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Viljoen: Fiji Airways Cannot Set Prices Because It’s A Tier Two Airline

Fiji Airways is a second tier airline and therefore is not a price setter but a price follower, says its CEO and managing director, Andre Viljoen. Mr Viljoen made the
24 Jun 2018 15:34
Viljoen: Fiji Airways Cannot Set Prices Because It’s A Tier Two Airline

Fiji Airways is a second tier airline and therefore is not a price setter but a price follower, says its CEO and managing director, Andre Viljoen.

Mr Viljoen made the remarks during an interview with the Fiji Sun in Nadi.

He was asked about the possible reduction in airfares.

He said cost was a big challenge for the airline because of our location in the aviation world.

“We are a faraway destination airline. We are not sitting in the middle of Europe where you have got all the countries around you to create a network of people coming in and out of the country and feed a lot of traffic.

“We are in the middle of the ocean and people only come here on holidays.

“So if you want to build it as a network and bring people to connect through, you have got to have a very compelling solution for offering them to come and switch through here.

“The more remote you are, the more difficult it is. When you look at our model all you can see is how remote we are.”

He said the second thing was that “we don’t have scale.”

He said for 18 aircraft “we got to have four lines of engineers, four lines of pilots for 18 aircraft.”

“We have to run a full flight planning department, a full finance department, a full commercial department.

“If we had 300 aircraft you’d be spreading the cost for 300 aircraft. We have a cost challenge. We have to keep looking at costs because we are small.

“We are running an airline and we are independent but everything comes at a cost. You have got a really small base to spread it all over with.”

“If we are to grow, we wouldn’t have to duplicate the costs, you will add a few people. So you get scale overtime.

“So between scale and where we are as a destination based airline and then the fact that we are second tier carrier in every market we fly.

“Second tier- when we go to Australia, or NZ, or US we are not the main airline we are a small operator flying once or twice a day and there is a large airline that is carrying or flying multiple times a day all over the world.

“The price setting happens by the first tier carrier not the second tier carrier. So we are not able to set the price. 

“We are the price follower. Which means it comes with a cost challenge, and cost keeps going up.

“I hope the tier one airlines push the price up. When you take these challenges they are not going to go away.

“If we are going to be sustainably profitable we have to have a strategy that focus on how we are going to offset these challenges.

“The challenges are here to stay with us for many years until we become number one.

“On joining internationally renowned airline travel alliance Oneworld, he said: “Let me first explain what type of partners we have and why. We are a small airline, with 18 aircraft and the best we fly is to 20 destinations.

“ We want to feed the traffic from everywhere we can to Fiji. The only way we open access is either fly there or find a partner that operates there that can feed the traffic onto our flights to Fiji.

“So the concept of having partners or alliance is we call it the “hub and spoke.” “We fly to our hub and there’re spokes that feed the hub.

“So this is the hub and spokes principle. We fly to hubs and we feed traffic through the spokes and that’s done through partnership.

“There are simple partnerships and there are more intense partnerships.”

Feedback:  nemani.delaibatiki@fijisun.com.fj



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