Turbulent times for PNG's

domestic airlines

By Sam Vulum

WHILE political

power-play and

infighting continue to overshadow Papua New Guinea’s real problems, the severity of threats against the third level airline industry is such that leaders cannot afford to continue their

blind-eye attitude.

The industry, vital to social and eco nomic well-being of thousands in rural area, is on the verge of total collapse.

Third level airlines service mining and agricultural industries.

The industry is struggling to survive against difficulties caused by the country's struggling economy. The situation was exacerbated by a new 12.5 per cent duty stamped on spare parts by the former gov ernment.

In a country as diverse as PNG, with very few roads, air services provide a vital link for rural people. Any collapse in the industry would see a collapse of their livelihood.

This was evident in the early 90s when politically driven bureaucratic red tape forced the demise of the country’s most successful third level airline, Talair.

Talair was then one of the largest third level airlines in the world. It served almost 300 main ports and rural airstrips through out the country and employed about 800

people.

Its Australian owner, Sir Dennis Buchanan shut down business and returned home after the government refused to approve the permit for an expa

triate employer.

Talair’s closure hit hard on the rural population. Some had to wait years before the return of air services.

Several new operations started to fill the gap left by Talair but most did not have strong profit bases to survive the tough busi ness climate.

Unlike Talair, where the service routes reached most remote destinations, the new operations could only serve areas where they could make money. Thus the places where money was scarce missed out com

pletely.

Despite his earlier contributions to PNG’s growth, let alone his Knighthood, Sir Dennis was blatantly refused re-entry when he first put in a request for services from Australia to PNG.

It took a succession of talks before he was allowed in again, but this time, he oper ated only international services through his Flight West Airlines.

The third level airline problem is such that Central Province governor Ted Diro has expressed concern about the plight of the industry. He claimed third level airline ser vices were in danger of being further scaled down or abandoned.

He said airlines were experiencing tough times, yet the government reintroduced the 12.5 per cent duty on spare parts, making the position even tougher.

“The collapse of the value of the Kina has hit many businesses, but none greater than airlines, including Air Niugini. The payments on leased aircraft have blown out, fuel is much dearer, international landing and other charges have risen, and the cost of imported spare parts has gone up as well,” he said.

“The airline operators have been warn ing the government for months that their viability is coming into real doubt.

“The government has done absolutely nothing to help the industry, and now it imposes a duty which can only worsen the financial position of all airlines,” he said.

Third level airline, Airlink’s managing director, Colin Buhner, said the abolish ment of exemptions on air craft spare parts and the re-imposition of the 12.5 per cent duty had increased operational costs of air transport.

Buhner said they had not been accord ed dialogue with the government to con sider increases in airfares resulting from higher operational costs. The 12.5 per cent duty on parts, all of which were imported and paid for in foreign currency, would increase operating costs.

Buhner said despite numerous requests for meetings with government officials to discuss airfares, currency and Consumer Price Index adjustments, counter price increases from industry suppliers, no response had been received.

He said that among the other things, the lack of maintenance, non-working naviga tional aids and damaging reports in rep utable aviation magazines, all contributed to additional cost burdens with a declining revenue-base, especially in the tourism industry.

Airlink recently decided to stop its ser vices to New Ireland saying it was uneco nomical.

Bubner said they had analysed their operational runs to New Ireland and dis covered that they only had about three to four people including cargo travelling in some parts of the province.

He said they would be cutting services to areas in East and West New Britain provinces for the same reason.

If the economic situation improved, he said, Airlink would consider returning ser vices to those areas.

The government of Sir Mekere Morauta has promised to review the tax system to ensure that it was the least pos sible obstacle to growth. ■