Government backs Fiji Airways, warns of economic fallout from flight cuts

The Fijian Government has defended its support for Fiji Airways, warning that a 20 to 30 per cent reduction in flights could have a direct impact on the wider economy.

Deputy Prime Minister Manoa Kamikamica said continued assistance to the national carrier was necessary because of its importance to tourism, business, investment and the movement of Fijians.

“Fiji Airways is not only just an airline, it very much the lifeline of the Fijian economy,” Mr Kamikamica said.

He said a large majority of tourists, business travellers and Fijians relied on the airline, making it an important national asset.

Mr Kamikamica said Fiji Airways had faced significant financial challenges following the COVID-19 pandemic, including almost two years of severely reduced revenue.

He said rising fuel costs had subsequently placed further pressure on the airline’s operations.

Mr Kamikamica said Government assistance, including measures aimed at helping Fiji Airways manage higher fuel costs, was necessary to protect the wider economy.

“The worst thing that could have happened if we had not given any assistance and let us say they cut the flights by 20 per cent or 30 per cent, that directly impacts the whole economy,” he said.

He said fewer flights could result in lower Value Added Tax (VAT) and other tax collections, slower economic activity and reduced investor confidence.

Mr Kamikamica said the proposed tax measure was intended to be temporary and was understood to remain in place for only one to two years while Fiji Airways worked towards financial recovery.

Management concerns

Mr Kamikamica also acknowledged concerns about the airline’s management structure and said the Fiji Airways board could examine its organisational structure for opportunities to reduce costs.

“There are some views around maybe Fiji Airways is top heavy with its management,” he said.

Despite those concerns, he said Government’s priority was to ensure the national carrier remained financially sustainable and continued supporting economic growth.

“I am hoping that Fiji Airways always can recover and continue to do what it’s doing, which is continuing to grow the Fijian economy and stabilise it,” he said.