The finding balance 2023 benchmarking and performance and building Climate Resilience in the pacific state-owned enterprises ADB report zeroed in the Samoa Airways losses recorded over the years amounted to over $51 million tala.
According to the report Polynesian Airlines operates international and domestic routes.
The international arm is marketed as Samoa Airways and commenced operations in November 2017; in the 3 years since, it has accumulated losses of $51.5million.
Cumulative losses have wiped out shareholders’ funds which, by 30 June 2020, were $17.9 million.
The report says this is not the first time the government has owned a state-owned enterprise that is operating an international air service.
Polynesian Airlines flew internationally until 2005 and was also loss-making—cumulative losses from 2002 to 2004 totaled $48.6 million.
In its final year of operation, the airline’s annual losses equated to 20% of the government’s budget.
In 2005, the government signed a joint venture with Virgin Australia to establish Polynesian Blue, which was 49% owned by the government, 49% by Virgin Australia, and 2% by private interests.
While Polynesian Blue’s accounts are not publicly available, it paid the government a $5.7 million dividend in 2016.
A post-transaction assessment was undertaken by the International Finance Corporation, which noted a 130% increase in inbound seat capacity, indirect tax collection from additional tourist arrivals of $1.86 million, and a positive fiscal impact of $6.9 million in the period 2005–2009. From 2005 to 2017, Polynesian Airlines only flew domestic and American Samoa services but was profitable, earning an average 6% return on assets over that period.
The government’s experience with Polynesian Airlines shows the risks associated with airline ownership, in particular when facing international competition. The decision in 2018 to acquire a B737 MAX, the measles epidemic, and coronavirus disease (COVID-19) in 2020 created significant adverse consequences for Samoa Airways.
The government would have been partially shielded from these consequences if it stuck with the joint venture.
In June 2022, Samoa Airways formally ceased servicing international routes (except to American Samoa through Polynesian Airlines).
