Air Tahiti Nui : To kill or not to kill?

There has been a heated debate in aviation circles about the recent firing of Air Tahiti Nui CEO Mr. Cedric Pasteur, and replacing him with a person who is mainly seen as a political ally.

Cedric Pasteur was a professional CEO with considerable industry experience and was amidst a restructuring programme for the airline when he was given the mandate to leave by December. Why did a government take such a senseless move is a question that seems to pop up often and the saying that the new CEO will take the airline to the bottom is a saying that is often heard. The fair question of why should such a small country keep such a loss making airline and the belief that it should be closed down (and perhaps be replaced with subsidized service operated by foreign carriers) led me to investigate more about this matter. Should Air Tahiti Nui be killed or not?

Air Tahiti Nui (IATA:TN) is the national carrier of French Polynesia and operates a fleet of five Airbus A340-300s from its base in Papeete. There is a side to this story that not many people have seen yet. To be honest with you, how I first got to know about a country (in fact, a department of France) called Tahiti was when I saw an Air Tahiti Nui aircraft and searched along it. The flashy blue liveried airline acts as the Tahiti’s ambassador to the world and ensures that the Tahiti’s key lifeline – tourism – is kept alive.

 

File:Air Tahiti Nui A340.jpg

Photo by Joe Jones.

The only other airlines that serve Tahiti as of this writing are Air France, Air New Zealand, Air Tahiti, AirCalin, Hawaiian Airlines and LAN Airlines. Most of these airlines cater to the O&D/VFR traffic that are originating from places where there is a significant French population.

For a remote French province in the middle of the Pacific ocean, generating profits on passenger business alone is no easy task. Soon-to-be-former CEO, Cedric, obviously fought hard with this and also suggested taking one of the airline’s five A340s out of service. This act perhaps, might have angered the French subsidiary’s leaders, as that would mean harming the country’s lifeline. In fact, the exact mandate that has been given for the airline since its launch in 1998, is to help develop the island’s tourism industry.

While us in the competitive landscapes want our airlines to be lean and profitable – which is essential for our survival – it really is not the job of Air Tahiti Nui to do the same. It’s primary role is to keep a link between Tahiti and its key tourism generating markets – and the revenue from this tourism, often probably offsets the losses incurred by the airline. In this scenario, Air Tahiti Nui really operates in a different environment than most of us do and are used to.

The topic of getting a foreign airline to run subsidized service son your behalf is a sensitive one, as it could turn out to be a game of playing with the tiger’s tale in your hand. The very same thing happened most recently to Samoa, which had taken a popular foreign carrier to operate subsidized services on its behalf and this carrier asked for a heavy sum, and discontinued the subsidized service as soon as they found better routes to utilize their aircraft on. After all, doing so does not take your country’s name to the world – which is important for tourism – either.

Ideally what should Air Tahiti Nui do is, probably to go with either Airbus A330-200s or Boeing 787-8s and try to minimise its costs. But the company’s present legal structure under the French regulations are believed not to allow the government into making any investments for the airline.

While it does not make sense to have a person with no business knowledge as an airline’s CEO – Air Tahiti Nui finds itself in a unique, as well as tricky, situation. It’s clear that Air Tahiti Nui ought to be brought into profitability and it’s likely that a politician is the least suitable person to do so – but in the question of whether to continue with Air Tahiti Nui or not, the country really finds itself in a catch22.

It would be interesting to see how this turns out, and let’s hope that we’ll continue to see this unique airline with a unique livery, in the future too.

 

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