Fiji Airways, one of the world’s smallest national airlines, is soaring, defying those who doubted its pandemic survival. Tony Harrington reports.
André Viljoen wasn’t happy. It was August 2020, five months after Covid’s deadly transition from novel virus to global pandemic, and rumours were swirling that Fiji Airways, of which he was Chief Executive Officer, was insolvent and might even collapse.
The stories were gathering pace at a time when air travel everywhere was restricted or suspended, many national and internal borders were closed indefinitely, and cities big and small were locked down to limit risks of further infection.
So, it wouldn’t have been a huge surprise to learn of an airline failure in a South Pacific island nation reliant upon international tourists, but starved of arrivals for 20 months.
Except the stories were untrue.
Viljoen moved quickly to change the narrative, publicly reassuring Fiji that its national airline, largest bridge to the world, and a major employer and economic driver, was not about to fail. Far from it.
He convened special briefings for the airline’s premium customers and the national business community to explain that F$455 million (US$201.8 million) in loan guarantees from the Fiji Government “is not a cash bailout using taxpayer funds,” but simply extra security for new borrowings and aircraft lease deferrals until the pandemic passed.
“Fiji Airways is not insolvent by any definition of the word,” insisted its CEO, let alone facing liquidation or bankruptcy. “Fiji Airways is ready to reignite tourism and the Fijian economy as soon as it is safe to resume international flying,” he declared, defiantly and confidently adding: “We will not only survive. We will thrive.”
And that’s exactly what is happening.
In May this year, Viljoen announced that after three years of pandemic-driven losses the airline he has led for nearly nine years achieved in 2023 a record pre-tax profit of F$131.8 million (US$58.46 million) and operating revenues of F$1.8 billion (US$800 million).
Not only did Fiji Airways defy the doubters (and there were many) by restoring its pre-Covid scale. It came back even stronger and more ambitious.
Focus markets
Beyond resetting its network, the airline piled on significant growth, adding destinations in its key source markets of North America, Australia and the Pacific Islands, doubling from two to four its fleet of ultra long-haul Airbus A350-900s, and expanding deployment of its widebody A330s, narrowbody Boeing 737-800s and MAX-8s, and turboprop ATR and Twin Otter commuter planes.
Total flights operated increased by 40% over 2022, capacity went up 47% to 2.8 million seats, the number of passenger journeys jumped by 57%, and the employee count rose by 37%.
Earnings before interest, tax, depreciation and abnormal costs (EBITDA) rose by 171% to F$370.6 million (US$164.2 million), debts of F$100 million (US$44.3 million) were repaid, borrowings totalling F$94.9 million (US$42.08 million) were refinanced, and the airline’s equity grew back to F$265.7 million (US $117.82 million), 50% of pre-pandemic levels.
The carrier’s board approved an interim dividend of F$15 million (US$6.65 million) to its shareholders – the Fiji Government (51%), the Fiji National Provident Fund (30.02%), Australia’s Qantas (16.45%), and the Unit Trust of Fiji (1.58%), with the last sub-1% shared between Air New Zealand and the governments of neighbouring Kiribati, Tonga, Nauru and Samoa.
As well, the board approved a profit share payment of F$5,000 (US$2,213) to eligible non-management employees in recognition of their work to progress the airline from Covid during a time of critical and worsening skills shortages across the global aviation sector, and an exodus of Fijians emigrating in worrying numbers to seek fresh opportunities elsewhere.
The International Monetary Fund (IMF) said almost 34,000 Fiji nationals, or 4% of the population, moved to other countries in 2022-23, a shift which not only impacted the local economy, but also threatened potential staffing of the airline and broader tourism sector while reducing the base of local travellers.
To appreciate the scale of that outflow, a 4% reduction of the US populace would equate to the combined departures of everyone from the three biggest cities, New York, Los Angeles and Chicago, while in the UK it would be on par with emptying Manchester.
Reliance on tourism
Tourism is Fiji’s largest industry, directly and indirectly contributing around 40% to gross domestic product. The government quantifies that the sector provides or supports around 120,000 jobs, or 36.5% of the national workforce.
Of total visitor arrivals last year, 70% flew on Fiji Airways.
“I want to put into perspective exactly what these financial results mean, not just to the national airline, but to the country,” said Deputy Prime Minister Biman Prasad, who also serves as Fiji’s Minister for Finance, Strategic Planning, National Development and Statistics.
