Talk of airline joint venture between Gov’t and RealTonga

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Nuku’alofa Tonga – Since the diversion order was issued in March, under Tonga’s Declaration of Public Health Emergency, all arrival and departure flights outside of Tonga were suddenly canceled. This left Tonga’s only domestic airline, RealTonga, in a financial crisis.

Tension over lack of government assistance is now turning into a possibility of a joint venture between RealTonga and the government.

The privately owned RealTonga, in its 7 years of operation, just launched weekly air service to Apia, Samoa, last year.

RealTonga’s plans for future expansion in the region looked promising, but are now on hold due to the pandemic.

Since Tonga closed its borders, CEO of RealTonga, Tevita Palu, saw 70% reduction in cash flow, and workers laid-off.

Their annual operating budget was $18m, while the airline operated at a loss, CEO Tevita Palu explains, his other businesses supplemented the airline.

Palu asked the government for financial help from the COVID-19 aid package. This was government funds intended to assist the private sector during the lockdown restrictions.

“The government said no, instead, they are planning to start a national airline,” said Palu.

Minister of Finance, Tevita Lavemaau, told 87.5FM, “The airline was insolvent and owed millions to the government.”

According to Palu, their debt to the government is largely due to paying airport fees and dry leasing two aircrafts, MA60 and Y12, that were gifts from China.

Palu explains, “The MA6O has been grounded 75% of the time due to staff training, mechanical issues, and operational factors.”

Similarly, the Y12 is payload restrictive, operates at a loss. Further, government has not paid any of the agreed upon subsidy.

Currently, RealTonga has not been in operation since their Saab aircraft had mechanical issues after a bird strike during takeoff at Vava’u airport last week.

Palu is awaiting the Cabinet’s decision for a possible joint venture.

“This is the best option that I see. Best for the travel public, good for RT, and for Government to do their supporting role,” states Palu.

Domestice air service to Vava’u, Ha’apai, ‘Eua, and Niua, are up in the air until the government and RealTonga come to terms.

The public is back to using ferry service until further notice.

 

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