more to encourage our small business sector to invest and export within the region where opportunities exist to insulate our businesses from high risks like political instability, dependence on one commodity or industry where external factors determine the success of many of our industries as Fiji had experienced first hand in its sugar and garment industries.
“Collectively, Pacific Islands governments should work to develop our small business sector in the region.
“Some areas that governments through regional bodies can assist growth of the sector is by facilitating more networking between our business sectors in the region including between Fiji and Papua New Guinea.”
Majority of PNG’s population (about 80 percent) live in the rural areas and the government has devised measures to develop them to start small businesses.
Maru says this is essential as “we do not want to be spectators and stripped of all our rich resources after foreigners deplete all our non renewable resources, like we have seen in many regions in the world”.
— By Elenoa Baselala
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