Q1. 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?
A1. 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.
Q2. 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?
A2. 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.
Q3. 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?
A3. 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.
Q4. How does the merger agreement between Qantas
and Air New Zealand affect Air Pacific and what
is your opinion about this issue?
A4. 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.
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Q5. Besides the airline
industry, what other partnerships is Air Pacific
involved in?
A5. 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.
Q6. 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?
A6. 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.
Q7. What will be your initiatives and strategy
in terms of marketing Fiji abroad for the next
few years?
A7. 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.
Q8. 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?
A8. 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.
Q9. 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?
A9. 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.
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