Fiji Airways annual fuel costs are expected to double to $1 billion, forcing Government and the tourism industry to introduce measures aimed at protecting visitor arrivals and keeping the national carrier’s flights operating as normal.
Finance Permanent Secretary Shiri Gounder said the dramatic increase in fuel prices had placed Fiji Airways under immense financial pressure.
“Fiji Airways uses around $500 million of fuel to run its operations, and brings most of the tourists into Fiji,” Mr Gounder said.
“When the fuel prices have doubled, aviation pricing doubled for Fiji Airways.
“In a 12-month period they’ll have to spend $1 billion.”
He said the airline faced two difficult choices – either pass the increased fuel costs on to passengers through higher airfares or reduce the number of flights.
“Either they pass the full cost of the price increase on the passengers, which is the visitor that’s coming, on the airfares, which will affect the cost of the airfares and can have a drastic impact on the visitor arrivals, or they can take a decision as an entity to reduce the number of flights.
“However, if Fiji Airways reduces its flight, or if there’s any impact on the number of visitors, everybody in the tourism industry gets affected.”
He said extensive discussions with hotels, airlines, cruise operators and other tourism stakeholders resulted in broad agreement that Fiji Airways must be supported.
“I think there’s general consensus amongst the industry and the government that Fiji Airways has to be supported, because without Fiji Airways there’s no tourism industry.”
Mr Gounder said the industry had agreed to a 5 per cent tax on hotels, tour operators and cruise operators, with all proceeds directed to Fiji Airways to help maintain its flight schedule.
“All that funding would be given to Fiji Airways to make sure that they continue all their flights as normal, to get in the tourists.”
He said tourism operators had also agreed to absorb the levy rather than pass the additional cost on to visitors.
“Most of them, they have agreed that they will not increase the prices, but will basically absorb the 5 per cent.
“If we don’t do this, the impact on the hoteliers will be far more, and I think the industry understands that.”
Fiji Hotel and Tourism Association CEO Fantasha Lockington said the tourism industry did not propose, endorse, or “broadly agree” to the Government’s 5 per cent Tourism Services Tax or Service Turnover Tax.
She said a few representatives might have expressed support in isolated discussions, and they did not represent the wider tourism industry.
