Air Niugini, CEO, Bruce Alabaster at the CAPA Australia Pacific Aviation Summit 2022
Air Niugini has seen (on average) K 400 million per annum in revenue lost due travel restrictions during 2020/2021 due to the Covid-19 crisis. Despite this Air Niugini is expecting a small profit for 2021 based on latest reforecast. During this short period the team has removed circa 36% of Air Niugini’s pre-Covid cost structure, with circa 24% of these savings are permanently embedded. Air Niugini has during this period managed to keep almost all staff on full pay and has been able to operate the fleet through the whole Covid period.
Transcript
Bruce Alabaster:PNG took a slightly different approach to Covid than, you know, the other extreme, which was perhaps Melbourne and London, in terms that there were never any strong restrictions put in place. And that's in the context that, you know, there is no social welfare support systems like there are in the Western democracies. Many, many people have sort of 8 and 9 people living in a house, so where we did see Covid transmission, it was generally in the social environment. So as a consequence, we were able to actually maintain domestic operations right through Covid. There was a period of 2 weeks at the start of COVID and 2 weeks where Delta transmission started across PNG where there was a significant reduction in domestic ops, but otherwise it continued. So in fact, in August Our revenue, total revenue, was 30% better than August 2019, which is a remarkable comeback. International, we took a bold leap and continued to operate the 767s internationally. 737 we removed onto domestic operations, and that was on the basis that we could actually underwrite the cost with cargo. So we'd move 12 to 14 tonnes of cargo on every flight, 5 days a week out of Brisbane, 5 days a week out of Singapore, once a week out of Manila, and once a week out of Hong Kong. Equally, the passenger load— so PNG effectively has very limited tourism market, so the passengers continue to be resource company fly-in fly-out workers and government officials who continue to accept the fact that there's going to be 2 weeks quarantine at either end. And accepted the fact that, you know, the cheapest airfares we were offering was business class because the load factor into Australia was 10% on a 767. Again, Air Niugini was relatively lucky through Covid, so we made a small profit in 2021 and we're on track to make a reasonable profit in 2022. That profit's allowed us to progress with the fleet transition, and next year is Air Niugini's 50th year of operations, so Quite a substantial fleet change going on. We're replacing the 2 767s with 2 A330-200s in March. Likewise, we've got a campaign progressing that's fairly close to conclusion to replace our 11 Fokkers and our 737-800 with a new regional jet, and that will either be the A220 or the Embraer E2, with a bit of analysis to still go on that. And then at the lower end of the market, we've got an RFP out there for an additional 4 Q400s. So we operate 3 at the moment. Additional 4 take us to 7 in total, which is the fleet target, and that will either allow growth at the bottom end of the market or transition out of some of the older Dash 8-300s and -200s that we've got.
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