Fiji's flagship airline, Air Pacific is being closely scrutinized by its majority shareholder, the Fiji Government.
Scoop magazine article quotes from Fiji's Finance Minister, regarding the lethargic financial perfomance of Air Pacific, which was widely believed to be a result of the dominance of the minority shareholder, Qantas.
The excerpt of Scoop article:
"Air Pacific Is A Stagnating Airline" -- Fiji Govt
Air Pacific Operations Review
Government owns major shares in Air Pacific which makes the airline's commercial viability very much its concern, said Finance Minister, Mahendra Chaudhry.
He was responding to a front page report in The Fiji Times on Saturday quoting the Association of South Pacific Airlines telling government to stay out of Air Pacific's affairs.
"Air Pacific is a stagnating airline. Its profit is declining, it is not expanding, no new major international destinations have been added to its flight network in the past two decades. It is also beset by serious employee relations' problems."
"It is ridiculous for anyone to say that as the major shareholder the Fiji Government should sit back and not take timely action to set things right to avert," Mr Chaudhry said.
Government's concern, as outlined in its media statement, stems from months of complaints lodged by Air Pacific employees, concerned members of the tourism industry as well as the traveling public.
The national airline's deteriorating standards is a worry to the tourism sector. Chronic mechanical problems associated with its ageing fleet of aircraft, is causing delays in the airline's on time performance, sapping confidence in its reliability and efficiency.
"As Fiji's flagship carrier, it is expected to contribute to a vibrant tourism industry by exploring expansion into new markets and destinations. But we have not seen the national airline embark on any new initiatives in the past two decades.
"Air Pacific Board and senior management have to take full responsibility for the poor state of the airline today."
It is widely believed that Air Pacific's current state of inertia is the result of dominance by minority shareholder Qantas Airways.
"This is why we need to review the shareholding agreement with Qantas Airways to ensure that Fiji's national interest is not compromised by this partnership," Mr Chaudhry said.
ENDS
However, Qantas denies any responsibility in Air Pacific's financial track record, according to a Fiji Times article.
In a Radio Australia web article, Qantas claims that it actually helped Air Pacific.Qantas washes hands off Air Pacific woes
MARGARET WISE
Fiji Times Thursday, May 29, 2008QANTAS says it is not responsible for the perceived sluggish performance of our national carrier Air Pacific.
And the airline, one of Australia's strongest brands, has taken strong exception to the interim Government's claim that Air Pacific's deteriorating standards was the result of Qantas' dominance.
A company spokesman from the airline's Sydney office said they were aware of the interim Government's plan to review the operations of Air Pacific.
With 46 per cent shares, Qantas is the second major shareholder in Air Pacific.
"We will, as a major shareholder, make a submission to the review at the appropriate time, the spokesman said.
"However, we reject totally the assertion that any perceived inertia in Air Pacific is the result of Qantas' dominance. The opposite is the case, we have provided operational and commercial support only when requested."
In a media statement this week interim Finance Minister Mahendra Chaudhry said it was widely believed that Air Pacific's state of inertia was the result of dominance by minority shareholder Qantas.
"This is why we need to review the shareholding agreement with Qantas to ensure Fiji's national interest is not compromised by this partnership," he said.
The review exercise will include a review of the shareholders' agreement between the two airlines, entered into some two decades ago.
Mr Chaudhry said government owned major shares in Air Pacific which makes the airline's commercial viability very much its concern.
"Air Pacific is a stagnating airline. Its profit is declining, it is not expanding, no new major international destinations have been added to its flight network in the past decade."
Qantas says it's helped Fijian carrier
Updated
Australia's main airline Qantas has hit back at claims by Fiji that it's responsible for the perceived sluggish performance of Air Pacific.
Qantas has told the Pacific News Service it's taken strong exception to the interim government's charge that Fiji's national carrier's falling standards, are a result of Qantas' dominance. Qantas says it's actually helped Air Pacific; providing operational and commercial support when asked to.
In a statement this week, interim finance minister Mahendra Chaudhry said the government would be reviewing the operations of Air Pacific of which Qantas is the second major shareholder. He says Air Pacific is a stagnating airline with falling profits and no new major international destinations have been added to its flight network in 10 years.
