Attorney-General Aiyaz Sayed-Khaiyum delivers Ministerial Statement in Fijian Parliament

Madam Speaker,

As Minister responsible for Civil Aviation, I rise today to give a report on the range of activities that fall directly and indirectly under this portfolio.

Madam Speaker, more than 90 per cent of visitors to Fiji come on an airplane. And more than 90 per cent of Fijians travelling abroad depart on one. And that’s not to mention all the Fijians who rely on our domestic airlines to travel within Fiji – to visit family, travel home or into the city, and access crucial services.

Given the huge importance that civil aviation plays in the Fijian economy – supporting our Tourism industry – and in our national life, I thought it appropriate to provide this honourable House with an update on this important portfolio.

Madam Speaker, I will cover a broad range of topics and touch on a number of important initiatives, policies and plans within the Department of Civil Aviation to ensure amongst other things (inter alia) that air travel into, within and out of Fiji is safe, reliable and affordable.

Madam Speaker, I would like to begin by outlining Government’s plans to develop the infrastructure of the 15 airports operated by Airports Fiji Ltd. This is in line with the FijiFirst Government’s plans to reform and modernise the aviation industry in Fiji to be globally competitive.

All told, AFL is looking to deliver around $250 million worth of capital upgrades over the next five (5) years, which demonstrates just how serious we are about this program. It will have huge benefits in terms of economic growth and development – including in our maritime zones – and job creation.

The centrepiece of this program is the Nadi Airport Terminal Modernization Project, which commenced in August 2014. The New Zealand company – Hawkins Infrastructure Ltd – was selected to carry out the work, which is scheduled to be completed by May 2016.

This year, the Fijian people and the visitors to our shores can expect to see a burst of activity and we kindly ask for their patience and understanding as the work is carried out. We promise, it will be worth the wait. Faster queues at check-in and through security, a spacious departure and check-in hall, views for the passengers in the departure lounge, top-quality food and beverages, a children’s play corner, a prayer room, a modern VIP lounge and spa facilities. And of course a segregated smoking area for those who do.

There is also a plan to in the near future build at least a 70 room transit hotel located within the Nadi Airport complex.

Of course, Madam Speaker, the major upgrade plans for Nausori airport are equally exciting. They include a runway extension – so that larger planes can land in Suva – and a new terminal. This will have huge benefits for our capital city, its people and its businesses.

Government will intensify negotiations for the acquisition of about 35 hectares of land necessary for these upgrades and we look forward to finalising this matter this year.

And of course, Madam Speaker, we also have our eye on Fiji’s 13 outer island airports. We are committed to providing AFL the necessary support for capital projects, maintenance, and upgrades for these facilities. In this regard, one of our major focuses is the upgrade of the Rotuma airstrip.

Madam Speaker, we are also focused on helping AFL continue to improve its own performance so that we can maximise the benefits we as a nation derive from these facilities, especially after they are upgraded.

As a result of the successful revenue restructuring and the achievement of operational cost efficiencies over the past few years, AFL’s profit forecast at a conservative approach “after tax” is $33 million for 2015 and $46 million for 2016.

While these numbers are forecasts, we think it’s possible to surpass them if we are able to continue accessing new markets working with Fiji Airways and with other airlines. And we take a disciplined commercial approach to operating Airport. Of course madam speaker this was not possible under the previous Governments nor would it have been if the other side was on this side. In fact madam speaker until 2007 AFL was either making a loss or breaking even or just a minuscule profit if any.

Madam Speaker, Government has called for expressions of interest for the acquisition of shares in AFL by the private sector and confidential negotiations are currently under way. This critical to ensure commercial confidence. As AFL’s performance continues to improve, the share value in AFL will concomitantly rise – generating more interest internationally and giving more value to Fiji.

With the divestment and the increased profits of AFL, the current arrangement where Government funds outer island capital works while AFL as part of its social responsibility picks up the tab for operational costs for those airports, we will be in a position to have AFL carry out capital works from its own cash flow including the operational costs. We are in the process of developing an MOU in this respect.

Madam Speaker, there is no doubt the AFL’s turn-around has been remarkable in particular under the guidance and leadership of its chairman, Mr. Faiz Khan. The Board also consists of the likes of Geofferey Shaw, a well known hotelier, Tui Macuata – Ratu Wiliame Katonivere and Xavier Khan. But the question isn’t if AFL is doing well. Because it is, beyond doubt. Remarkably well. The question is whether it can do even better. As a Government, we want the best – for our people and for our nation.

The point, Madam Speaker, is this. With the right people for the right job and now the right strategic partner, we can do even more, achieve even more, offer even more. As we have seen with Fiji Ports, the right partnership with the private sector has incredible benefits. It will further our case to become the hub for aviation in the region – recognised around the region and the world for the high standard of our facilities and the quality of our services.

