Tuesday, 10 June 2008

Of profits, rising fuel prices and airfare increases…

When it comes to airfares, local consumers in Fiji have been losing out to overseas visitors enticed to visit the island by large discounts and incentives offered by Air Pacific (Fiji’s international airline) in conjunction with the online travel provider Expedia.

Yesterday locals received some more disheartening news - Air Pacific announced that it will increase its fares from Fiji to Australia and New Zealand by approximately 5% for tickets issued from 11 June 2008, citing the rise in fuel prices.

Keeping an eye on the situation, the Consumer Council of Fiji (CCF) pointed out that the price increase announcement follows hot on the heels of the financial statements released by the Air Pacific Group showing that it made an after tax profit of FJ$25 million (US$17 million) for the financial year ending 31 March 2008.

The group’s profit before tax was recorded at FJ$38.2 million for the 2008 financial year, a 620% improvement on the previous year's profit of FJ$5.3 million.

This is a major turnaround from an after tax profit of only FJ$17,000 [US$11,500] recorded for the previous financial year.

Premila Kumar, CEO of CCF, questioned the fare increase. She commented that these profits were made despite the fact that the airline had to contend with rising oil prices and flight disruptions during the peak season in the past year.

Air Pacific’s CEO, John Campbell, said that although the airline has effective internal cost management and some fuel hedging, it will come as no surprise that Air Pacific can no longer sustain current fare levels with the price of fuel reaching record highs.

What do you think?

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