Merger talks resurface

The National Business

LINK PNG and PNG Air have reapplied to the Independent Consumer and Competition Commission (ICCC) for Link PNG to acquire a minority shareholding in PNG Air.
In a joint statement, both PNG Air and Link PNG said ICCC’s approval would be beneficial to Papua New Guineans job security across both airlines and the continuation of the PNG Air brand.
Link PNG chairman Sir Kostas Constantinou and PNG Air chairman Augustine Mano said the proposed joint venture between Link PNG and the Mineral Resources Development Company (MRDC) was based on PNG Air remaining as an independent airline, setting its own airfares and selling its own tickets separately from Air Niugini.
Sir Kostas and Mano noted that it was critical that the country continued to have two independent airlines, PNG Air and Air Niugini, and there continued to be a strong competitive domestic market.
The airlines said the Covid-19 impacted their operations and while they would continue to operate independently at the commercial level, they would be able to leverage a merger to deliver cost reductions.
Both chairmen noted that the aviation industry worldwide had been badly affected by Covid-19 and governments had to pay billions to keep their airlines operating.
The Fijian government recently issued loan guarantees of K788 million to support Fiji Airways.
“We believe this move, if approved, will ensure PNG’s airline industry is profitable, sustainable and competitive without having to rely on Government support.
“Both airlines are ultimately owned by the people of PNG, either the taxpayer, contributors to superannuation or as a landowner so it is critical both airlines are viable.”
Sir Kostas and Mano noted that the proposal was based on Link PNG only having a minority share position, and all the commercial functions remaining separate and independent including:

  • SALE of all of PNG Air’s tickets, including all pricing and yield management of these air fares, and all staff associated with these functions;
  • MARKETING of PNG Air, including existing sales offices and a separate website;
  • PNG Air retaining an independent board and management;
  • ENSURING that all cabin crew, sales and check-in staff were in PNG Air uniforms; and,
  • ENSURING that all of PNG Air’s aircraft remained in PNG Air livery.

The key synergy benefits would come from back office functions that can be more efficiently managed across the two airlines and more efficient use of the fleet.
“We believe there is a compelling case for creating a stronger independent PNG Air, across a wider network, as well as ensuring job security.
“We will also ensure the savings created will be passed back onto our customers, through more affordable airfares; with the lower prices resulting from economies of scale and through the considerable cost efficiencies that are available.”