Samoa Airways losses, fickle airline business and painful memory called Polynesian Airlines
The truth is painful. In the case of Samoa Airways, although the frank admission by the Minister of the Airline, Lautafi Fio Purcell, in yesterday’s Weekend Observer hurts, given the nature of the beast so to speak, it’s not surprising at all.
We are referring to a story titled “Nowhere near profitability, Samoa Airways Minister admits” published on page 2 of the Weekend Observer.
The signs have been there from the start. Despite the Government’s best attempts to paint a positive light of the airline’s financial status, nothing could be further from the truth.
If the Government was hoping that Samoa Airways was going to be a cash cow instantly, they were wrong.
Folks, it’s great for Samoa to have its own flag carrier and it sure looks impressive on the CV of the Government to add an international airline to its list of achievements.
But it was always going to be a tall order, one very expensive exercise at that. Indeed Samoa Airways was only going to drain more resources and monies from this country’s coffers, which is precisely what is happening.
The worry is that no one knows how bad the leak is.
Since the airline was established some two years ago, the status of its finances has been kept well hidden. All we know – and they did not tell us this – is that the airline’s jet operations ran at a loss of $6.64 million, for the October–December Quarter of the 2018-19 Financial Year, according to a performance report submitted to the Ministry of Public Enterprises.
From that figure we can then do the math. It’s not pretty.
Which is perhaps why Minister Lautafi has been forced to make a very frank admission publically about what is going on, for the very first time.
“The public needs to understand that the situation [is like] the operation of any new company. We are nowhere near running a profitable operation yet. That is the nature of any newly established airline," he said.
“As I said before, airlines in other parts of the world will not make any profits within the first five years; of course we are operating on losses and that will always be the case for a newly established airline."
Interestingly enough, the Minister still found time to take issue with this newspaper's reporting on the airline's losses.
“The annual report is the most official report,” he said. “Those are quarterly reports and that is really [only] for internal processes.
“There are four quarterly reports and it is mostly for internal processes and the report [featured in the Samoa Observer story] is just one of the four quarterly reports.”
Well okay then Mr. Minister. Here’s a deal, can we get a copy of the annual report, if one is available already? If there is none, why not? Seeing is believing.
That said, we acknowledge with gratitude the Minister’s willingness to be upfront about the state of the airline’s finances. We also acknowledge his willingness to discuss the salary of the airline’s top official on the front page of the newspaper you are reading.
As proud Samoans, we all want the airline to grow, flourish and work well. Who does not feel proud seeing the name Samoa Airways next to the big carriers at Auckland, Sydney and Brisbane when we check in at the airport?
There is something wonderful about having our very own flag carrier taking the name Samoa all over the world.
The problem is that for the past few months, we haven’t had an aircraft so that all we see is Air Malindo instead. What’s more, when we enter the aircraft, instead of being greeted by the lovely Samoan smiles of the Samoa Airways crew, we see Malaysians, Indians and other nationalities. Nothing wrong with that except this airline is supposed to be Samoa’s airline manned by Samoan people.
From what we’ve been told, Air Malindo is sticking around for another six months as part of a “wet lease” while the Government tries to find a new aircraft.
What this means is that Samoa Airways will only continue to pay a hefty cost to stay in operation. And the losses will continue. The real question is how much more losses can the Government sustain? And when will they say enough is enough.
Pride in having a national carrier is one thing. But being sensible about the economics of trying to keep a profit-less airline afloat is quite another. Samoa does not have the luxury or the financial muscle to sustain Samoa Airways' losses. Somewhere somehow, someone will have to make a decision on where to draw the line.
Besides, we should never forget the past. Remember Polynesian Airlines? Remember how its finances became a serious threat to the national economy?
Has this Government forgotten how Polynesian airlines had jumped from a one Boeing aircraft to a four-Boeing fleet all the while its debt ballooned to “over $50million” that it nearly bankrupted this country’s economy?
Now that’s the stuff no one wants to think about.
But history exists for a reason. It is there as a reminder, giving us guidance about the mistakes we cannot and should not repeat. What do you think?
Have a peaceful Sunday Samoa, God bless!