Samoa Airways, budget deficit, declining economy … what a wonderful world!
The Government’s intentions for Samoa Airways, as an international airline, were clearly defined and outlined from the start. Despite warnings about the financial risks, Prime Minister Tuilaepa Dr. Sa’ilele Malielegaoi and the Minister of Samoa Airways, Lautafi Fio Purcell, would not be dissuaded.
They were prepared to do anything to ensure their dream of Samoa Airways would become a reality. And they did. So determined were they that they even looked past well-qualified advice from within the Government itself.
Tuilaepa’s argument was that the Government should have moved a long time ago to set up its own airline to provide easier and cheaper access for tourists to fill up Samoa’s hotels, motels and tourist accommodations. All this was premised around the Government’s grand vision of tourism being the mainstay of the economy.
In November 2017, the dream was realised when Samoa Airways was officially launched. And as the man behind the operation, Prime Minister Tuilaepa proudly stood at Faleolo International Airport and declared to the world that no one else will look after Samoa’s needs better than Samoans themselves.
“If we do not do it now it will never be done,” Tuilaepa said. “You look around our region from Solomon islands to Vanuatu, Kiribati, Tahiti to Fiji – our neighbours have their own national airlines and they have maintained their airlines successfully and comfortably. If others can do it, so can we – yes we can, if we do not allow idiots to ever again both at the ground and management levels to operate the national airline.”
Who he was referring to as “idiots” he did not say. The only other airline we know of is Polynesian Airlines, which ironically failed under the same H.R.P.P. administration many years ago.
But looking at Samoa Airway’s journey since it launched on that proud day in 2017, it has been a tough old time for the Government. After a couple of years, it’s mind boggling that for a national carrier, the airline remains without an aircraft. How do you run an airline without an aircraft? Should it be called an airline at all? But that’s only part of the problem.
With the Government keeping the airline’s books well hidden from public view, the little information that has been made public thus far has revealed that the airline’s losses has already run into millions of tala. Those figures were well before the measles crisis crushed Samoa and now the Coronavirus pandemic, which has truly knocked the life out of the tourism industry, upon which the Government had pinned all hopes for Samoa Airways survival.
In terms of debt, the recent revelations about the Airline’s loan account with the Unit Trust of Samoa (U.T.O.S.) point to a figure in the future of not less than $30 million tala. That is just to U.T.O.S. We do not know if there are other loans.
Still, such a huge amount on top of untold losses point to quite a scary picture.
Which is why the story titled “Samoa Airways seeks investors” published on the front page of Tuesday’s Samoa Observer immediately drew our attention. The story revealed the Government’s plan to sell its shareholding in the airline to the local business community.
Speaking in Parliament, Prime Minister Tuilaepa said the decision follows the Government’s privatisation policy, where local businesses are encouraged to provide a “capital injection” and contribute to the airline’s operations.
“There are investors who have expressed interest to hold shares in Samoa Airways,” Tuilaepa said. “It is good to bring in the business community so they can support the national carrier…”
Now this is definitely some new thinking. Why didn’t Prime Minister Tuilaepa and his administration seek the views of local businesses before? Why didn’t they ask them for advice before they proceeded with this grand plan?
Maybe they were afraid that one of these serious investors would have told them the truth right from the start, that without public funds, this airline would have flunked a long, long time ago. And now that they are perhaps running out of funding options, this is the next best plan, which is extremely unrealistic.
While the details are sketchy about Samoa Airways’ financial situation, you don’t need to be a rocket scientist to know that it is not performing well. And given the situation with the coronavirus and the tourism industry, it is highly unlikely any serious businessperson would be keen to invest in such a fickle and volatile industry, especially amidst such uncertainty.
Which is why it is remarkable that the Government has all of a sudden changed its tone in terms of the direction for the national carrier.
This of course could all be avoided if they could just tell the public the truth about how the airline is performing. And let them be reminded that criticisms are not by people who don’t want to understand the benefits these developments offer, as Tuilaepa claims.
The fears and criticisms are well placed and there are some very valid reasons for them. The last time the government tried to run such a huge commercial operation with Polynesian Airlines, it nearly bankrupted the country.
With a growing budget deficit, a declining economy due to a number of unavoidable and unforeseen circumstances and the woes in the tourism industry, this is definitely not the time for another Polynesian Airlines.
Let Prime Minister Tuilaepa and the Government hear from Albert Einstein today, who said “insanity is doing the same thing over and over again and expecting different results.”
Now think of Polynesian Airlines and tell us we are wrong about Samoa Airways? Please.