The recent discussions surrounding Fiji Airways, and the impact of the unprecedented and significant global aviation fuel price increases, arose from precisely such a challenge, says Tourism Action Group (TAG) chairperson Damend Gounder.
“Following the escalation of conflict in the Middle East, TAG reconvened to assess the potential implications for Fiji’s tourism industry and national economy,” he said.
“International commentary at the time had raised concerns regarding aviation fuel supply and airline operations globally. Fiji’s tourism industry could not afford uncertainty around international connectivity.”
He said during this period, Fiji Airways presented detailed information to TAG regarding the significant financial pressures arising from maintaining full capacity due to the rapid escalation in aviation fuelcosts.
“Industry representatives were advised that additional fuel expenditure had increased dramatically, placing considerable pressure on the airline’s cash flow while it continued to recover from the impact of COVID-19.
“Fiji Airways detailed that it was unable to guarantee maximum route coverage during the fuel crisis and explained that it would need to do what many airlines around the world were doing, including introducing significant fuel surcharges for travellers and reducing international capacity.
“During the same period, Air New Zealand had already scheduled a reduction of approximately 11,300 seats between July and October through a combination of flight cancellations and aircraft equipment downgrades, without consultation with Fiji tourism industry stakeholders. This demonstrated that capacity adjustments were already occurring across the market and reinforced the importance of protecting Fiji’s international air connectivity during a period of significant global uncertainty.
“Fiji Airways also outlined the broader impacts that any reduction in connectivity would have on employment across tourism and the many sectors that support it, the wider risks to Fiji’s tourism economy, and the risk to the airline’s ability to meet future demand if it maintained full capacity without any assistance.”
According to Mr Gounder the Tourism Action Group had convened a meeting on June 1 with the Minister for Finance, the Permanent Secretary for Finance, the Deputy Prime Minister and Minister for Tourism and Civil Aviation, Fiji Airways, Tourism Fiji, senior representatives including Fiji Hotel and Tourism Association CEO Fantasha Lockington, and members, together with major tourism investors and operators from across the sector.
“The meeting did not set out to endorse a predetermined outcome. Rather, it was to consider the range of options available to Government to protect Fiji’s aviation connectivity and tourism economy during an emerging international crisis.
“Several potential measures were discussed during that meeting, including the temporary redirection of departure tax revenues, Government guarantee arrangements, direct Government financial assistance, and a temporary Tourism Services Tax.
“Following those discussions, the outcomes were formally documented by TAG and communicated to Government. Those records reflected the discussions held at the meeting.
“It is therefore important to recognise that the Tourism Services Tax did not emerge in isolation. It formed part of a broader, carefully considered package developed collaboratively by Government, Fiji Airways, and representatives of the tourism industry, with the deliberate aim of shielding smaller businesses from additional burden.”
