Why Viljoen Opposes An Open Skies Policy

While competition might drive down the airfare as more competitors enter our air space, it would wipe out the national airline, Fiji Airways chief executive officer and managing director warned.

Mr Viljoen said: “The first aspect is air access. Does the Government let anybody in who wants to fly here or are they managing the open liberalisation of flying here in a proper manner?

“Now there are airlines out there whose business model is not about the country they fly to, it’s about themselves. In fact, all airlines have that, it’s their starting point.

“These big airlines come in on level playing fields and wipe out the small national carrier. Open skies is expected to give more people, more flights but what it does it creates more chaos.

“The reality is there is no history to show that it has actually benefitted the country, benefitted the other airlines or benefitted those huge carriers and add another destination to dump capacity in and destroy the local airline.

“With lower ticket prices, it will increase traffic and the history says that 90 small airlines have disappeared.

“They were wiped out by the big guys and you think the country is better off? Take for example the Maldives.

“It has no airline. They are struggling today with air access because the airlines flying there will decide when they want to, how they want to fly themselves for the country.

“In Fiji, Government is our majority shareholder. We are here to stay. We are going to be here when these airlines find the things tough. There is a partnership between ourselves and the sovereignty.

“We are here to basically support the growth of tourism and the economy.”

He said in return they expected Government to manage liberalisation so that it was fair and balanced.

“Otherwise, these big guys will wipe us out in days,” Mr Viljoen said.

“Our strategic objective is to be sustainably profitable.”

It is understood that the Chinese had tried very hard to set up direct flights from their major cities to Nadi International Airport.

Mr Viljoen said the direct flight from Beijing was not the problem.

“The problem is if you take every major city in China which has 25 million to 30 million people,” he said.

He said they had airlines which had many aircraft. They could put three flights here a day tomorrow. They would flood the country with tourists.

“We have restrictions in terms of available hotel rooms and where will it leave us. It will be the end of Fiji Airways.

“It is in our best interest to create a strategic airline to show that we are connected to the world. So at the end of the day there is a lot of history that shows we are a small sovereignty.”

He said there was a huge cost challenge this year and this could only be met by raising airfares.

“Until you push airfares up, you cannot get it. We are sitting in the queues waiting for the big guys to push their airfares up.”

From time to time the airline makes available cheaper airfares.

Mr Viljoen said: “We call it a booking time. There is a trend of people booking later and later bookings. There are 33,000 flights a days in Europe. People fly and they are paying cheap fares but they are not one or two hour flights, they are 10-hour flights. We are trying to tell people to buy early.”

He revealed that Fiji Airways wanted to grow a minimum eight per cent a year.

“This year we are growing 13 per cent, last year we grew 12, but moving forward we want to grow eight per cent a year.

“We have done a five and 10 year masterplan. We want experts to come in with special tools to look at all the opportunities to fly to in the next five years or 10 years. Eight per cent is split into four per cent in existing routes and four per cent in new route every year. New route every year is the maximum we can digest. With this we can take our passengers from 1.6 million today to 3.3 million in the next 10 years. We can go from 18 to 24 aircraft.”

Love the people

Mr Viljoen said he “loves the people, the Fijians”.

“Of course. We support the rugby team. They are not called Fiji Rugby Team anymore, they are called Fiji Airways rugby team. What I love about the country first of all is the simplicity,” he said.

“South Africa’s very busy, 60-70 million people. There’s lot of traffic, congestion and here you don’t have it. Sometimes when you drive from Denarau to the airport the streets are empty when you compare it to Johannesburg.

“The simplicity, beauty, and the nature, the sea is magnificent. I spent eight years in Mauritius which is also an island in the middle of the sea, it does not have the same waters, the coral is all bleached, you don’t see the fish, it’s just not as beautiful. Here you have got the most beautiful sea life.

“When you are driving and when you want to turn, people will stop and give way to you. In Johannesburg, they get out and beat you on the head if they have to stop. So aggressive.

