Air Tahiti Nui Chairman and CEO, Michel Monvoisin, says that profits in the aviation value chain are still unevenly distributed
What is the secret behind the airline’s positive performance in recent years?
We are doing well. We have seen continuous growth since 2013; and 2015 was a particularly good year. After years of surprises, shocks, and downturns for the industry, that’s good news.
It’s giving us some reserve cash to invest and that will help us in the future. And it will help French Polynesia too as we are the flag carrier and a vital part of the economy.
The current Tahitian Government and President have been in place for four years, giving us the stability we need.
It is no coincidence that we have been doing well in that time. The lower fuel price and tourism growth have played an important part too.
But before that, we had a particularly turbulent time locally. There were 11 Presidents in 10 years.
We are state-owned and it is good to know that government understands and supports the work that we do in connecting the country to the world.
But we have to be sustainable in our own right and we’ve been able to post double-digit profit in the last three years. It is a unique business model and so we do face unique challenges.
What changes are you making as part of your future strategy?
We are moving our fleet to the Boeing 787-9. The first one will be delivered in November 2018.
That is going to be a massive change for us. It will be like having a whole new airline.
The 787-9 will be the perfect aircraft for our long, thin routes. It will be particularly important for the Asian market because of its range. Buying the 787-9 shows our maturity as an airline and how far we have come.
The Airbus A340 has served us well. It has been a great aircraft for us. But we’re going to two engines from four and we’ll be far more fuel efficient.
The other positive step forward will be increasing our codeshares to expand our network
In any case, running a widebody aircraft is complex and we are a small airline. A lot of the work has to be sub-contracted.
Of course, we always ensure we have fully trained people as well because of our remote location. We have to know how to do things ourselves if need be. That will always be the case.
We make sure we have qualified people across all our departments. There are some ex-pats but largely it is a local workforce all trained to international standards. And the change in aircraft types won’t affect our pilots. They will be fully trained.
And the other positive step forward will be increasing our codeshares to expand our network. The future is really exciting.
How important is the airline to the prosperity of the country?
Tahiti is in the middle of the South Pacific. You do have to look at the map to appreciate just how isolated we are and how important aviation is to the country.
The shortest route we fly is a five-hour trip to Auckland. And we fly to every continent except Africa.
We are highly dependent on inbound traffic and there is a structural limitation in our growth
We are vital to tourism and tourism is vital to the Tahitian economy. But if we want to sell more airline seats then Tahiti needs to build more hotel rooms.
We are highly dependent on inbound traffic and there is a structural limitation in our growth, which is the availability of hotel rooms in Tahiti.
I am also Chair of the Tourism Board, so I know the problems we face and we are all working hard to overcome them. The government is looking for investors that can help build the right infrastructure.
Getting partners to manage hotels and resorts is easy but finding the right partner for the initial build is not so easy.
Is the local aviation infrastructure keeping step with your development?
Unfortunately not. Our airport is old and it is expensive. It is an ongoing challenge and we cannot offer the level of service we want to offer.
But the facts are: we fly about 500,000 people a year; we are a €300 million company flying ultra-long range. That is the reality.
That isn’t a lot of traffic, we are not a big company, and so even with growth we are not talking big numbers. That makes the argument about needing new infrastructure quite difficult.
Is the voice of smaller carriers loud enough on the global stage?
It is not so much a question of having a voice, but rather a question of being listened to. I don’t think smaller airlines have the influence they should have.
There are questions that are important to an airline like ours. Where an airline AOC is registered, for example, and issues surrounding market entrance and exit are critical.
It would be good to be asked to be more involved at the industry level.
What are the main industry trends affecting Air Tahiti?
The positive trend has to be that airlines are finally achieving the cost of capital. That will attract investors and allow airlines to develop. We have to be happy about that.
But, we have to accept the other side of the coin. There are low fuel prices, low interest rates, and money is easily available. That encourages new entrants or airlines to take market position by burning cash.
A small airline like Air Tahiti Nui serving a very specific market and entwined with its home country necessarily takes a long-term view for all its decisions.
Labor, airport charges, and many other areas have costs that are going up
We work hard to do things right for the country and we are prepared for short-term pain for long-term gain.
But other airlines can come and go. And they can go quickly. I don’t think that’s the best way forward for our economy or for industry.
The people on the islands are very sensitive to air fares because air transport offers vital connectivity.
But our costs are going up. Labor, airport charges, and many other areas have costs that are going up. It is very difficult under that kind of pressure to be sustainable.
Another ongoing concern is the distribution of profit in the aviation supply chain. I’m not sure that has changed significantly and the better airline financial performance shouldn’t disguise that fact. Our partners always do a little better than the airlines and yet we’re the ones facing the end customer.
Are you particularly concerned about low-cost carrier competition?
LCC competition in one of our neighbors, Hawaii, is crazy. It shows what could happen here in time.
Low-cost carriers are a challenge and, for us, that challenge will only increase. Some of them are investing heavily to take market position.
Our long, thin routes protect us to a degree because not many airlines are interested in those.
The reason they aren’t interested is because they are hard to operate profitability. We know that only too well. But the proof of our strategy is that we are still here!
Will safety across oceanic airspace be improved thanks to the new tracking standard?
The airport has implemented automatic dependence surveillance – broadcast (ADS-B). We will have Boeing 787s with highly developed avionics on board and we have asked Boeing to ensure we have the best equipment available.
We are pushing the authorities and the manufacturers and suppliers to give us the tools we need
We simply must be able to track an aircraft everywhere it goes.
We are pushing the authorities and the manufacturers and suppliers to give us the tools we need. We have smartphones that can tell us exactly where we are in most places.
The fact that we can’t do that with an aircraft is astonishing. We have to have tracking everywhere. Without exception. It’s the right thing to do for our passengers.