“The F$1.8 billion revenue – earnings – is a direct injection into the economy. It spurs activity not just in the tourism sector but across the national economic landscape by way of salaries, the purchases of goods and services, payment of utilities, new investments and countless other daily transactions, all of which collectively fuel the engine of growth.”
But in a sobering parallel development on the same day as the carrier’s jubilant profit announcement, neighbouring Air Vanuatu collapsed, an event soon followed by the eruption of serious civil unrest in the nearby French Pacific territory of New Caledonia, critically impacting its airline, Air Calédonie.
While Air Vanuatu has since relaunched limited domestic flying with ATRs, its overarching failure and the uprising in New Caledonia both served as sharp reminders that in the South Pacific progress can be fragile and easily disrupted or destroyed.
It also recalled many previous crises across the region, including in Fiji, all of which impacted national airlines and by extension national economies.
In 2011 Fiji was smashed by Cyclone Yasi, part of a continuing pattern of severe and damaging Pacific weather events, of which this nation of 332 islands – 110 of them inhabited – is a constant casualty.
Since 1987, Fiji has also endured significant political unrest of its own, with four military coups – the latest in 2006 – imperilling tourism, destabilising the national economy, and upending the global reputation that Fiji wants and needs as a picture-perfect Pacific Island paradise.
Fiji Airways, then branded Air Pacific, was badly impacted by the political chaos, though that’s not obvious right now after its reconstruction, repositioning and robust emergence from Covid and the resurgence of tourism.
“The economic recovery post pandemic, and recent economic growth, has been primarily driven by the tourism industry. This industry reduces poverty, promotes citizen wellbeing and social welfare development,” said the Fiji Government’s Department of Finance in its recent draft of a new National Development Plan.
“The rapid restoration of air travel and robust tourism demand, including during the off season, helped 2023 tourist arrivals reach 104% of 2019 levels,” observed the IMF. “With GDP growth at an estimated 8%, output surpassed pre-pandemic levels in 2023, witnessing a faster recovery than other tourism-based Pacific Island countries.”
Plus, by extending its network in the key markets of Australia and North America, Fiji Airways flagged even broader ambitions, not just to increase tourism purely bound for Fiji, but also to secure a slice of the lucrative traffic flowing across the Pacific between Australia, New Zealand, the US and Canada, and to convince travellers between these markets to break their journeys with short stays in Fiji.
In July 2022, when the Fiji National Provident Fund (FNPF) bought its 30% stake in Fiji Airways, the fund’s CEO, Viliame Vodonaivalu, highlighted not just its optimism of a healthy return on investment but also the betterment of the nation which a strong airline could deliver.
“Fiji Airways has always been on our radar,” he said. “We saw this as an opportunity and believe that there will be full recovery of our investment, given that this strategic national asset has high return potential both in interest income and capital appreciation, apart from the obvious tourism synergies.”
More than that, it was “an enabler to other investment opportunities such as medical tourism, aged-care and commercial agriculture ventures for export, whilst also having a synergistic relationship with FNPF’s substantial hotel portfolio”, Vodonaivalu added.
Fiji Airways has also vertically integrated into the accommodation sector, increasing to over 50% its stake in the company which operates Fiji’s Sofitel Resort and Spa, and investing in Vatu Talei Pte Limited, a new 190-room resort development expected to open late in 2026.
In doing so, the airline has sought to help address a long-term impediment to its own and the nation’s growth: a shortage of quality accommodation.
In addition, it has secured a contract to manage Fiji’s airports, cementing its role not just as the national airline or even a primary tourism driver, but also a significant provider or manager of key and complementary national infrastructure.
Viljoen arrives
Viljoen joined Fiji Airways in 2015 after more than six years with a not-dissimilar small-nation airline, Air Mauritius, where, after starting as Chief Financial Officer and Chief Information Officer, he became CEO. He previously held key roles with three carriers in South Africa, including CEO of South African Airways.
Beneath the generic aspiration of growth, a key metric for Viljoen and his team at Fiji Airways is to build global awareness of the nation through its airline, initially via the profile afforded by global awards programmes as well as the word ‘Fiji’ in giant letters on its planes.
“We made a decision in 2016 that the national carrier was not going to be just another small airline, and that we would never be satisfied with the status quo,” said Viljoen.
In June, for the second consecutive year, Fiji Airways was named ‘Best Airline in Australia and the South Pacific’ in the global Skytrax awards for excellence, as well as claiming its fourth award for ‘Best Airline Staff in Australia and Pacific,’ and last year achieved its ambition to be recognised as a Five Star Major Airline in the annual ratings programme of the US-based Airline Passenger Experience Association.
