Polynesian Airline soars

by Alan Ah Mu

It has long been recognised

that tourism offers Samoa one of the best chances for economic growth and clearly the key there is to provide a boosted capacity to fly in as many visitors as

possible.

Late May, Polynesian Airlines announced it will add a leased 8737-800 aircraft to it’s fleet in November 2000, allowing direct flights to Australia and Honolulu - and a 8737-700 too.

“ The 8737-800 will be configured in two classes and carry 154 passengers as against the present 8737-300’s capacity of 126 seats, ” said Tuilaepa Sailele

Malielegaoi, the airlines’ chairman and and Prime Minister.

Tuilaepa described the last four years as a period of

consolidation for the government owned airline. Back in 1994 - turbulence.

Polynesian’s debt had shot up to SUS4O m, forcing cuts in public expenditure as government took over the debt.

Top management, all locals, appointed when Ansett quit as managers in 1992, got dumped and cost cuts saw air passenger capacity go down again. In 1987 Polynesian changed from a 737 to a 727 for 150 seats. In 1992 they went from a 727 to two 737 s and a 767 for about 500 seats but debt forced it back to the 737 it has now. The most visible cause of failure was expanding into the American market too fast and costly acquisition of aircraft.

But the then general manager, Papalii Grant Percival, said the airline was always

under capitalised, something Tuilaepa,

installed as chairman in 1994, has come to agree with publicly. Now he points out that the 8737-800 will come with signifi cant operational cost benefits, allowed “

prudent route expansion “ and leased with “ very favourable arrangements with the International Lease Finance Corporation.

“Being able to afford another big aircraft is good news for a company cursed with reg ular dosages of bad news and controversy.

Most recently, the revelation that some rather generous advances had been extend ed to senior staff, deputy chief executive officer, Leaupepe Sanerivi Muliaumasealii, departed soon after without explanation.

Outraged critics thought that for an air line meant to be struggling to restore itself and the country it had caused much anguish to, at least an honest attempt to be austere with taxpayers’ money should have been a priority. There were two accidents in suc

cessive years, one with fatalities amongst other instances of bad publicity.

But by the end of June 1997, the nation al carrier was able to announce that the air line made SUS 2.79 m which included SUS 1.04 m won in a court case against Ansett.

By June last year debt was down to SUS 4.76 million with Tuilaepa saying “ It is lighter “ and being repaid without stoppages to government projects. Last year too, Polynesian re-entered the US market by buying 20 seats on Air New Zealand flights, last month announced a net profit for the year ending 30 June 1998 of SUS 1.07 m on revenues of SUS26.2m, with assets valued at close to SUS 19.5 m. Just how important, is noted by the Central Bank’s figures of the top earners. (See table) In it’s latest figures, the bank says that tourism leads as the country’s biggest earner with SUS 8.2 mil lion for the first three months of the year, a nine percent rise on last year’s figures for

the same period. Tuilaepa said the decision by the company to arrange equity in its present 8737-300 SW-ILF in December 1996 has paid ditidends, adding that Polynesian can now sell this aircraft and replace it with a 8737-700, and place the airline in a position of having two modem international jet aircraft operating an inte grated network that will include new direct non-stop routes to important major tourist origin markets. “ The developing arrange ment with the major ‘ one world ‘ alliance carrier Qantas is seen as a positive step in this direction. “But government believes together with the Chamber of Commerce that no other airline except the national carrier can help develop tourism here.

“ Because real istically we can’t expect any other regional airline to promote our tourism indus try, “ said chamber secre

tary, John Boyle.“ . “ We need an airline with a commitment to the country, whose survival depends on the country and vise versa. “ You take how Air New Zealand runs it’s Los Angeles service. If the mar ket builds up a bit they put an aircraft ded icated to Samoa. It goes from Auckland to Samoa to Honolulu to Los Angeles. Once the market drops a little, they pull out and amalgamate the service with Tonga so we’ve now got one aircraft that’s flying Auckland Tonga Apia Honolulu, Los Angeles and back.

“It’s believed foreign airlines are not going to accept a decrease in profit by pausing to support the development of Tonga and Samoan tourism industries, by running aircraft for periods that may be operating at less than maximum seat capacities. Tourism is vital to the country’s finances for development and the industry cannot do without a successful national carrier. ■

Centra! Bank Figures Of Top

Earners ($M)

1996 1997 1998

Merchandise Exports

24.8 37.5 50.9

Tourism Earnings

96.0 98.3 114.6

Private Remittances

90.5 107.5 109.9