Interview: Paul Abbot, CEO, PNG Air
What is your outlook for growth in Papua New Guinea’s aviation sector in 2018?
PAUL ABBOT: The market has been flat over the last year, and this is likely to continue until the end of 2018. Few new routes have opened, and at the moment it is more a matter of consolidation as the economic environment is very tight. However, increased competition and investment in the new fleet have benefitted the market.
Freight continues to be an important aspect of business, though there have been economic challenges. General freight movement in the first quarter of 2018 is down from 2017. Part of the problem is that cargo flows very unidirectionally rather than going both ways. Other impacts in the wider economic sense include the rising cost of fuel and the depreciation of the kina, both of which significantly affect our bottom line.
That said, the aviation sector will improve when new resource projects are announced in the last half of 2018 or early 2019, as this will encourage more travel and freight requirements, and generate more discretionary income for the economy. For that reason, companies are investing so that they are ahead of the competition when demand ramps up. Furthermore, Papua New Guineans are frequent domestic air travellers. Some of this is due to the lack of alternative infrastructure, such as roads, but many of these journeys are made to visit family, which is important to Papua New Guineans.
Ongoing investments will result in a reliable and cost-effective aviation segment, which is vital to the country. It will give the population more choices, as well as lift the overall standard of aviation.
How have infrastructure developments affected the domestic aviation industry?
ABBOT: National Airports Corporation (NAC) has embarked on a large investment programme to improve many of its key ports, such as Mount Hagen, Lorengau and Alotau, among others. Although the programme is comparable to the last one, which covered Hoskins, Popondetta and Goroka, this one is on a larger scale. All of these improvements will lift the standard of facilities and improve operational performance, which is very good news for all travellers and operators.
The challenge for operators is to improve customer experience. Unfortunately, at this stage airline operators aren’t necessarily able to increase the number of services or business hours at a large number of ports. A lack of after-hours public transport, security concerns and other such challenges tend to make night operations unattractive for a great majority of the public. Getting the full value from these improvements to infrastructure requires more than just NAC and operator support; it will also acquire action from local communities and the government.
How do you assess PNG’s potential to become an aviation hub in the South Pacific?
ABBOT: There is a desire to make PNG a regional hub, but in my view, there are many obstacles to achieving this. PNG does not have many of the advantages that a hub such as Singapore enjoys. We do not have enough geographic ties, we lack the facilities needed to transform into a hub, and we are too close to larger hubs in this part of the world, such as Australia.
However, there is potential to develop niche segments and piggyback on regional markets so that we can serve the growing tourism sector. We can offer competitive services to Australians travelling to the Solomon Islands, for example, and to Chinese tourists visiting Cairns or Brisbane via Port Moresby.
PNG is famous for its diverse flora, fauna, diving and surfing; however, it suffers from a negative perception regarding its safety and security. Previously, New Zealand also struggled with low visitor numbers, but now tourism is one of the most important contributors to its economy. The same potential for PNG is there, and hopefully APEC 2018 will help promote it as an interesting destination for business and leisure travellers.
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