Beyond profile-building accolades, Viljoen also committed to embedding his airline in a major commercial alliance to achieve global connectivity and broader product access for customers.
The oneworld partnership was chosen, and in 2019 Fiji Airways was admitted as the first oneworld Connect partner – a kind of alliance-Lite category as it built up to full membership.
That bigger target was reached in Dubai in June this year during IATA’s annual general meeting where Fiji Airways was officially named as the 15th member of the alliance, its 21-aircraft/26-port operation to be integrated into oneworld within 12 months.
Its regional division, Fiji Link, was added as an affiliate member, further extending oneworld’s collective global reach to include destinations within Fiji and in the neighbouring nations of Tonga, Samoa, Tuvalu and Vanuatu.
“This milestone will have far-reaching benefits for Fijians, including enhanced domestic services via Fiji Link and increased global connectivity, drawing more international tourists to our islands,” said Viljoen.
Even before its oneworld acceptance, Fiji Airways was planning significant growth, boosted last year by the arrival of its two latest A350s, taking the fleet of these planes to four and enhancing the carrier’s ability to extend long-haul operations.
It flagged potential targets including additional destinations in the US, plus Beijing and Shanghai in China, and Seoul in South Korea.
As well, it increased focus on operational self-reliance by progressing expansion of the Fiji Airways Aviation Academy, near the airline’s Nadi Airport hub, installing full-flight CAE pilot training simulators for A350s and ATRs alongside its existing A330 and B737 units.
Sustainability strategy
But with increased flights come increased carbon emissions, contributing to climate change – a huge threat to Fiji and surrounding Pacific nations.
The World Bank says Fiji faces “significant disaster risk levels” and has ranked it 124 out of 191 countries based on exposure to coastal flooding and tropical storms, which it says are “of major economic significance in Fiji”, and cost the equivalent of 5% of annual GDP.
Viljoen needs no convincing on climate.
“As the national carrier of a small island developing state, we are acutely aware of the need for urgent action to combat climate change,” he said. “As an airline, most of our carbon emissions are generated by using jet fuel, so to meaningfully reduce our carbon footprint we must embrace using a blend of sustainable fuels.”
The carrier is progressively upgrading its fleet, not only with its more fuel-efficient A350s but also the 737 MAX-8s, seven of which are currently deployed on routes to Australia, New Zealand, Hawaii and Pacific islands, alongside older 737-800s and larger A330s.
Last year, the airline performed its first flight using blended SAF, part-powering its newest A350 from Singapore to Fiji, the last leg of its delivery flight.
“Many larger airlines with more resources have already bought up significant quantities of future SAF capacity, making it somewhat challenging to secure supply,” said Viljoen.
“As demand for sustainable fuel increases, we will see investment and production ramp up, and it will become much easier and more affordable for airlines to acquire SAF. We are exploring all options, including the potential for SAF production in Fiji.”
The airline is also preparing a global fuel supply tender to secure access to SAF, and as a member of oneworld it is likely to be bound by the alliance’s commitment to use SAF on flights from California, where it serves both Los Angeles and San Francisco with A350s.
But how successful it is at decarbonising remains to be seen, particularly given the recent abandonment by minor shareholder and major competitor Air New Zealand of its own 2030 carbon reduction targets, citing delays and uncertainty in deliveries of new, more efficient aircraft, and concerns about government and regulatory commitment to facilitating affordable supplies of SAF.
While it shapes its carbon reduction strategy, Fiji Airways continues to expand its network and flight frequencies to increase the number of visitors it can fly to its home.
Since its acceptance into oneworld, participation in which will formally begin next year, Fiji Airways has joined the frequent flyer programme of American Airlines, the world’s biggest carrier and a founding member of the alliance.
Building on that partnership, the carrier has just announced that from December, it will introduce three nonstop A350 flights per week between Nadi and American’s primary hub at Dallas Fort Worth, the third-busiest airport in the US, the fourth busiest in the world, and the airline’s fourth US gateway.
As well as connecting Fiji directly to American’s giant hub, the new route will also enable Fiji Airways to pitch for passengers and freight between the US and Australia and New Zealand, flying via Nadi, and competing against other US carriers and two of its own shareholders, Qantas and Air New Zealand – a risky but huge opportunity.
Although it is progressing strongly, Fiji Airways has cautioned that “2024 will be a very different year to 2023”, given the impact of increased competition and geopolitical tensions. The challenge of sustaining continuity is huge.
But for now, André Viljoen could not be happier.
