Home » Uncategorized » “Fiji Airways losing money on domestic route”.

“Fiji Airways losing money on domestic route”.

 

Letter to Editor (The Fiji Times, Fiji Sun, Island Business) sent 30 June 2014s

 

I wish to congratulate Mr Pichler and Fiji Airways for listening to complaints by international flight customers (including this one) about the need for good hot simple meals and a low cost but informative old-style inflight magazine, rather than an expensive glossy and empty PR magazine.

But economics students (and the Commerce Commission) must seriously think about Mr Pichler’s recent claim (Fiji Sun, 28 June 2014 ) that his “domestic subsidiary is losing money”, that “their operating profit margin in the domestic network was negative two per cent” and that “ to some extent” this was because of the infrastructure restrictions like short runways at Savusavu.

Not too long ago, in contrast to the current monopoly, there were two competing airlines operating on the same routes, under the same runway infrastructure and presumably making some profits, despite the prices being much lower than the current ones, even allowing for inflation.

Today, especially on the major Nausori-Nadi-Labasa trunk routes, there are fewer flights, nearly all operating at maximum capacity, and presumably optimum profits. Of course, the consumers have no alternative but to suffer the inconvenience of long waits for connecting to or from international flights, with even that delayed after the scheduled time because of alleged “operational reasons” (i.e. airline gobbledegook for “waiting for more passengers from connecting flights to increase the load factor”).

The Chairman of the Commerce Commission (Dr Mahendra Reddy) has previously refused to reply to media questions on this particular monopoly issue, despite grand claims in the vision and mission statements of the Commerce Commission.

Given the now public explanation by Mr Pichler on the alleged unprofitability of the domestic routes of Fiji Link, can the Commerce Commission (and Dr Reddy) explain:

(a) whether the financial returns on the Nadi-Nausori-Labasa routes are indeed negative; or

(b) whether the high prices and high profits on the above routes are used to cross-subsidize other unprofitable sectors of Fiji Link;

(c) if subsidies have to be given on Fiji Link’s unprofitable but socially necessary routes elsewhere, why are they not given in a transparent fashion by tax-payers in general instead of being burdened on the consumers of the popular domestic routes; and

(d) why Fiji Airways cannot be ordered by Commerce Commission to reduce prices on the Suva-Nausori-Labasa routes.

If Dr Mahendra Reddy’s current activities also include trying to enhance “substantial competition” in the political arena, could he please ask the usually reticent CEO of the Commerce Commission to respond to this letter, although I point out that reducing domestic air fares might also win Dr Reddy some “kudos” useful in an election.

Or do consumers have to wait for a new Minister of Aviation or a new Executive Chairman of Commerce Commission, after the September elections?

 

Professor Wadan Narsey

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9 thoughts on ““Fiji Airways losing money on domestic route”.

  1. good job Dr Narsey. It is perfectly common sense even to non economic students. Corruption is rife in Government and probably the worse since the first coup.

  2. When will Wadan Narsey understand that not everyone is answerable to him.

    (c) if subsidies have to be given on Fiji Link’s unprofitable but socially necessary routes elsewhere, why are they not given in a transparent fashion by tax-payers in general instead of being burdened on the consumers of the popular domestic routes; and

    Answer, because why should I as a taxpayer pay for something I do not use.

  3. Vinaka Dr. Narsey.
    I travelled about two weeks from Nausori to Labasa via Fiji Link. It is interesting to note that their are different categories of fare on the same route and same flight. Some pay $131 while some pay $164 etc.
    Another point is the flights are generally 50% occupied.
    Why can’t the fare be maintained at one price and instead of 50 % more people can travel on the same flight.
    This is total MONOPOLY by Fiji Link.
    I thought government was encouraging more people to invest under the North Policy.
    Perhaps the changes will come before the election to get votes from people by FF.

    Another area that needs to be looked is the charges by Vodafone which Dr. Narsey had raised. The free money is lost if it is not used by people. Vodafone has made millions from this over the years.

    The Commerce Commission and Consumer Council have CEO’s who are not only unqualified but simply want limelight.

    The chairman of Commerce Commission – kanwa Mahen has not able to resolve most issues such air fare, charges by Vodafone, hardware prices, prices of food, price of utilities etc etc.

    The only way possible is by the removal of an illegal regime.

  4. On no. Please do no say that Mr. Pichler has been bent to pressure by the funny family government over this hard landing. His words seem very much like crap that a regime lackey might regurgitate. More half truths spew forth. Us in the job know what happened. The pilot, and other older ones, struggled through his training with a number of fails. His training was shortcutted to make sure he eventually passed. This still going on. Under this pilots control the plane did hard landing. Organizational issues aside pilot error was a contributing if not direct cause. If the pilot was not in error as Mr Pichler states then why the need for disciplinary action (“pilot who was in command of the flight has escaped further disciplinary action”). Why wasn’t pilot not fired? Is there truth that Mr Pichler wanted him gone? Now another pilot has been demoted with more to fly away. Organizational problems for sure sara. Like many fijian pilots now doing maybe Mr Picher should leave for something worth his measure. Heaven knows he is not getting respect where he is….”

  5. It is indeed very unsafe to fly with Fiji Airways as the pilots are not fully trained. This must be clarified without delay rather then putting people’s life at risk.

  6. Safety is questionable now, ever since Stefan’s predecessor had taken over. Meh cava would the public think when it becomes known the new recruits for our airline are fresh from flight school. The airline has gone away from previous practise of hiring local pilots with a minimum of 1500 flying hours to modri ones with less that a couple hundred. While local experienced pilots languish in domestic operations. Locals are complaining that even some foreign pilots are hired with less hours than locals. This cant be right eh?

  7. I say wait after the elections…. Defeat to the P.P.F then get rid of the one-eye-jack…. He and premila (CEO of Consumer Council) can start their own business from their money and see how they do? Phucking idiots

  8. Did you hear cockeyed reddy ..the airlines are charging premium price because of lack competition …duhhhhhhh
    What type of idiotic comment is that. Just say you can’t do anything because it’s government owned and you want to sleep with the enemy , the bitch who is running that airline . Got her job spreading her “wings”

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