Samoa Airway’s $2 m. “teething problems”
Conflicting stories have emerged from Prime Minister Tuilaepa Dr. Sa’ilele Malielegaoi’s Government over the performance and profitability of Samoa Airways.
While the Airline’s Minister, Lautafi Fio Purcell, had abruptly rejected reports that it was already running at a “substantial” loss, the Prime Minister has taken a different position.
While he would not say whether the reports are true, Tuilaepa said the Airline is going through a “predicament” most new airlines experience when they start.
He said it is unreasonable to expect a new airline to make a profit immediately.
“You cannot expect a new Airline to fill up the Airplane with passengers at initial stages of operation,” Tuilaepa said.
Samoa Airways was launched last November.
A few months into its operations, sources told the Sunday Samoan the losses are mounting and they are significant.
The Sunday Samoan understands that Cabinet had appointed a Special Committee comprising of senior Government officials to monitor the Airline’s performance. They are to submit a report to Cabinet on a monthly basis.
A Cabinet Minister, who asked not to be named, told the Sunday Samoan that figures given to Cabinet during one of “our meetings shows that the loss has accumulated to more than $2 million.”
That was at the beginning of the year.
Asked if this was true, Tuilaepa was circumspect.
“Look, every new Airline goes through that same predicament,” he said. “You cannot expect a new Airline to fill up the airplane with passengers at initial stages of operation.”
Even if there were losses, Tuilaepa said the Airline should have enough and that it would be “covered under their budget.”
“So there is nothing to worry about,” Tuilaepa assured.
“We will know at the end."
“But this issue transpires for every new Airline, whether it is local and overseas. There will always be that anticipation during the first year. “There are teething problems as in everything, and there are teething problems during the first stages of any operation.”
The Prime Minister added that it doesn’t make good business sense to expect a profit right away. “If you expect profits at the beginning, it will never work,” he said. “Just like everything. When you came into this world, you are a newborn. Then you crawl, walk and then run.”
The Prime Minister confirmed that an “independent Committee” had been appointed to “independently follow up and advise the Cabinet” on issues pertaining to the Airline.
He added that there is a request from the Airline to waive landing fees imposed by the Samoa Airport Authority for a whole year.
“I don’t believe that a decision has been made on that specific issue but there has been a request,” Tuilaepa said.
“At the same time, it is not easy for the Authority to make such a difficult decision. It is a decision that has to be looked into by Cabinet, but that has not reached Cabinet.”
Tuilaepa said the Government has to be careful and weigh up its options.
“If the request is granted other (Airlines) will object, so the decision comes from Cabinet and not the Authority on such matters.”
Earlier this week, Lautafi strongly rejected claims the national airline is already running at a loss.
“That is not true,” he said.
“Where did you get your figures from? That’s not true.”
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