Is this the Beginning of End for Airlines PNG?

Burnt remains of flight CG1600
Burnt remains of flight CG1600. Image source unknown.

The recent crash in Madang has sent cold fear to potential clients of the airline. Without a doubt many people will not be looking to other alternatives given the company’s safety record. Could this be the catalyst for the company to fold?

The company was initially established as Milne Bay Airlines (MBA) and formally began operations in 1987. However, it was not long before their light aircrafts started having incidents and November 30 1991 was the first case when a crash occurred in Gurney Airport which saw five people hurt and the pilot suffered a broken leg. Fortunately, there were no fatalities.

However, December 15, 1992, proved fatal for 6 people including the expatriate pilot when the Norman Britten Islander they were travelling in struck a mountain near Alotau, Milne Bay Province. The in July 12, 1995, another disaster struck when a Twin Otter exploded and crashed shortly after takeoff from Gurney. This time the number of fatalities doubled, 15 people died and an investigation revealed a kerosene leak in the cargo section caused the explosion. However, the next year would prove more tragic.

On May 11, 1996, another Norman Britten Islander belonging to the company flew into a valley near Oumba, the pilot attempted to do 180 degree turn but it was too late, forcing the aircraft to crash into the trees. Only 1 passenger was killed. Unfortunately, a couple of months later, on July 9, a Twin Otter struck a mountain under cloudy conditions on approach to Mendi. 20 lives were lost.

3 more people died in 2004 as one of their Twin Otters crashed into the remote mountains of Goilala. The loadmaster, Nati Ario, survived. 2009 and 2010 also proved a bad year for the company as two more crashes were recorded during this period.

On August 29, 2009, flight CG4684 crashed under bad weather in the Owen Stanley Ranges near Kokoda Airstrip killing all 13 people on board. Then on January 20 a year later another accident occurs while an EMO Twin Otter tried to take off at Kikori Airstrip. There were no fatalities but the aircraft suffered extensive damage. Unfortunately, the worst was yet to come.

On Thursday October 13, flight CG1600 from Lae to Madang crashed in Marakum in the Rai Coast District. The plane, a Dash-8, carried 32 people, 28 of whom were passengers while 4 made the crew, went down and then exploded killing 28 people. The two pilots survived and so did a flight attendant and a passenger thanks to the efforts of the locals who rushed to the scene and managed to save them.

The crash not only has taken away lives but the people’s confidence and trust in the company. A good number of people have expressed openly that they will not fly with the airline again.

The chairman of the airlines, Simon Wild, has tried to reassure the public with a press statement released in the papers. However, the records paint a very scary picture and it will take time for people to regain confidence – something that may well effect the company’s operations and might become a catalyst for foreclosure.

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?