Nuku’alofa -January 28, 2021: 12.30pm (Nuku’alofa Times): Profits made by the Lututai Airlines Limited is “by the people and for the people”, Prime Minister Hon Rev Dr Pohiva Tu’ionetoa has said in a statement released today.
He made the statement in response to claims by local businessman Tevita Palu that the “the profits of Lulutai Airlines Ltd are the result of the hard work and sweat of Palu Aviation and Real Tonga in the past 20 years”.
Hon Dr Pohiva said government had to back the setting up of the new airline company following a proposal by senior staff of the Real Tonga company who had been terminated by Mr Palu last year when the COVID-19 lockdown started in Tonga.
Since then the new company has been able to achieve alot of positives, including lowering air-ticket costs.
Since beginning services in September 2020 Lulutai Airlines Ltd , the company has been able to:
(i) reduce ticket prices compared to previous prices in 2019/2020,
(ii) turn financial performance and revenue positively, with costs monitored closely,
(iii) now target to repay all set up costs to Government within a year,
(iv) confirm that all future profits of the Airline, will be paid to the Government, for the benefit of the people,
(v) improve customer significantly, particularly in flight disruption scheduling,
(vi) improve aircraft engineering maintenance to the high standard of compliance required by law,
(vii) conduct an international flight for Covid repatriation,
(viii) achieve a high record for on-time departures and arrivals,
(ix) set a new record for number of flights in one day to Vava’u,
(x) improve cargo services to provide better services for customers.
Lulutai set up
Hon Dr Pohiva said the Lulutai operation is a totally different one from Real Tonga and it was one that government was forced into because of the need that is here locally.
“Tevita Palu’s Real Tonga Ltd (hereinafter “Real Tonga”) began commercial flights in 2013, and has been in operation for seven (7) years. In all seven years, Real Tonga has requested assistance from the Government. Over the same time Real Tonga’s debts to Government significantly increased annually. In these seven years, Real Tonga did not deliver a result where air ticket prices could be reduced for the people of Tonga,” he said in his statement.
“In March 2020, Real Tonga owed debts of more than $5 million to the Government. In addition to this were bank loans, debts to Tonga Airports Limited, and to within the civil aviation industry. Before the two week national lockdown (prohibiting inter-island travel) in March 2020, Tevita Palu terminated or made redundant a number of Real Tonga employees, with little hope of future employment.
” In April 2020, Real Tonga’s aircraft suffered a bird strike in Vava’u and was grounded. This significantly affected Real Tonga’s ability to provide domestic commercial air services. At the same time, by having terminated and made redundant key senior employees, Real Tonga lost a legal requirement for the validity of its Air Operator’s Certificate. This Certificate was temporarily suspended until Real Tonga has completed requirements for engaging its new employees. This is a reason why Tonga had no domestic air services for much of 2020.”
He said the Government of Tonga had no intention to set up an airline.
“Yet this was an essential lifeline service for the people of Tonga. The Government initially explored the possibility of providing significant financial help to Real Tonga in order to enabling Real Tonga to continue services. Another possibility was for the Government to go into a joint partnership with Real Tonga, and for the Government to buy shares. The difficulty was that Tevita Palu’s debts to Government was already far too much, and the conditions Tevita Palu set included the forgiveness of Real Tonga’s debts to Government. Also difficult was that Real Tonga’s Senior Staff were no longer with the airline,” the Hon Prime Minister said.
“At the same time, a working plan proposal was submitted to the Government by Real Tonga’s Senior staff who Tevita had made redundant. Their advice was to set up a completely new airline, with no debts or financial difficulties, with the ability to significantly improve domestic airline services, good for the people, and responsible to the Government. It was to be an airline of the people, for the benefit of the people, not for just one person or privately owned company. It was a difficult decision for the Government. There was much opposition, but in the end the Government took this difficult path and set up Lulutai Airlines Ltd. The result, by the grace of God, is now evident to all.”
He said it was therefore incorrect for Mr Palu to say that “all that was changed was the name, but that the people and the machinery is the same”.
“In actual fact the airline’s vision and purpose is different. Lulutai Airlines benefits more than just one owner and one company. Lulutai Airlines aims to provide more affordable tickets that benefits the customer, while still maintaining the highest level of safety, and delivering a profit to the Government. The company’s management and decision making processes is different,” he said.
“The work systems are different. A new financial management system is used to ensure revenue and expenses are secure. Customer service and innovative ticket products is very important. Overall, the work environment is different, with better equipment, leading to better outcomes.”
For the “Charters” referred to by Mr Palu, “the majority of these charters is for emergency medical evacuation of patients from the outer islands, and this is paid for by the Ministry of Health. Lulutai Airlines does not bear the costs of “Charters”, and all efforts are made to ensure regular scheduled services are not affected. At the same time, the working relationship between Ministries requiring Charter flights, and the Airline, has improved”.
Hon Dr Pohiva said Lulutai Airlines has signed agreements with the Ministry of Tourism for the rental of small spaces in the Tourism offices in Ha’apai and in Vava’u. Lulutai Airlines has also signed rental agreements with Tonga Power Ltd for use of their office in Nuku’alofa.
“This is a good way to improve service by providing ease of access to the customer, and reducing operational cost. This again helps the aim of delivering better products and prices to the customer,” he continued.
It is misleading for Palu to claim that he paid USD$600,000 for the replacement and repair of the engine of the aircraft grounded by the bird strike in Vava’u.
“All expenses for the repair of the engine, labour, shipment of the engine domestically and internationally, replacing and installation of the new engine, was paid for by Lulutai Airlines,” the Hon PM added.