The sluggish performance by Air Pacific has been one of the reasons outlined, including certain powers given to Qantas, Australia's international carrier. According the Fiji's Attorney General as quoted in a Fiji live (FL)article, despite holding 51% shares; the Fiji Government is unable to exercise certain powers normally awarded to majority shareholders.
The excerpt of the FL article:
Fiji Times article also reported that three directors will be appointed to Air Pacific's board.
Fiji Govt unhappy with Qantas deal
11 JUN 2008
The Fiji Government is unhappy that Qantas airline has more say in the operations of its national airline Air Pacific.
The Government has majority shares in Air Pacific. However its aim to integrate the airline in its plans to boost the country’s economy has been inhibited by the status quo.
Interim Attorney-General and Public Enterprise Minister Aiyaz Sayed-Khaiyum said today that the Government will be calling for public submissions for the next 28 days in the hope that it may make changes.
“Government has 51 per cent shares in Air Pacific. However, despite this the Government of Fiji is unable to exercise powers that it may normally do as a majority shareholder,” he said.
“For example, under the Articles of Association, Qantas, which owns 46 per cent of Air Pacific, has veto powers in a number of key operational areas.
“These include the commencement of any new air routes, the issuance of shares, the adoption of an annual operating budget, the adoption or material variation by the directors of a dividend policy of the company, and the entry by Air Pacific into any major commercial agreement.”
Sayed-Khaiyum adds that many interested parties like the tourism operators, employees, business houses and members of the travelling public have raised concerns regarding equal employment opportunities in Air Pacific. He said Fiji needs to have direct connectivity with South East Asia, Middle East and Europe, which will among other things give Fiji a bigger tourism market.
The AG’s comments follow the establishment last month of a Cabinet task force to oversee a comprehensive review of the operations of Air Pacific.
The Cabinet team comprises Civil Aviation Minister Ratu Epeli Nailatikau, Sayed-Khaiyum, Finance Minister Mahendra Chaudhry and Tourism Minister Tom Ricketts.
The public submissions sought by Government will be presented to the task force.
Sayed-Khaiyum said the task force “will undertake further exercises to give Government a true picture of its position as 51 per cent shareholder of Air Pacific”.
Air Pacific CEO John Campbell told Fijilive this afternoon that he hasn’t had any communication with Government regarding the review.
Comments are being sought from Qantas.
Meanwhile, ousted Prime Minister Laisenia Qarase had said Government was interfering into Air Pacific's operations and is cause for concern. He said Qantas is one of the most reputable airlines in the world and it's partnership has ensured the survival and profitability of Air Pacific over the years.
The Association of South Pacific Airlines had also called on the interim Government to ‘stay out’ of Air Pacific’s affairs.
The excerpt of the FT article:
Three new directors set for Air Pacific
Thursday, May 15, 2008
THREE new directors will be appointed to the Air Pacific board from next month.
Board chairman Nalin Patel says Air Pacific's major shareholder, the Government, has informed him three new Fiji directors would be appointed next month.
The Government owns 51 per cent of shares while Qantas Airways Limited is the second largest shareholder with 46 percent.
Mr Patel said the names of the three directors would be advised by the government in due course. He said the chairman, managing director and Qantas-nominated directors remained unchanged.
"It's the shareholders prerogative and the Government owns 51 percent of the company. The appointments are done by the shareholders themselves," he said.
"The Government has the final say in regards to the Fiji directors. Fiji has five and Qantas has four. The appointments are done on a yearly basis and done at the annual meeting which is usually held in September."
Mr Patel said directors Daniel Elisha, Sitiveni Weleilakeba and Sekonaia Mailekai would step down after the May 29 board meeting. The interim Government will appoint the new directors by next month.
Mr Patel said he appreciated the contributions of the three departing board members.
Yesterday Civil Aviation Permanent secretary Ross Ligairi referred all questions to the director of Civil Aviation.
But Akuila Waradi said the Government was working on confirming the new board members.
"What's come out in the news is news to us. We're working on confirming the new members and who will be replaced," he said. "I'm not aware whether the board of directors are on contract but the term is usually for a year and renewable for a maximum of three year but all that has to be looked into."
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