And so Prime Minister Tuilaepa Sa’ilele Malielegaoi’s government has made a decision. After more than 12 years of working with Virgin Australia in the joint venture to operate Virgin Samoa, the government is pulling out.
The decision was revealed in a letter from Prime Minister Tuilaepa Sa’ilele Malielegaoi to the Chief Executive Officer of Virgin Australia Pty Ltd, John Borghetti, leaked and published in your newspaper last week.
Dated 12 May 2017, the letter was straight to the point.
Writes Tuilaepa: “Following numerous extensive discussions and negotiations held between VA and the Committee members of the Special Negotiating Team (“SNT”), Cabinet has unanimously decided not to re-new the Joint Venture (“JV”).
“The Cabinet has decided that the current arrangements of the JV, is no longer the Direction that Government and ultimately Samoa should take at this time.”
Tuilaepa went on to acknowledge the Airline’s contribution.
“I would like to take this opportunity to thank you for all the excellent work we have undertaken together to date, and I do sincerely hope we can still work together in the future,” he wrote. “We thank you for your services and hope we are able to do business again in the future.”
Now speaking of the unpredictable future, there is one thing for certain.
From where we stand today, it’s hard to imagine Virgin Australia and the government of Samoa having a future together. On top of this letter to Mr. Borghetti, Prime Minister Tuilaepa did not mince words when he was pressed about the issue during his weekly media conference.
In a story titled “P.M. defends axing of Virgin” published the next day, Prime Minister Tuilaepa said the government’s decision is the best move for Samoa. Which is when he revealed the “future” in as far as Samoa is concerned.
That is in the revival of Polynesian Airlines’ international operations.
“We’ve been ready,” Tuilaepa said. “When you own your own airline, you can make your own polices about your airline which will reflect the policies of our country.”
Tuilaepa added that his government has “learned from our experience.”
We certainly hope that is the case. You see, it’s hard to disagree with the government’s grievances and its reasons for pulling away from Virgin Australia.
But its plan for Polynesian Airlines to resume international flights is an uncomfortable thought too.
Which brings us to what we have always said everytime this topic is brought up. Unless this move has been thought out, planned and then have that plan implemented properly by the right people; this could be the final straw to break the camel’s back, given the precarious situation our economy is in.
We should not forget that the last time Polynesian Airlines was operated in a similar manner – although on a much grander scale – the country was nearly bankrupted.
At one point when the airline had gone from one Boeing aircraft to a four-Boeing fleet, its debt had ballooned to “over $50 million” in aircraft leases. It was then that the risk of bankruptcy became very real and all the taxpayers of this country ended up shouldering the burden.
It is why we say the government’s decision is chilling and an uncomfortable thought.
The worry is that from what we have seen, the government doesn’t seem to care at all about instances of corruption and collusion which have been clearly highlighted and proven by government initiated committees.
Why is this important? We all know from the last time Polynesian Airlines operated international flights that there was a lot of corruption then. In fact, corruption and mismanagement was the deadly combination that dragged the airline to the mess it found itself in.
In Samoa today, there is not a lot to be confident about when it comes to the government’s track record in dealing with corruption.
So what guarantee do we have that this new Polynesian plan will not end up down that path? None.
Now with the economy in dire straits and our debt level skyrocketing, we would prefer to err on the side of caution and stay far, far away from taking unnecessary risks that could backfire and haunt this country forever.
To be fair to the government, we understand that the current international air travel arrangements for Samoa are not exactly ideal.
And that includes expressed fear of collusion among the two biggest carriers flying in and out of Samoa to keep their profits high, thus punishing members of the public.
We agree that such is a legitimate concern that must be addressed. But is reviving a beaten track we’ve trudged along before and faltered on the best way to go?
We again take this opportunity to urge the government to exercise caution.
Keep in mind that even with this decision, there is nothing to stop Virgin Australia from flying to Samoa under an open sky policy. When that happens, you will again have Polynesian Airlines taking on Air New Zealand and Virgin Australia who are already an alliance by the way. Who do you think is going to win there?
Logistically, Polynesian Airlines does not have the marketing power and the pull the big networks and Airline Alliances such as Virgin and Air New Zealand have.
Moneywise, who has the millions to pay for the set up costs?
We say this because we are under no illusion that this will cost millions of tala of taxpayers money.
Again, think of the cost for pilots, crew members, training, housing, transport, salaries and wages, start-up marketing costs, offices in New Zealand and elsewhere, aircraft parts, maintenance and more. Think of the volatile fuel costs. And if Polynesian enters a deal or deals with other airlines, the government will no doubt be asked to front up a guarantee and this will not be a few thousands. We’re talking millions again.
Now here is what history has taught us. When Polynesian Airlines last ventured into international flights, it made losses in the millions and taxpayers ended up paying dearly for it. It nearly bankrupted this country. Are we heading down that path again?
Tell me we are not. Have a restful Sunday Samoa, God bless!