Mr. Campbell, you became
CEO of Air Pacific on July 2001, only 2 months before
September 11th, a date that will be remembered in this
industry. What were you doing, how did you find out about
the September 11th attacks?
I was in hotel bed in Auckland. I received a phone
call at three o'clock in the morning as we had a 747
on route to Los Angeles. The question was if we should
turn the aircraft back or not and we decided to bring
it back. Thank goodness we did, otherwise we would have
had one of our airplanes caught in Los Angeles for the
next five days. I remember the day very well and always
will.
Concerning the background of Air Pacific. It has
been operating for more than five decades now. It is
a Fiji company that has been profitable since 1985.
If you had to point out two or three reasons for that
success, what would they be?
Air Pacific has been profitable for 18 years. It was
unprofitable only two years, 1987 and 2001. Success
comes from the same critical elements as in any other
business: Keeping a close control on costs and managing
the rate of production so that production parallels
demand. It becomes necessary to stimulate demand from
time to time and an airline company will always do that
by promotion and marketing activities. Another factor
for success has been our ability, even though we are
relatively a small company, to have excellent management
data. We have worked very hard on technology to ensure
that we have the information to be able to manage properly
at all times. Quality decision making is very important
and must be supported. The management team is highly
qualified and have very wide experience. This is a small
company, people accept broad responsibilities and this
supports decisions. The other key element for success
has been that we focus on Fiji. We do not pretend to
be a global company, an intercontinental airline, we
serve a specific tourist demand and focus on key source
markets into Fiji. This way, we can quite accurately
forecast the level of demand under normal economic circumstances.
In 1985, Qantas and Air pacific became strategic
partners and formalized a management support agreement,
one-year later Air Pacific started being profitable.
How do you measure the importance of good partnerships
for the future growth of Air Pacific?
Early in the 1980's, Air Pacific became a little ambitious
and decided to enter into some lease arrangements for
a DC10 aircraft to service the USA through Honolulu
with connections onwards to Los Angeles. For a small
company like Air Pacific it probably was brave to do
that but it did not bring a profitable conclusion. We
accumulated losses up to $36 million FJD and the company
was technically in bankruptcy. It had to be supported
by the Government of Fiji otherwise it would have failed.
Then, the Government of Fiji invited a number of overseas
airlines to submit management proposals to solve the
situation. They looked at international airlines for
operational management support and systems development
in order to allow the business to recover. The tender
was a vigorous campaign in which a number of airlines
participated and Qantas won. Qantas, in turn, brought
a management team to the airline and made a first critical
decision of leasing to Air Pacific, on a very inexpensive
basis, a 747 to operate the Australia-Fiji route which
became a profitable route for the company. Backed by
loans, this gave a stable source of income that enabled
the business to be rebuilt. There was a significant
process involving personnel training, technical investments
and various other developments over a period of four
years. After those four years, the Qantas team withdrew
and left management to the developed and trained Air
Pacific team. It was a commercial opportunity for both
parties and in the end, the agreement between the Government
of Fiji and Qantas evolved, the loan was converted into
equity and today we can talk about a long term stable
relationship. The Government of Fiji is the principle
shareholder with 51% of the company and Qantas owns
46.3%. The rest of the shareholding is divided among
various Governments of neighbouring countries.
How does the merger agreement between Qantas and
Air New Zealand affect Air Pacific and what is your
opinion about this issue?
Because of Qantas' shareholding in Air Pacific, we
are captured in this process. We have to be part of
the arrangement and therefore we hope to have the future
opportunity to co-ordinate marketing efforts with Air
New Zealand as we have already done with Qantas. We
already have an excellent technical support arrangement
with Air New Zealand. When it comes to major maintenance
we must rely on Qantas and Air New Zealand as our partners,
we cannot afford to be without one aircraft as our fleet
is only five at the moment. Our agreements allow us
the quick replacement of an aircraft, access to spare
parts, to training, to simulators and to technical expertise.
We are a small company and we cannot generate all these
things ourselves. This potential commercial partnership
is really going to increase our ability to function
and to be profitable. Most of the airline business in
the South Pacific is based on tourism, there is not
much business traffic in the area so must of the major
intercontinental airlines do not operate here as they
would find it hard to make a profit. We offer partner
airlines the possibility of spreading their network,
to link their major networks through the hub of the
Pacific, Fiji, into nearly all countries in the South
Pacific.
Besides the airline industry, what other partnerships
is Air Pacific involved in?
We have a number of stakeholders we work with and also,
because we are a tourism based company, we work in partnership
and harmony with the industry. We have to understand the
problems and the needs that the industry is facing so
we work very closely with the Fiji Hotel Association and
with the Society of Fiji Travel Agents but also with Aviation
partners like Airports Fiji Limited. One of the most important
partnerships we have is with the Fiji Visitors Bureau
because they are in charge of marketing Fiji abroad to
bring tourists into Fiji. |
You mentioned
before that Air Pacific only had two unprofitable years
in the last 18 years, the most recent being 2001. Is Air
Pacific financially recovered? What are your expectations
for 2003 and your commitments with the Tourism industry
in Fiji?
