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Air Niugini expands in growing economy despite service challenges and weak balance sheet

Analysis

Air Niugini, Papua New Guinea's national carrier, has rapidly expanded in recent years as foreign investment pours into the country to develop its wealth of natural resources, driving demand for domestic and international air travel.

The state-owned carrier plans to add more aircraft and up-gauge key domestic services to Boeing 737 in 2013 to keep pace with a growing economy and competitor Airlines PNG. But the financially strapped carrier is struggling with poor on-time performance while also being criticised for charging excessive fares. Deregulation has brought some domestic competition, but airlines from neighbouring Philippines and Solomon Islands are struggling to break through protectionist barriers.

Aviation provides the single most important form of transport in the mountainous country which lacks a major road network linking the capital, Port Moresby, to other major centres. But the poor state of aviation infrastructure including runways and terminals poses a substantial hurdle to expansion of air services.

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