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No Govt Support Blamed for Airline Collapse
PM Prince 'Ulukalala on Royal Tongan's demise

Ken Brown
Boeing 757...contributed to the collapse of Royal Tongan Airlines.

PRINCE ‘ULUKALA LAVAKA ATA’S CRITICS wanted him to admit it was a big mistake; and amidst the chaos which afflicted Royal Tongan Airlines’ second shot at providing international air services, some called for his resignation. But the flying public’s support, however, was mixed.
Royal Tongan Airlines’ final closure brought forth a combination of sadness and bitterness in the community.
Local politics festered in a sea of innuendoes and finger pointing in light of disturbing allegations attributed to the collapse of the national airline.
With liquidation and the tallying up of the total damage to the country’s finances yet to be underway, Prince ‘Ulukalala Lavaka Ata, Tonga’s prime minister as well as aviation minister, agreed to talk to ISLANDS BUSINESS regarding the collapse of Royal Tongan Airlines.
Here an excerpt of the interview:


Q. What led Royal Tongan Airlines to get a Boeing 757 for its international services?

“It started with promises of money from ministers and members of Parliament. I initially said yes to T$18 million for the first five years, but later on the numbers were revised, downwards. Early on, after being appointed aviation minister, I realised the important economic role Royal Tongan Airlines (RTA) play—both as a domestic and an international air service operator. To begin a business, it’s hard to do anything without money; even cars need gas. An opportunity developed, however, when I attended an aviation assembly in Montreal. There, I met my counterpart from Brunei. The Minister of Brunei, understanding the importance of a national airline, invited me to visit (Brunei). While there, I met with the Sultan, to whom I explained my vision to develop Tonga’s national carrier for the economic well-being of my people. Brunei, politically, is a very sensitive country and sentiments for support were mixed. However, in view of the close ties the Sultan has with Tonga via his relationship with Crown Prince Tupouto’a, he instructed Royal Brunei Airlines to provide, at cost only, all the assistance RTA would need to realise its potential. It was a hard deal. I challenge anybody to get that today, with no money. The only way RTA could provide a stand-alone international service was in association with a recognised airline. Upon my return to Tonga, I restructured RTA at board level; appointed a new CEO, and gave clear instructions to develop RTA as an international carrier, as well as regional.

“The feeling at that time was that cabinet and members of the House understood the importance of aviation in the development of our economy. The airline was being run by others who put their motives first, ahead of our national needs.”

Q. Do you think anything could have been handled differently to ensure there was financial support for Boeing 757?

“It was never there. There were 2 votes on motions read, resulting with a no‚ on the first; a support fully on the second, but no money was given. Between votes, formal and informal dialogue took place; a presentation was made in Parliament by the RTA chief executive. I received written questions from Parliament and information was made available to them. It was not a shock that RTA was already losing money—T$12 million was the projection. But its market share was increasing and comparatively, the projected Boeing 757 loss was only T$8 million. As aviation minister, I informed the RTA management that they had to boost capacity, provide services that were more accessible to the public via more scheduled flights, and to provide a route structure that was sustainable. Moreover, a route structure that suits our country’s needs, as opposed to being at the mercy of another nation’s international carrier needs.”

Q: Would you clarify that for me, Prime Minister?

Prince ‘Ulukalala Lavaka Ata...need a national airline for Tonga’s economy.

“Schedules maintained by other carriers for example, had been changed without regard to Tonga’s financial development. Changes were made to Air New Zealand’s Boeing 767 flights in and out of Tonga that limited Tongan maritime and other industries’ ability to match air cargo demands with the new schedules. The lack of control over international scheduling was detrimental to Tonga’s economic development. As for Tongan residents, who comprise the air travelling public, fares were often raised to five times more expensive for flights of equal distance; for example: Auckland/Tonga vs. Auckland/Sydney. For the average citizen, RTA was basically a very expensive domestic service operator; was ill-managed, had always lost money, and was equipped with the wrong aircraft. To improve the domestic market, both tourism and trade were necessary to make the airline industry viable for all Tongans. After the wet leasing of the Boeing 757, I issued restrictions that the carrier was to recover costs only; returning financial surpluses in the form of better services and lower fares. From the beginning there was a school of thought that my vision and aspirations were unachievable by Tonga; politicians grabbed onto this at their first opportunity.”

Q. Would it be fair to say, that RTA became the most politicised venture in the country?

“Figures shown to me indicated that RTA at first would be operating at a loss and eventually break even, was proving within the first year to be on schedule; and, that the market was slowly being dominated by the RTA international presence.”

Q. RTA’s expansion plans to include services to Honolulu were steeped in controversy, especially with the newly invoked security measures adopted by the United States. Could the airline have met them and still made a profit?

“The United States had just changed the security codes to condition orange and at the time RTA met those measures. Polynesian Airlines depended on Tongans from here to fill its New Zealand and Australian route. If RTA had been kept running, I think it was possible to fly the route and earn a profit; we needed it.”

Q: Would it be fair to say that with those low fares came increased financial strains? Were other options forthcoming?

“Factions within government informed the Privy Council that funds could be made available from external interests, but they would, however, require a Royal Commission to substantiate RTA’s potential.”

Q: What role did the Royal Commission play?
“It was initially put forward as a vehicle to determine RTA’s viability for investment purposes.”

Q: Do you think, sir the commission performed as it was intended?

“People wanted too much, or it was the wrong people maybe—people contrary to RTA’s interests. Two of them were interested in operating international and domestic airlines themselves. The Royal Commission heightened RTA’s political profile and indeed did not serve as a vehicle for financial assistance, but rather as a vehicle for political discouragement. Not only were the RTA board members left with the difficult task of finding funding from external sources, but they found themselves up against a six-month deadline in which the airline would have to file for bankruptcy or appeal to the House to reconsider its decision and approve the original funding proposal. This also threw into question the commitment from Royal Brunei in assisting a national carrier that did not have the support of its own government, and appeared regularly in media reports of a negative nature.”

Q: Has the relationship with the Sultan of Brunei suffered because of the airline demise?

“National leaders tend to have larger world views, it wasn’t personal; it was business. Both the chairman and deputy chairman of RTA fought hard in cabinet to convince their colleagues that assistance must by given to keep RTA afloat until the House reconvened and could reconsider its decision to halt further financial support. It was then that the government created a sub-committee specifically to look into the RTA issue. And against the chairman and deputy chairman’s advice, recommended the RTA’s closure and liquidation.

Q. Were the recent adoption of a single-airline policy and ministerial changes made with the specific intention to help bolster the country’s damaged economy?

“It’s the other way around. The economy is too small to support more than one airline; nothing changes the economy like aviation. People volunteered to clear land and help extend runways in the Niuas; in ‘Eua, The new DC-3 services offer opportunities that have never been open to them before. This resulted from policy—not from operators deciding to save money by purchasing smaller aircraft to service the outer islands.”

Q: Looking back, would you do it again?

“Hindsight is always 20/20; if I had known in the beginning that they weren’t going to give me the money—no.”

 





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