Chathams withdrawing from Tonga Domestic Air Services due to uncertain future resulting from Government’s policy of introducing a 2nd Airline
By Craig Emeny CEO and Owner of Catham Pacific Airline.
Late 2007 the Tongan Government invited me to set up an airline in Tonga at very short notice stating that there were concerns regarding financial failure of current Airline, and its inability to meet all travel demands and provide services to Eua and the Niua’s. Over the last four years I have established and developed an air service that is reliable and sustainable. This has given the inbound tourist operators confidence to promote Tonga as a destination, and Tongan people have been provided with a safe and affordable airline with the lowest domestic seat cost per kilometre in the region.
I’ve invested heavily in Tonga to develop Chathams Pacific, funding it through the assets of my New Zealand operation to achieve the standard of domestic airline Tonga has today. My commitment included purchasing two additional aircraft suitable to service the sectors between TBU and EUA and the Niua’s. I provided these services as a social responsibility and the revenue from these sectors cover only the operating cost of the Aircraft and have not contributed at all to the infrastructure (indirect) costs.
I consider I have done all that has been asked of me and have achieved a good standard considering the relative isolation of Tonga and the very high costs of fuel and qualified operational expertise.
The CEO has cited the following reasons for this decision
Early in 2012 the Tongan Government announced that the Chinese Government are planning to provide Tonga with Aircraft, Flight Training facilities and an Engineering facility with a full support package. Press releases advised the government would use this support to sponsor an airline in competition to Chathams Pacific.
This naturally concerned me as the air travel market in Tonga simply is not large enough to support two Airlines and the minister involved (who is very aware of this) did not include or consider my airline in anyway. On enquiring, the new venture was confirmed directly to me by Government Ministers.
I was advised just before Christmas by the same Minister that Aircrew and Engineers are going to China to commence training Mid February 2013 and the Aircraft are expected to be operating in Tonga by Mid June 2013.
I have to accept that this is a firm start date, and in light of that I have had to re-evaluate my Airlines future in Tonga. The study I have carried out clearly shows that I am not able to maintain financially viability in the Tonga market with the introduction of another airline operating a 50 seat (MA-60) and a 17 seat (Y12) aircraft in competition to me.
The five months from February to June is the very lowest season with less than half the peak season traffic. My Airline suffers significant loses during the low season’s which we normally recoup in the high season. The year as a whole averages out with a very small return. To date I still have a loss in Tonga after nearly 5 years of operations resulting from the start-up cost and the earlier competition.
With a new Airline commencing as we enter the high season I will not be able to recoup the low season’s losses and will actually incur further losses competing with the new Airline.
I simply cannot justify the resources required to sustain these sorts of losses, and the situation would jeopardise both Chathams Pacific and my New Zealand operation (Air Chathams). The Chatham Islands are dependent on my airline to support its travel and fishing industry and appreciate the service I’ve provided for nearly three decades.
However, the Government have made it clear they wish to have another Airline, and we can see we are a barrier to that getting underway. That, together with the current employment difficulties the uncertainty has created for the Airline, means the most sensible decision for Chathams Pacific is to withdraw and clear the way for the new Airline. Two Airlines simply will not financially survive in the Tonga Market.
For businesses to invest, grow and assist the economy there needs to be certainty and stability. Unfortunately, the absence of these factors has hugely impacted on Chathams Pacific.
I have now lost business confidence in Tonga due to the Governments attitude towards my airline and I won’t continue providing the domestic air services. It is a very sad decision for Marion and I to make because we care very much about our staff who are mainly Tongans and work loyally for the Airline and the Tongan people. We enjoy working and living in Tonga, and other than the imposed difficulties, it has been a rewarding and enjoyable experience.
I have advised the Government that I am happy to assist them in the interim by leasing Aircraft and services until the Chinese Aircraft arrive and the new airline is established if they wish. My Reservation’s System, Engineering. Administration expertise and equipment would all be available if required, and this would allow a smoother transition to be put in place. However, clearly be a Government decision.
I understand that I am the 11th Airline to operate in Tonga. Chathams Pacific is financially secure and sustainable airline and I would continue to operate the domestic air service in Tonga in a normal operating environment. It is the government’s decision to sponsor competition with donated aircraft from China and that will make Chathams Pacific untenable in the future.
I’m proud of what we’ve achieved here and I don’t want to see it damaged resulting in uncertainty in the tourism and domestic market
The Government may have some other interim solution, but whatever occurs I would be disappointed to see all the good work we’ve done in the domestic market harmed.