Samoan Government Cautioned Against Polynesian Airlines Deal

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Leasing of Solomon Airlines plan needs thorough financial review

By Lanuola Tupufia

APIA, Samoa (Samoa Observer, May 17, 2015) – Prime Minister, Tuilaepa Sa’ilele Malielegaoi, has downplayed a call for his government to defer its plan for Polynesian Airlines to fly to New Zealand and other Pacific countries.

A document obtained by the Sunday Samoan shows that a senior government official has cautioned the Prime Minister.

The plan, announced by Cabinet last month, apparently involves Polynesian Airlines (PAL) entering into an agreement with Solomon Airlines to lease a Solomon Airlines Airbus to allow Polynesian Airlines to fly the "Nadi – Apia - Auckland and any other requested route."

But in a letter to the Prime Minister last month, leaked to the Sunday Samoan, the government was told that the deal is far too risky.

"What PAL is embarking on represents a huge undertaking with enormous financial implications not only to PAL but also to Government," the letter reads.

"The Government is still paying the debts incurred by the previous PAL outfit and PAL cannot commit to another transaction without a thorough analysis to determine its financial viability."

In the end, Prime Minister Tuilaepa is asked that the "proposal by PAL be deferred or delayed" until "the government has been provided with quantitative evidence of the most cost effective air access options to support tourism development."

Asked for a comment on Thursday, Tuilaepa said the Polynesian Airline plan is still being carefully considered. He rejected claims that the plan is not financially viable.

"That is not the case," he said. "What is happening is that the plan is being put aside while a thorough analysis is underway."

According to the Prime Minister, part of the analysis is taking into account the review of the joint venture between the government and Virgin Australia.

The review of the Samoa/Virgin Australia deal is due in September.

The joint venture has been the subject of much criticism, especially from Members of Parliament who have accused the airline of making friends with Air New Zealand.

Part of the criticisms included the call to revive Polynesian Airlines as an international airline to service Samoa and New Zealand.

Asked about the progress of leasing a plane from the Solomon Airlines, Tuilaepa is optimistic.

"There are two ways," he said, "we can lease a plane or buy one."

"We can also work together with another airline like a joint venture on one plane."

"We have been doing this for a long time where in the past we worked with Air New Zealand."

According to the Prime Minister, the option of a lease is cheaper.

"Leasing is good in a way because if an engine breaks down, it can be replaced with a new engine," explained Tuilaepa.

"It is also good in a business sense because if we want to use a new aircraft, we can do that based on the lease. But if we buy a new aircraft and then it breaks down, that is the end of you and the aircraft."

The Prime Minister said the plan is being carefully looked at by the new Polynesian Chief Executive Officer, Seiuli Alvin Tuala.

"So that is your answer to that small issue," he said.

As it stands, the joint venture between the government and Virgin Samoa manages the jet operations while the turbo prop feeder operations are managed by Polynesian Airlines.

According to an official, the Polynesian Airline plan compromises the government’s aspirations in Virgin Samoa.

Further, the official is concerned about the apparent absence of a "proper business case provided by PAL" on the plan.

At the beginning of last month, Cabinet announce the plan for Polynesian Airlines to fly to New Zealand and other Pacific countries.

In a statement, Cabinet said "the initiative is to enhance flight services and provide cheaper airfare options for the people of Samoa. A meeting was held between the heads of Polynesian Airlines and Solomon Airlines to negotiate the Heads of Agreement for the proposed lease of Solomon Airlines Airbus 320/319 aircraft to Polynesian Airlines, particularly for the Nadi – Apia - Auckland and vice versa route, and any other requested route.

Chartered flights are expected to resume June 2015.

"The agreement also includes the assistance by Solomon Airlines in conducting trainings for the Polynesian Airline staff."

"Scheduled flights for Polynesian Airlines are expected to start in November, with the expectation of the local carrier to operate direct flights on its own aircraft next year."

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