Samoa Airways privatisation call
Former Polynesian Airlines boss, Fauo'o Fatu Tielu, is calling for the new national airline to be privatised, saying the business is too risky for Government and prone to wasteful management.
Last week Prime Minister Tuilaepa Dr. Sa'ilele Malielegaoi responded to criticism from Fauo’o that Samoa Airways threatened to “bankrupt the Government”.
“I see he also mentioned profits, and there should be a profit. He [held] the monopoly. Even if he slept or he was incompetent, there will still be money,” the Prime Minister said.
But Fauo’o, who inherited accumulated losses of $100 million in accumulated losses when he took over Polynesian Airlines but left with $12 million profit in his final year but left with cash and funds in excess of $12 million, said running an airline was not so easy.
“It is my belief the [Government] cannot sustain an airline because it is too expensive and it is also risky,” he said in an interview with the Samoa Observer on Friday.
Fauo’o - an outspoken critic of the Government’s decision to end a joint venture with private operator Virgin Blue - said Tuilaepa should hand the reins of the airline to the private sector.
“If not, then the [airline] should partner up with a successful international airline,” said Fauo’o.
Fauo’o oversaw the now Samoa Airways starting in 2003.
“As I said earlier, I came on board at the time the debts were in the hundreds of millions and we started making profits three years later,” he said.
“When I came on board it was already a big loss due to the high cost of the operation and there were not enough revenues and that is because there is only one aircraft.
“And when a flight is disrupted due to unforeseen circumstances that means all the flights will be cancelled and the company has to accommodate the [displaced] passengers and that [comes at] a huge cost.
“The company was only profitable when I decided to re-open Fagali’i using the twin otters to operate between the two Samoa’s and that’s how the company made money.”
Fauo’o, is contesting the seat of Va’a-o-Fonoti and spoke on the sidelines of a Faatuatua ile Atua Samoa ua Tasi (F.A.S.T.) party conference on Friday.
He urged the Government to “seriously” consider finding other bigger airlines to partner with, saying it would give Samoa Airways the advantage of opening new routes in the Pacific.
“ I am referring to the recent joint venture with Virgin Australia [from which] the Government did receive dividends,” he said.
In 2017 the Government parted ways with Virgin Australia; the Prime Minister Tuilaepa Dr. Sailele Malielegaoi said was the best move for Samoa.
Fauo’o reiterated the risks of operating an airline is significant.
“[In] the current situation, the [Samoa Airways] had to pay out its operational; costs but there is no profit,” he said.
According to the latest Government statistics, Samoa Airways operated at a loss of $20 million last Financial Year.
It took out a $15 million loan from the Unit Trust of Samoa (U.T.O.S.) in 2018. In June this year U.T.O.S. confirmed it was considering an application for another loan of the same value.
“This all falls under the risk management and, I refer to the COVID-19 and measles [situations] which had a huge impact on the flights and now the borders are shut down,” Fauo’o said.
“In the meantime there leases for an aircraft which of course is expensive; as well as the lease for spare parts, future maintenance these are all the costs to consider.
“The Government should partner up with another airline because they cannot do it alone. They cannot sustain the operational costs.”.
He also said the Government was looking at decreasing the costs of airfares but the issue of consistency must be considered.
“The issue is the reliability of service, not the low airfare. Look at Air New Zealand: despite how expensive the airfares are, people still opt to fly Air New Zealand because their flights are reliable,” Fauo’o said.
“If the airfares are low and the flights are unreliable not many people would want to take the risk because the flights were not consistent.
“People don’t really consider the value of the airfare when they travel, because they don’t want to get stuck somewhere because the flights are cancelled.”
Last week the Prime Minister said the Samoa Airways was instigated by big minds thinking of a “big world outside” and the many people around the world wanting to travel into Samoa.
“Because there is no competitor, and that’s like our ferry going to Savaii. There is no competition.”
Tuilaepa said the difference between a short-sighted thinker and long-term thinker is that Fauo’o focuses only on profits. The Government, he says, is looking at the opportunities for the people of Samoa to travel, not only to American Samoa but also to Australia and New Zealand.
“This is why I said before, if you were a Government official and you had left, you best not say a word. Because when you do, it only reflects a bigger problem with you,” Tuilaepa said.
*This story has been updated to correct Polynesian Airlines' financial position under the leadership of Fauo'o Fatu Tielu.