It’s a very different society. There is respect here, and not like in the other fast moving countries where it is about first come first serve.”

It’s a very different society. There is respect here, and not like in the other fast moving countries where it is about first come first serve.”

Talks with Emirates

Mr Viljoen has also revealed that Fiji Airways is talking to Emirates Airline about code sharing from Dubai to the destinations they serve in Australia and NZ and connecting with our flights.

“They are keen to do it which will offer another way to Europeans to come to Fiji. Now we’ve got a code-sharing with British Airways, American Airlines, Cathay (Pacific).

“Emirates is very big. Their model is pretty fantastic. They have turned a desert into another world. If you have a global business, one of the ideal places to be located in is Dubai. Because from Dubai you can connect every day to ever major city in the world more than once a day.

New cheaper aircraft

Mr Viljoen said one of the key drivers of financial sustainability of the business was the aircraft you use. “The fuel prices have gone up dramatically and in the world they use cheaper aircraft. The new generation aircraft fly further like 15 hours and use 25 per cent less fuel,”  he said.

“We are looking at eight. Because we have got 6 today and you will see we are growing to eight. It won’t be eight all tomorrow morning. It will be replacing the six with 6 new ones and eventually to eight.

“If we go with Boeing we have to replace everything with Boeing. If we stay with Airbus, that’s more scalable. The difficulty with Boeing is that you can’t fly with all Boeings and still have Airbuses. Unless you take a decision an equal number of both, you can’t fly them. We have 18 aircraft and 4 types so it’s not balanced. We need more engineers and more pilots.

“We have the long haul fleet, we have the A330s which are Airbuses, and then we have Boeing 737-800s today which somehow is 18 years old. Then we have Twin Otters in Fiji Link, and we have the ATRs in Fiji Link. We have 3 new ATRs and there is a fourth one coming in July. We will have a complete fleet of Twin Otters.”

He said they were bringing in a Boeing 737 MAX which is a size eight, similar size to the current aircraft with 180 odd seats.

“The seats in the economy are all leather and you have a lot more space because of the design of the seats, full inflight entertainment behind every seat. The business class has new seats, Wi-Fi onboard and a beautiful space cabin. So we are getting the first one in November, and the second in December and as they come in they will replace some of the existing 737-800. We are getting five new to replace five old.

We are first in this area to fly the Max. “

“With rising fuel prices, we have to balance it with the increase in airfares,” he said.

He was asked if the airfares did not go up how the airline would cope with increased cost. He said there would be cost cutting.

“We would be very reluctant to touch customer service we have done so much to get it where it is,” he said.

Is he looking at staff reductions?

“No, unless things become so dramatic. If the fuel prices go up to $300 a barrel. You can never say never. If the fuel prices keeps going up and there is persistent losses they may find no options. We are taking a realistic approach by saying things are going to get tougher before they become any easier and we start relooking at cost savings and that’s what we are busy doing.”

The airline is Going Greener. He said Ms Voss and the team “are looking to take plastics out from on board because you know today the blankets are wrapped in plastics and everything is in plastics.”

“So the more we can put recyclable paper around, the more we are contributing to environment.”

Mr Viljoen also talked about the Aviation Academy in Nadi to train pilots.

“Today we get our pilots to go around the world to get their licence renewed because every licence is renewed every six months. When we convert a pilot from first captain they have to get through simulator training and we are paying all these simulator training centres around the world a lot of dollars. We have shown a business case where it shows that it is good to develop our own simulator centre and the spare time because we won’t be using it freely, we will use it for the other airlines. And they are already queuing up. I mean would you rather go to Singapore for your training and sit in the heat and traffic and everything or you can come here and enjoy it at a much cheaper cost. So I think it’s going to be a big thing.”

“We had pilots waiting for a month. Their licence is going to expire. We can’t get a booking for several months, four to five months. Then what happens, they have to wait for a month before they can go into the simulator.”

 

[Source: Fiji Sun Online]

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