News Backgrounder
Fiji Airways’ steady path to recovery
Fiji Airways has upgraded its cabin product and ordered new aircraft as part of a five-year plan to lure Asian travelers to the South Pacific.
March 1st 2014
Volatile market conditions and overcapacity are the major challenges that Fiji Airways boss, Stefan Pichler, has faced since he took over the rebranded South Pacific carrier last September. Read More »
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| 'We need to be sustainably profitable to pay off our debts and fund new aircraft ' |
| Stefan Pichler Chief Executive Fiji Airways |
But the former boss of Kuwait’s Al Jazeera Airways is undaunted by the challenge of turning the episodic financial fortunes of the carrier into a sustainable and profitable airline.
Pichler told Orient Aviation that the airline’s new five-year plan will increase flights between Fiji and Asia by 144%. “This is our plan, we believe in it and we will make it happen,” he said.
At present, the carrier’s only Asian destination is Fiji-Hong Kong. Pichler was coy about the Asian destinations he has in mind, but it is generally accepted that Japanese and Mainland Chinese tourists are primary targets in the five-year plan.
“In terms of our network expansion plans, we will not be taking a ‘trial and error’ approach. We are focused on the deliberate selection of new routes teamed with the best airline partnerships. We will announce these as they are finalized,” said Pichler.
Fiji Airways, formerly known as Air Pacific until its rebranding in mid-2013, is 51% controlled by the Fiji government with Qantas Airways holding 46% equity in the carrier.
The airline, which has endured several financial setbacks in its operating life, flies scheduled services to neighbouring South Pacific countries as well Hong Kong, Australia’s Brisbane, Melbourne and Sydney, Auckland and Christchurch in New Zealand and Honolulu and Los Angeles in the U.S.
Pichler plans a 25% increase in the airline’s fleet by 2017 with the purchase and/or leasing of four new aircraft, including one A330-200, two B737-800s and two ATR72-600s (one as a replacement for an ATR 42-500), by 2017. The additional aircraft will facilitate the company’s plans to increase its capacity across all markets by more by 35% and raise passenger numbers by 39% in the next five years. Already it has taken delivery of new A330s to replace its three 747s.
Proposed capacity increases include Asia at 144%, Pacific Islands at 86.6%, New Zealand at 58.9%, Australia at 28.4% and 12.3% on domestic routes. Seat availability on its U.S. routes will be unchanged. Pichler will put in place an aggressive financial target to increase operating profit to a minimum of US$52.6 million, based on fuel prices and currency exchange rates remaining at current levels.
The carrier made an after-tax profit of US$7.4 million last year compared with $6 million in the previous 12 months. Pichler said the airline has been performing ahead of financial forecasts in recent months despite increased competition from Virgin Australia and Jetstar in the Australian market.
“It is our aim is to be a world class boutique airline. We must match that goal with an ambitious but solid financial growth plan that expands on current successes and takes our airline to a new level. We need to be sustainably profitable and have a healthy cash flow to pay off our debts and fund new aircraft,” he said.
The airline boss spent four years running Jazeera Airways after he left Virgin Blue (now Virgin Australia) in 2009, where he had been chief commercial officer for five years. He is credited with turning around the Kuwait-headquartered carrier by achieving some of the highest margins in the industry for Jazeera’s 2011 and 2012 fiscal years.
