Fiji Airways looks to latch on to New Zealand recovery in growth plans
By Paul McBeth
Jan. 10 (BusinessDesk) - Fiji Airways, the Pacific nation’s national airline, wants to latch on to New Zealand’s accelerating economy as part of a push to more than double operating earnings over the next five years.
The Nadi, Fiji-based company plans to add four new planes, lifting capacity by 35 percent and expand its workforce by 29 percent in the next five years as it seeks to build itself into a world-class boutique airline. New Zealand is a key plank in the strategy, with the airline aiming to boost capacity 59 percent by 2017 from its current 237,390 annual available seats.
Chief executive Stefan Pichler, who joined the airline last September, told BusinessDesk the company anticipates increased tourism spurred by New Zealand’s economic growth, and is considering increasing its Nadi-Auckland and Suva-Auckland routes, or introducing a new destination.
“We don’t intend on grabbing market share,” he said. “This plan is driven by underlying market analysis and growth forecasts of GDP growth, traffic growth between New Zealand and Fiji for the next couple of years.”
New Zealand government figures show annual short-term departures to Fiji climbed 3.8 percent to 110,060 in the year ended Nov. 30 from a year earlier, and were up 8.9 percent from 2011.
The strategic plan, which was signed off by the airline’s board in December, intends to lift available seat numbers on Asia routes by 144 percent, Pacific Islands by 87 percent, Australia by 28 percent and on domestic routes by 12 percent. Capacity on US routes is expected to fall 4.7 percent. The airline’s current capacity is almost 1.32 million.
Fiji Airways is targeting operating earnings of more than F$100 million from the five-year plan, a level Pichler said is more than double its current level, without being specific. The airline reported a net profit of F$17.8 million in the year ended March 31, 2013 on revenue of F$690.6 million.
Pichler said he aims to build the company’s brand, which officially switched to Fiji Airways in June last year, as it becomes “more customer-centric.”
“We need to be sustainably profitable and have a healthy cash flow to pay off our debts and fund new aircraft,” he said.
Fiji Airways underwent a turnaround under previous chief executive Dave Pflieger after sustaining losses from a burst of competition from the arrival of Australian budget carriers Jetstar and Virgin.
The airline intends to expand its workforce, beefing up the number of local employees, in a bid to be “the employer of choice for Fijians,” and Pichler says the targeted growth by almost a third is “digestible” by the country.
That includes reducing its reliance on expatriates, and Pichler said he wants to reverse the pilot ratio of locals to expats which is currently at one-third locals to two-thirds expats.