Airline's turbulent flight path impacts the nation

By The Editorial Board 01 July 2022, 6:00AM

The flightpath of the country’s national airline Samoa Airways has been well documented over the years – from its rebranding after life as Polynesia Airlines in November 2017 to its exorbitant operational costs.

The journey of this State-owned entity has not been exemplary in terms of corporate governance standards, but that did not matter to the former Human Rights Protection Party (H.R.P.P.) Administration.

Led by the then prime minister Tuilaepa Dr. Sa'ilele Malielegaoi, the Administration fought tooth and nail to defend the airline, and ensured its operations continued to be bankrolled by the State-owned entities such as the Unit Trust of Samoa (U.T.O.S.), despite the airline’s rising debts and non-profitability.

In December last year this newspaper brought to light documentation, which showed Samoa Airways owing up to $45 million in loans, which were disbursed to the national flag carrier over a two-year period.

The documents, obtained by the Samoa Observer, show that U.T.O.S. was willing to direct Samoan investors’ money into an airline that was in a state of “technical insolvency”. 

Of the total of $45 million in approved loans, a sum total of $33 million was disbursed while the remainder of the fund was put on hold by Cabinet while it reviewed the future of the airline, the report noted at that time.

Unsurprisingly, when the former Administration was negotiating the aircraft lease with overseas firms while they were still in office, it was all shrouded in mystery. 

Both Tuilaepa and his then Minister of Public Enterprises, Lautafi Selafi Purcell gave conflicting answers two years ago when queried by this newspaper and the media on the negotiations.

Sadly, transparency was never part of the former Administration’s rulebook, when it came to Samoa Airways and its operations. 

Seven months after details of the $45 million U.T.O.S. loans to Samoa Airways were made public, the parliament debate on the Government’s 2022-2023 Appropriation Bill (which was passed on Wednesday night) turned to the airline’s financial dramas in recent years. 

Our elected representatives got to hear of the efforts by the current Government to save the country from a $160 million liability, primarily for breaching a contract that was negotiated by the former Administration.

The Minister of Public Enterprises, Leatinuu Wayne So’oialo told the House that the Samoa Government’s negotiations with EU-based Fly Aircraft Holdings Eighteen Ltd were nearing conclusion.

He said an "estimate of 90 percent of public funds will be saved from returning the aircraft compared to the $160 million loss predicted for ceasing the lease". 

But it was not easy for the Cabinet Sub-Committee, which was tasked to lead the negotiations with the European aircraft lease company, as Leatinuu revealed they too faced hurdles in their bid to end the 8-year lease contract.

While the negotiations are still underway, the Minister has indicated the Samoa Government will end up paying $16 million and not $160 million for breaching the contract.

Congratulations to the Government and Minister Leatinuu, especially the Cabinet’s Sub-Committee for reducing our liability by up to 90 per cent. 

The fact that these crucial talks will now result in the country making savings of up to $144 million is commendable, as this means extra funding to channel into priority areas such as health and education as well as social development.

However, we continue to be astounded at the audacity of the former Administration to negotiate such long-term aircraft lease contracts that would have negatively impacted the country’s finances.

Even the Samoa Government’s payment of the $16 million – which both parties appear to be settling on during their current negotiations – is still excessive for a Small Island State with a vulnerable economy amid current COVID-19 pandemic challenges.

There are lessons to learn from this whole saga, truth be told the stories of Samoa’s national airline can be case studies for current and future governments, as they shine the light on the importance of transparency, accountability and good governance and serve as reminders of the need for our leaders to be grounded in ethical leadership.

A lot of people have borne the brunt of the former Administration’s attacks over the years, simply for speaking out to warn of the direction that the airline was taking. The outlook is grim for the ailing airline and it appears the new interim Samoa Airways Board the Government announced recently already has their work cut out. 

Questions should be asked about the viability of the airline and its day-to-day operational costs and whether alternatives, such as opening up different routes to Samoa to multiple airlines to bring in competition could be the way to go, in a bid to introduce cheap air travel for citizens.

By The Editorial Board 01 July 2022, 6:00AM
Samoa Observer

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