Madam Speaker, I am pleased also to report in this House today the spectacular performance of Fiji Airways.

As I’m sure my fellow Members will know, it’s been a busy few years for the airline as it has achieved a remarkable turn-around of fortunes – a complete rebranding, a profit-sharing scheme for its staff and an ambitious plan to expand its operations.

It feels like yesterday when we welcomed the first new Airbus A330 – the Island of Taveuni. As the Prime Minister said at the time: Bearing a uniquely Fijian design, the plane was a flying billboard for Fiji – a message to the world that we are open for business and want to share our beautiful surroundings, our culture and our hospitality with the peoples of other lands.

Since then, there’s been no looking back for the airline. Two new Airbus A330s followed the first – Namuka-i-Lau and Yasawa-i-rara. And Fiji Airways has announced plans to lease a new Boeing 737-800 and Airbus A330-300, which will both enter its fleet in 2015. Following that, an additional 737-800 is planned for 2017.

And in the domestic market, Pacific Sun has become Fiji Link – another addition to “Brand Fiji” – the FijiFirst Government’s program to distinguish an internationally recognised Fijian brand that is known for its quality and uniqueness.

Fiji Link has revamped its fleet by purchasing an ATR 72-600 and ATR 42-600. It has also leased an additional ATR 72-600 to meet the demand for expanding routes. This has significantly improved the services it can offer its customers. Indeed, the new fleet has allowed our national carrier to strengthen its Pacific and international network.

Madam Speaker, the results of all this activity is undeniable. Fiji Airways will soon announce its 2014 financial results, which are more than double the best profit in its history.

But Madam Speaker, I think that many would agree that the airlines biggest accomplishment is no doubt the creation of a team of committed and motivated individuals, who are working together better than ever to bring our national airline to new heights. I have no doubt this great success will continue in 2015, together with a great dividend for its shareholders.

Madam Speaker, I would like to pay special tribute to the Managing Director and CEO, Stefan Pichler, for the great work he has done at Fiji Airways. We are very sorry to see him depart as CEO, but are happy that he will remain on the Board and continue to support the strategic development of the group.

Stefan has ensured that he is leaving behind an outstanding group of senior managers, and he is also playing a key role in the selection of a new CEO. So I can assure this House that business will continue as usual.

Madam Speaker, Fiji Airways is continuously adding new routes to its service on the back of its fleet expansion.

Beginning this month, Fiji Airways will start its Shanghai charters service – in partnership with Rosie Holidays – the first step toward tapping into the vast Asian market. In April, it will commence it’s direct Honiara service. And in June, the airline will add Wellington to its list of direct New Zealand destinations.

There are plans to have an extra flight to Sydney, Melbourne, and Christchurch; to increase the frequency of ATR services; and to add an additional flight to Hong Kong in the peak holiday periods. And there will also be more flights to Taveuni, extra capacity on the Nadi-Suva route, and more supplementary services in peak periods.

What’s more, Madam Speaker, the new A330-300 will provide a 6 per cent capacity increase for the airline’s popular Los Angeles route.

I think we can all agree that the future of the airline has never looked brighter.

Unfortunately, Madam Speaker, there are those who want to downplay Fiji Airways’ potential by arguing for a closer relationship with Qantas. I would like to clearly state that they still hold 46% of Fiji Airways’ shares. An issue we need to deal with in time to come.

But the fact is this, Madam Speaker. As a country that relies on tourism, it is absolutely essential that we have a national airline and that we have control of the fortunes of that airline. It’s a matter of national interest. We cannot be subject to the commercial interests of foreign airlines alone.

That’s why it was so important that we removed Qantas’ veto rights in essential areas of the airlines operations. As a minority shareholder, these should never have been granted in the first place by Rabuka’s SVT Government. And that’s why the FijiFirst Government is committed to ensuring the viability and success of Fiji Airways.

Madam Speaker, as a nation, we have acceded to many International Conventions and Treaties relating to Civil Aviation, such as the Warsaw and Chicago Conventions, to promote the safety and security of air travel. And so, Madam Speaker, I would now like to turn my attention to providing an update on the activities of the Department of Civil Aviation, which is responsible for ensuring Fiji is in compliance with these agreements.

The Department of Civil Aviation is responsible for the safe, efficient and effective regulation of air transport in Fiji. It develops air safety protocols, in line with international standards, and oversees/regulates the development of Fijian airports.

Specifically, the Department of Civil Aviation is in charge of ensuring necessary compliance to the International Civil Aviation Organization standards, through the regulatory arm of the Civil Aviation Authority of Fiji – CAAF.

