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Air Marshall Islands’ ongoing downward spiral

Lack of money fuels air woes

In 2003, an ADB report said: “The financial position of Air Marshall Islands is precarious—it has never made an operating profit and depends heavily on government subsidies.” Ten years on, a report issued late last year had this to say about the government-owned national airline: “Air Marshall Islands has been a company in crisis for many years—continually operating at a loss, with government support only on a crisis-management basis, with weak management and government involvement in operations.”

Despite reports detailing the airline’s woes, and pleas from the Marshall Islands Chamber of Commerce and donor agencies, the government has shown little interest in either reforming the airline or letting private companies operate domestic air services. This has undermined private sector tourism development because no one can count on planes arriving or departing on schedule.

The country’s flagship scuba diving destination at Bikini Atoll, for example, shut down in 2008 after a dozen years of increasingly profitable operations because international divers were repeatedly stranded by irregular air service. For a week in April, both Air Marshall Islands (AMI) planes were grounded—again—waiting for parts and at least one of them would not get back in the air until last month.

The larger Dash-8 resumed flying after just a week’s disruption, while the workhorse 19-seat Dornier, which normally services most of the outer islands, was grounded from late March awaiting landing gear equipment, and was down for about six weeks. A lack of funds to purchase needed spare parts continues to hurt the government’s national airline, resulting in longer grounding periods of aircraft that undermine the airline’s ability to generate revenue. For the Dornier, replacement of landing gear equipment is required after a certain number of landing cycles or flight hours.

It is among aircraft equipment that has a known replacement schedule, but AMI didn’t have the US$50,000 needed to purchase it in advance of the deadline. The national government approved a $100,000 emergency subsidy at the end of March, which allowed for purchase of the landing gear equipment. But this is only one of many parts needed, “and we don’t have the money to buy them,” said airline General Manager Jefferson Barton.

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