Vanuatu has initiated the voluntary liquidation of its national carrier, Air Vanuatu, following the cancellation of flights to Australia and New Zealand, which left tourists stranded. This decision was made by the Pacific island's government after representatives from the accounting firm EY arrived in Port Vila and conducted initial assessments of the airline's financial status. The airline attributed the flight cancellations to prolonged maintenance requirements for its aircraft.
By J Prakash
The liquidator, EY, aims to resume normal operations as soon as possible after conducting safety and maintenance checks. Air Vanuatu has confirmed the cancellation of all scheduled international flights, with future flights under review. Efforts are being made to rebook affected travellers once operations resume. The airline operates a fleet of four planes connecting the country's islands and destinations in Australia, New Zealand, and other South Pacific islands.
Virgin Australia, along with Air Vanuatu, operates scheduled passenger flights between Australia and Port Vila, with thrice-weekly flights from Brisbane. In response to Air Vanuatu's grounding, the Australian government has requested Virgin Australia to increase capacity. Consequently, Virgin Australia will operate five flights per week between Brisbane and Port Vila throughout May and June. Additionally, it has applied for approval to increase seat capacity between Australia and Vanuatu and intends to launch seven additional weekly flights between cities on the east coast of Australia and Port Vila.
EY's appointment as liquidator comes amidst a challenging period for the global aviation industry, marked by labour shortages, inflation affecting costs, and credit challenges. Air Vanuatu has faced particular difficulties due to disruptions in tourism caused by cyclones. However, EY remains optimistic about the airline's future and is committed to securing its continuity, recognizing its importance to the people of Vanuatu.
While the liquidation process typically suggests closure, there's potential for Air Vanuatu's relaunch, given its status as a government-owned entity without competing shareholders. Voluntary liquidation can serve as a strategy to restructure operations and renegotiate financial and leasing terms. Airlines often undergo restructuring in the aviation industry, where costs are high, and profit margins can be narrow.
Qantas Airways, an Australian carrier, has pledged support to its code-share customers affected by Air Vanuatu flight cancellations.
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