CAAF regulates the safety and security in the civil aviation industry in Fiji. By effective implementation of the international safety standards set by the ICAO and their recommended practices, the Fiji civil aviation system is well above the global average and the highest in the South Pacific region (excluding Australia and New Zealand).

We are currently in the process of harmonising the Fiji Air Navigation Regulations with international best practices and standards to further raise our already exemplary record.

And so, Madam Speaker, the Department manages the allocation of $3 million to CAAF for safety and security oversight.

Madam Speaker, in addition to the focus on safe management, the Department also negotiates and reviews Air Services Agreements for the expansion of our aviation and tourism markets.

Madam Speaker, for those who do not know, an ASA is an agreement between two nations to allow international commercial transport services to be established.

They are extremely important to a nation like Fiji – which relies heavily on tourism and is an island nation – and therefore it is absolutely necessary that we enforce their terms – which have been carefully considered and agreed to by both parties.

An example of this was the recent dispute with Solomon Islands after it breached its agreement with us. Flights were suspended after a Fiji Airways flight was refused a landing slot in Honiara by the Civil Aviation Authority of Solomon Islands.

Madam Speaker, I am very pleased that this dispute has now been amicably resolved. But the point remains: Fiji takes its obligations under the ASA, as with other international obligations, very seriously and fully complies with its obligations.

At the same time, Fiji expects that those countries which sign ASAs with Fiji to also comply with their obligations. If they fail to do so, Fiji has a clear sovereign right to assert the terms of those agreements.

Madam Speaker, Fiji has concluded agreements with 28 countries, including New Zealand, Australia, France, the United States of America, and Singapore. A total of 11 airlines – including Fiji Airways – have been issued licenses permitting them to operate air services.

Jetstar – one of the designated airlines of Australia – has recently been approved to operate three flights per week on the Gold Coast/Colangatta-Nadi service. The opening of this route through Jetstar will capture the Australian Eastern seaboard region North of Sydney and South of Brisbane, in addition to the existing four flights per week on the Sydney-Nadi service.

In addition, Madam Speaker, Russia and the United Arab Emirates have both approached Fiji to sign ASAs and negotiations are currently underway.

But I think that it is important to stress, Madam Speaker, that it is our responsibility as Government to ensure that our national interests are always protected.

Therefore, Fiji does not support full air transport deregulation, also known as an Open Skies policy.This policy must be approached with caution and great care, as the time is simply not right for Fiji to enter such an arrangement with other sovereignties. We also do not support generally giving fifth and sixth freedom rights because they can have deleterious effect on Fiji Airways and Fijian interests.

Madam Speaker, the Department also oversees the continual implementation of the important air subsidy scheme, to encourage air operators onto routes deemed uneconomical via a tender process.

Domestic airline operators use these subsidies to facilitate trade, tourism, and public travel needs that are so essential for our maritime communities.

The tender process requires airline operators to bid the cost of operating air services to the outer island routes. Government then subsidises any shortfalls in the total revenue generated on a trip.

Madam Speaker, the 2015 tender was advertised on 4 October 2014 and Fiji Link was awarded the tender for Vanuabalavu, Lakeba, Rotuma, Cicia and Koro. Northern Air was awarded the tender for Gau and Ono-i-Lau.

And for the first time, Government is now also subsidising the Suva-Kadavu route.

Madam Speaker, the award of tenders takes into account various factors such as the cost of operations, which incorporates the airline’s profit margin, the aircraft capacity, airfares and the ability of the airline to generate revenue on the tendered route.

Madam Speaker, allow me to provide a few examples that illustrate my point.

The Koro route was awarded to Fiji Link as they tendered a larger capacity 19-seater twin-otter aircraft with a lower cost of operation of $4,830, whereas Northern Air tendered a lesser capacity 9-seater Islander aircraft, with a higher cost of operation of $5,000.

Furthermore, the Suva-Kadavu route was awarded to Fiji Link as they tendered a larger capacity 19-seater twin-otter aircraft whereas Northern Air tendered a lesser capacity 9-seater Islander aircraft, despite both airlines tendering an equivalent cost of operation of $4,000.00.

Madam Speaker, without the Government subsidy, the air services to these outer islands would be not be feasible for airlines and air services to these areas would cease.

For example, the distance between Nadi to Rotuma is approximately 587km, which is a two and a half hour flight from Nadi to Rotuma, with no refuelling facilities available in Rotuma.

The airline operator on this route has to ship its fuel in advance to cater for the return flight from Rotuma. The Government subsidy assists airlines to recover the cost of operating this route with a reasonable profit margin.

Madam Speaker, overall, as I have outlined, we are excited about the year ahead. There is much to look forward to in the year ahead.

Madam Speaker, thank you for your time in allowing me to speak.

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