Airline must be worthy to investors

 THERE might have been a resounding sigh of relief across the country at yesterday’s good news but regular travellers would simply say, it is about time, Air Niugini.

The national airline has slashed domestic air fares by half for the next 12 months.

Time and again, many a traveller has decried the high airfares, arguably the highest in the region, and possibly not too far behind the highest in the world.  

But local airline companies, including Air Niugini, have at the same time argued that it was not the actual fares that was the problem but other related and necessary costs such as fuel surcharges.

Considering that airlines in the region and especially Australia’s Qantas have had a number of significant challenges, our comparatively small national flag carrier is making a daring move by slashing air fares by half.

The Air Niugini board and management must be commended for taking what Public Enterprises Minister Ben Micah described as a progress and community-minded approach.

The announcement could not have come at a better time and there is a lot to gain from this by everyone from villagers visiting relatives in town to big businesses. 

The holiday season is coming up and workers and holiday makers will in the next three months make plans for their travels and buy their airline tickets.

The high cost of travel not only affects individual but is considered a major cost item for some business. 

In particular, those who fly personnel regularly to and fro will gain significantly from the reduced air fares.

The 2015 Pacific Games, to be held in Port Moresby next July, will be a major international event brought to our doors. 

While government is pumping millions of kina in public money in preparation for the Games, every Papua New Guinean who should, in all fairness, be able to afford the opportunity to witness this sporting spectacle.

Travelling from outside of Port Moresby is now made more affordable, which means that spectators or tourist besides athletes and officials can come to watch the games and return home after that. Air Niugini’s fare reduction could have a follow-on effect, forcing other domestic airlines to take proactive actions while improving the quality of customer service.

Micah’s other major announcement this week is that the national airline will be selling off at least half of its shares, leaving the State, currently the sole shareholder, with just 51% shares.

The rationale being that under a more diverse shareholding, the airline would be better positioned to face the challenges already experienced by other regional airlines like Australia’s Qantas and Virgin.

Air Niugini board chairman Sir Frederick Reiher reported that like other sectors of the PNG economy, the company has had challenges such as low commodity prices and a weak currency.

The Government hopes to dispose nearly half of its shares in Air Niugini to Papua New Guineans and is eyeing the superannuation funds like Nasfund and Nambawan Super to take the offer on behalf of their national contributors. 

This would mean that be­sides, the airlines own employees themselves, who have had several industrial disputes with the company management, would have an indirect shareholding through their super fund memberships.

Air Niugini, has only fairly recently gotten out of its reliance on the government for its survival and but is still susceptible to the prevailing negative economic trends. The proposed sale of shares by the Government to the superannuation funds would require careful thought and analysis before committing to such an investment. 

There have been enough lessons learnt over disastrous investments by super funds. 

State-owned enterprises, including Air Niugini, have generally been regarded as inefficient and heavily-reliant on government funding.

It is a bold move by Air Niugini to slash its fares and an even more daring to convince the public through the super funds to invest their life savings in a venture confronted with similar challenges that have caused others in the same business to resort to drastic measures such as laying off staff.

This is the moment for Air Niugini to prove itself worthy of investor confidence.