We achieved turn around from an operating loss of
39.5 million FJD in 2001 to a profit of 9.65 million
FJD in 2002. The current financial year ends on 31st
March 2003 and we will show a further improvement on
the results of last year. We have always been very keen
about matching our fleet to demand and that is what
we are going to do. We are commencing the first part
of this expansion with two 747-400 aircraft leased from
Singapore Airlines for a period of five years with options
to extend, the first delivery in April this year and
the second in June. They will operate daily between
Nadi and Sydney and four weekly flights between Nadi
and Los Angeles. They will provide the backbone to allow
us to increase our route to Los Angeles to daily. They
will also allow substitution for our B767 flights to
Japan during the peak periods of the summer. These two
aircraft will also send airfreight to Los Angeles, Japan
and Sydney and occasionally operate to Auckland during
peak periods. The second part of this development plan
will be to acquire four A330-300 aircraft with delivery
every two years starting June 2005. So we will have
larger aircraft by 2005, then an additional one in 2007,
2009 and the last in 2011. These 4 A330-300's will improve
our services to the markets we operate on the Pacific
Rim as we need wide body aircraft. With this development
we can see steady growth plus possible new markets that
represent future opportunities. It is quite an ambitious
project. To give you an idea of its scale, this investment
is equivalent to 65% of the GDP of Fiji for this year.
It is about 1.3 billion FJD whilst Fiji's GDP is around
2 billion FJD. The whole project will be funded by our
own reserves and operating cash flow. We are very confident
in developing this plan but for us to be capable of
sustaining such an investment we need to make sure that
there will be sufficient hotel beds in Fiji to handle
the increasing number of visitors to the country. This
is one of the reasons we are contributing to the development
of a hotel ourselves on Denarau Island in partnership
with ACCOR and other investors. It will be a 300 room
hotel in its first stage and later on there will be
further development to increase rooms to about 500.
It is not our desire to be a hotel operator but we want
to see more rooms in Fiji. We will exit that hotel,
probably three to five years after it is successfully
opened. We are aware of a number of other projects that
are proposed and planned in Fiji. Tourist numbers in
and out of Fiji today are about 400,000 per year. If
we consider the planned 8% annual growth, the number
of tourists coming in 2005/06 will be around 550,000
to 600,000.
What will be your initiatives and strategy in terms
of marketing Fiji abroad for the next few years?
Fiji Visitors bureau spends 13 million FJD each year
on marketing. We spend around 30 million FJD per annum
and it is not marketing focusing on the airline but
focused on the destination to increase visitor arrivals.
We will continue this strategy, with key partners in
source markets, for the foreseeable future.
After the coup of May 2000 there was a dramatic decline
in tourism arrivals. Australia and New Zealand arrivals
dropped significantly. After that the Fiji tourism industry
has tried to diversify target markets. Do you agree
with this strategy?
Yes, we must spread the tourists origin markets. It
is vital to do so and there are many reasons for that.
One is obviously to reduce exposure from only one or
two countries so that the industry is not so vulnerable.
Neighboring countries such as Australia and New Zealand
will probably always be our largest markets because
it is an easy journey and not expensive. We are seeking
growth on Tokyo right now. The extension of the second
runway in Narita International airport in 2004 should
open more landing and take off slots. We hope to increase
our flights from three to five to Japan at that time
if we are able to negotiate more traffic rights between
Fiji and Japan. At the moment we operate three services
to Los Angeles and that will increase from June 2003,
subject always to the market. For New Zealand and Australia
we already have multiple daily flights in both markets
and throughout the South Pacific we have many flights
weekly, two or three per week to most destinations.
We do support the idea of diversification. Europeans
are finding the South Pacific increasingly attractive
and we have good growth in the UK. We have an office
in London already and will soon open another one in
Germany or the Nordic area. The challenge is to be able
to offer the tourism experience visitors wish to have.
For instance, tourists from South East Asia, professionals
with business background, look for high quality hotels,
good shopping, excellent restaurants, multiple activities,
sight-seeing and cultural experiences but also gambling
and night life. Before investing in such a market we
need to be able to offer what they want. The majority
of travellers from South East Asia are not typically
sun and sand tourists. We may be investing in the wrong
place if we spend large marketing and operational funds
in Asia.
Our readers always like to know about the person
behind the company. You were in Indonesia and then came
back to the Pacific. What brought you back to the Pacific?
I had a phone call inviting me. Qantas recruited me from
Air Pacific in 1987. I was part of the Air Pacific team
that helped turn the company around from 1984 to 1987.
After joining Qantas I was involved in planning and marketing,
pricing and had a variety of different responsibilities.
Over the last six or seven years, Qantas has tended to
send me to places where there was a problem so, somehow,
I became a "Mr Fix It". I like working where
there is a challenge. I like Fiji and considered this
job an opportunity, a business opportunity for me. I wanted
to help recover the airline from 2001 and this is already
on its way but I also wanted to take it beyond recovery.
It represented a very interesting challenge for me so
it did not take long to say yes. |