About a year ago, Prime Minister Tuilaepa Sa’ilele Malielegaoi’s Government made a critical decision. After more than 12 years of working with Virgin Australia in the joint venture to operate Virgin Samoa, they pulled the plug on the deal.
The decision was relayed by Prime Minister Tuilaepa Sa’ilele Malielegaoi to the Chief Executive Officer of Virgin Australia Pty Ltd, John Borghetti.
Back then, a copy of the letter from Tuilaepa to Mr. Borghetti, had been leaked to Samoa Observer. It was published verbatim.
“Following numerous extensive discussions and negotiations held between VA and the Committee members of the Special Negotiating Team (“SNT”), Cabinet has unanimously decided not to re-new the Joint Venture (“JV”),” Tuilaepa wrote.
“The Cabinet has decided that the current arrangements of the JV, is no longer the Direction that Government and ultimately Samoa should take at this time.”
Tuilaepa went on to acknowledge the Airline’s contribution.
“I would like to take this opportunity to thank you for all the excellent work we have undertaken together to date, and I do sincerely hope we can still work together in the future. We thank you for your services and hope we are able to do business again in the future.”
Well that was then. Today, we know there is absolutely no way Prime Minister Tuilaepa’s Government will work with Virgin again.
Apart from the fact that far too much water has gone under the bridge, Tuilaepa’s administration immediately moved to set up Samoa Airways, which was launched in November and has been flying between New Zealand and Australia.
Contrary to reports about the airline’s financial struggles, Prime Minister Tuilaepa is adamant that there is nothing to worry about. He has insisted that it is too early to get an idea about the performance of the airline until the financial year is finished. Okay then.
Besides, all the critics who have raised questions about the Government’s plan have either called “idiots,” “fools,” “stupid” or “kids.” Which is normal Tuilaepa speak.
Today, we want to ask what has now become of P.M. Tuilaepa and his administration’s grand airline dream. We know Samoa Airways is still operating. But did they make the right decision to exit from the Virgin JV?
At the time, this column warned that unless the Government had thought out, planned and then have that plan implemented properly by the right people; this could be the final straw that would break the camel’s back, given the precarious situation our economy is in.
Keep in mind that the last time Polynesian Airlines was operated in a similar manner – although on a much grander scale – the country was nearly bankrupted. At one point when the airline had gone from one Boeing aircraft to a four-Boeing fleet, its debt had ballooned to “over $50 million” in aircraft leases. It was then that the risk of bankruptcy became very real and all the taxpayers of this country ended up shouldering the burden.
Now with the economy in dire straits and our debt level skyrocketing beyond the ridiculous, is Samoa Airways adding value to the economy? And how long more will it be before they ask for a bail out?
To be fair to the Government, they are not wrong in their insistence on Samoa having its own airline. It’s a wonderful feeling knowing there is a Samoan flag carrier flying Samoa’s name all over the world. There is nothing more heartwarming than seeing the Samoa Airways plane on a tarmac in Auckland, Sydney and Faleolo.
But it must be proving a logistical nightmare trying to make it work. Cash flow wise, it‘s going to be very challenging – if it hasn’t been already the case.
Keep in mind that even with their decision to dump Virgin, Virgin is still flying to Samoa from Australia. And Air New Zealand has never been so persistent in its efforts to service the Samoa route.
Logistically, Samoa does not have the marketing power and the pull the big networks and Airline Alliances such as Virgin and Air New Zealand have.
Now here is what history has taught us. When Polynesian Airlines last ventured into international flights, it made losses in the millions and taxpayers ended up paying dearly for it. It nearly bankrupted this country.
Now a year after dumping Virgin, how fares P.M. Tuilaepa’s government’s airline dreams today? Stay tuned!
Have a wonderful Wednesday Samoa, God bless!