Page 25 - Islands Business October 2024 edition

Aviation Aviation

“Without this ongoing training, these vital missions would training to third-party airlines while enhancing our own
not have been possible.” capabilities.”
Chief Operating Pilot, Captain Aaron Dean, echoed the Looking to the future, Viljoen announced plans for phase
value of the simulators. two of the academy’s development, which will include the
“This facility isn’t just about ticking boxes for training. It’s construction of additional simulator bays, workshops, and
where we hone our skills, practice difficult scenarios, and dedicated offices for instructors.
ensure that we’re flying at the highest standards,” said Dean. The second phase represents an additional FJ$75 million
Viljoen also stated that the Aviation Academy is also spend.
attracting interest from international airlines looking for high- “This is not just a one-off investment; it’s part of our long-
quality training in the Pacific. New Caledonia’s Aircalin is one. term vision for the future of aviation training in the region,”
“This investment opens new revenue streams by providing Viljoen stated.

LAST GASP EFFORTS TO SAVE
AIR VANUATU

By Samantha Magick accepted AV3 as the preferred buyer.
AV3 has agreed to pay US$3.3 million into a fund to pay
As Vanuatu’s government seeks to revive Air Vanuatu, creditors in three tranches, and within ten months of the
the World Bank has pointed to the airline’s collapse as a creditors agreeing to the compromise. Ultimately, 306
cautionary tale about the risks of “opaque State-Owned creditors voted in favour of the compromise, and 18 opposed
Enterprise administration”. it.
In it’s Pacific Economic Review released in October, the Bank On October 2, Vanuatu’s Supreme Court granted orders
noted that the liquidation of the airline had led to an almost to terminate Air Vanuatu’s liquidation on the grounds that
2% downgrade in growth for Vanuatu, compared to the March a compromise fund be set up, and that the first payment of
2024 projections. US$1.1 million be made. Those conditions were met and the
Air Vanuatu went into liquidation on May 9 of this year, liquidation was terminated on October 11.
after months of accumulating debt, cancelled flights, labour At that time, Ernst & Young’s Morgan Kelly noted that: “The
shortages, grounded planes, and maintenance difficulties. implementation of the Deed of Compromise maximises the
Stranded passengers were able to travel when Fiji Airways, return to creditors and presents an opportunity for the Air
Qantas and other carriers stepped in, but the damage to Vanuatu business to continue, saving jobs and providing vital
Vanuatu as a tourist destination was immense. The flow of aviation services for Vanuatu.”
workers from Vanuatu under labour mobility schemes to Air Vanuatu’s directors and management have reportedly
Australia and New Zealand has also been disrupted, and other resumed their positions and some domestic flights have
economic sectors affected. resumed. However, Air Vanuatu’s jet was repossessed earlier
The World Bank notes that Vanuatu’s “current account this year, and it is unclear when, or how, international flights
deficit is expected to widen substantially from 2.2% of GDP in will resume.
2023 to 7.4% of GDP in 2024 as travel receipts decline”, and As we went to print, representatives of German aviation
that the cost of restructuring the airline will likely result in a investors, Panaf were in Vanuatu conducting a due diligence
12-13% increase in public debt. on Air Vanuatu and AV3. The Vanuatu government says while
It concludes that tax reform will be needed to increase it is looking at a minority partner, AV3 will retain 51% of the
revenues “such as the introduction of income taxes, fishing shares.
licensing fees, and higher VAT rates” and that non-priority However, the same problems that plagued Air Vanuatu prior
spending should be reduced, “including pausing interim to its collapse, most notably a lack of transparency around
spending measures like increases in public employee how it was being run, have characterised AV3, the Vanuatu
compensation and allowances”. Daily Post has noted.
The newspaper asks where AV3/the government has sourced
AV3 to the rescue? its initial US$1.1 million payment from, how it intends to raise
Ernst & Young was appointed as liquidators of Air Vanuatu in the remaining funds, what offers the other ten interested
May and given the role of restructuring its debts and finding parties made, and whether the existing management and
a buyer. By October, it had recognised US$129.4 million in board members will remain, noting: “The directors of this
creditor claims. mysterious company that’s considered private with VFSC
Eleven entities reportedly expressed an interest in buying and government owned in court are not saying a word to
Air Vanuatu, including AV3, which is a special-purpose entity mainstream media.”
owned by Vanuatu’s Ministry of Foreign Affairs. Ernst & Young

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