The Fijian government led by Commodore Frank Bainimarama seized power in a coup d’état in December 2006. Fiji has been running against the world and pushing back against Australia since then. Australia and Fji expelled each other’s diplomats in 2009 and Fiji has been increasingly making it difficult for foreign owned [often Australian controlled] businesses to operate. Now the “war” has moved to the air.
Air Pacific, the flag carrier, was Fiji Air. It was founded in 1951 by Gatty, an Australian aviator. 70 per cent of all travellers to the island nation use Air Pacific, although competition by the two Australian carriers Jetstar, owned by Qantas and Virgin Australia has been steadily increasing. Air Pacific flies to points in Australia, New Zealand and USA plus key Pacific islands. CEO Dave Pflieger (who came in 2010 from Virgin America) has been leading a restructuring project. The carrier is today owned by:
- the Fijian government (51%
- Qantas (46.32%).
- Air New Zealand (3.7%)
- the governments of Kiribati, Tonga, Nauru and Samoa (minor stakes)
- the value of the airline will be reduced,
- the potential value of the Qantas stake will be eroded. I don’t think it will stop Qantas selling but they may not be thrilled with he final price,
- More importantly, it will be harder to sell stakes to third parties outside Fiji which reduces the pool of potential investment now and in the future,
- This move wont help attract capital and Air pacific is already woefully undercapitalised. This has limited expansion and growth. For example, in 2011, Air Pacific canceled their entire order of eight 787s after two horror financial years,
- For some passengers, the diluting of Qantas involvement may be a reason not to fly Air Pacific and push more passengers to Jetstar and Virgin,
- There are signifiant links between Qantas and Air Pacific’s frequent flyer programs which also build the case for flying Air Pacific.
This move potentially sidelines Air Pacific and consigns to an ever shrinking network, capacity and fleet. If this is the result, then this move is wacky. I am curious to see what CEO Dave Pflieger (pictured here) does next.
I have often thought that Air Pacific should stitch up deals across the region creating a mega airline with Air Caledonia, Air Tahiti Nui, Solomon Islands, Air Nu Gini, and covering all Pacific islands countries. Instead of a lot of small carriers all competing, one could take on the world taking passengers across the region. No way are we going to see that idea which may prove to be as wacky as the effective nationalisation of Air Pacific.