| Aviation: AIR PACIFIC PROFITABLE, AIR TAHITI NUI IN CRISIS |
2 airlines serving top holiday destinations.
Here's a tale of two airlines. One, Air Pacific, serves Fiji which, with more than 500,000 visitors a year, is the South Pacific's number one visitor destination.
| Crisis... Air Tahiti Nui’s losses are mounting. |
The other, Air Tahiti Nui, serves French Polynesia, which with over 200,000 visitors annually is the region's number two visitor destination.
Air Pacific, founded more than 50 years ago, is 51% owned by the Fiji government and 46.63% by a foreign airline, Qantas, the main Australian carrier.
Air Tahiti Nui, now more than 70% owned by French Polynesia's government, got going in 1998 with the sole purpose of flying tourists to French Polynesia. French Polynesia's tourism was in trouble because international airlines were ending or reducing their flights to it.
Air Pacific's primary business is the trunk route delivery of tourists to Fiji, but business-people just travelling and regional traffic-is also important to it.
In the 1980s, Air Pacific went broke and nearly went out of business. It survived to become even in these hard airline times profitable. Measured by business it is the biggest duck in the South Pacific pond.
In 2004/05, it carried a record 595,019 passengers and made a record F$35.9 million operating profit. It paid a nice dividend to its shareholders, something not many airlines can do nowadays, and again paid its more than 700 staff a bonus.
The airline is gloomy about its current financial results, no thanks to fuel price. But it is also optimistic. It doesn't see catastrophe ahead of it, not as long as it plays its business cool and wisely.
But how goes Air Tahiti Nui? Unlike the relatively well cashed up and cost cutting conscious Air Pacific, the future for French Polynesia's national airline appears to be grim. It is losing money heavily and not just because of high fuel prices.
Ten years ago, French Polynesia was landing about 200,000 visitors a year. The figure dipped and lately recovered to about 230,000/240,000 visitors last year.
French Polynesia's tourism is in a state of crisis for reasons not all to do with Air Tahiti Nui, but the airline is in a crisis too. Assisted by French government's tax breaks, it built up a fleet of five big Airbus A340s, a long range plane for flights to Japan, Australia, New Zealand, Los Angeles, New York and Paris.
Los Angeles, New Zealand and Australia are doing so-so but hardly brilliantly; the Japanese route is stagnant; and the New York and Paris trips are clear disasters with passenger loads of only 25-35%, way below the 70% minimum needed for profit.
Observers say the New York service which began last year was a badly miscalculated misjudgment.
The airline announced the service, began it and expected Americans to jump aboard it from day one, lured by French Polynesia's ultra exotic image. That didn't happen, and still isn't. Now, ISLANDS BUSINESS has been told the airline will open a New York-Paris service in March.
This route is commercially one of the world's toughest. If the airline is counting on help from exotic brands for raking up business, it will again probably be badly disappointed.
In January, the airline announced a US$17 million loss and blamed that on fuel prices. What are its accumulated losses? Probably more like US$30 million and may be much more than that.
Air Tahiti Nui has shelved the purchase of a sixth 294-seater Airbus A340 since it already has far more seats than there are passengers.
It is talking about Airbus A350, 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.
Air Tahiti Nui's losses are mounting. In April or May, the government and other local shareholders will be asked to cough up several more million dollars investment in the airline to keep it going. Can they afford to carry the burden? Will they be willing too?
Air Tahiti Nui's future is a worrying one.
Back to Air Pacific. Its situation is different. It expects its profit to dip quite significantly this year, primarily because of high fuel prices. Unlike Air Tahiti Nui, it has to stave off competition from Australian and New Zealand cut price airlines. It was forced to cut its Australian and New Zealand route fares but business is not only holding up but increasing.
Air Pacific's two big money-makers are Australia and New Zealand and they're just three or four hours away. In Fiji, nearly everyone speaks English.
Air Pacific is spreading its business. It owns 35.9% of Sofitel Resort & Spa, a F$80-million pub that opened in December as a project the airline initiated when it realised its growth was being strangled by a lack 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 scene 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 may soon be extended to Tarawa, another former port.
Chief executive John Campbell says the airline has rethought the Pacific Islands. In future, 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 Polynesia. Air Pacific might eventually evolved into what it once set out to be-the South Pacific's regional airline.
|
|
