Another green monster in the merger

Model aeroplane at Air Niugini
Is the merger between Air Niugini and Airlines PNG in the best interest of the people of Papua New Guinea?

The proposed merger between Air Niugini and Airlines PNG is a hot topic this week. People have been throwing their thoughts all over the media with a good majority against it. I must also agree.

That is not to say there are benefits to it, there is, however, the merger creates a monopoly in the aviation market which is my greatest concern. As we all know competition creates a healthy market with affordable prices. However, the merger will remove the current competition. This may create another green monster.

The green monster is a term I like to describe our national commercial bank, Bank South Pacific (BSP). When the Papua New Guinea Banking Corporation (PNGBC) was merged with BSP back in 2002, BSP’s managing director Noel Smith said

…significant cost savings as part of the synergistic benefits of amalgamation…a locally owned entity, the bank would promote stability in the PNG economy, ensuring that a bank with significant market share will make decisions in the best interests of PNG and its people

However, in the last couple of years they have increased and added extra fees. This raises the question if the merger actually achieved its goal of cost saving – the same reasoning is being given for the airline merger.

If the merger happens, air travel will be monopolized by a single airline and who is to say they won’t charge exorbitant prices, higher than the current, for a service that is already unfair. Francis Kalukal puts this out clearly in his letter published in The National (27/09/11).

He questions the logic of the merger and points out that the large costs incurred by Air Niugini are due to inefficient management and operations especially with the frequent cancellations (as an example) which forces the airlines to accommodate travellers in very expensive places like Lae and Port Moresby. He even goes further by comparing the service received by international travellers as opposed to the domestic routes.

Why should someone taking a short flight to Cairns be served a nicely prepared sandwich plus drink (even beer) while someone travelling from Port Moresby to Rabaul are served a small packet of biscuit and a small cup of juice? Yet the domestic traveller would have paid higher airfares than the international traveller.

The merger is pushed by former Prime Minster Sir Mekere Morauta who also used the free education gimmick in 2007 and was the one that introduced privatisation and the BSP merger. The people at the time trusted him because of his economic background. Unfortunately, the BSP merger, although a good business deal, is not a good deal for the minimum wage earner whose hard earned kina gets gobbled up by a hungry green monster.

The idea of merging the airlines is only workable if there is healthy competition. The merged companies would become one, put their resources together and provide services against others. However, in this case, if the airlines merge we are left again with a monopoly.

Is that in the best interest of the people of Papua New Guinea?

Author: Bernard Nolan Sinai

I’m a writer, publisher, IT personnel and martial artist.

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