mercure1
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Air Tahiti Nui – One More Year, One More Loss

Thu Jun 28, 2012 5:22 pm

Well its year 12, and 12 years of loss so far.

Air Tahiti Nui auditors released the 2011 figures and no surprise little French Polynesian airline recorded loss of more than double of 2010 with net loss of €8.7mil after all the figures were adjusted including economic subsidies by France in overseas territories.
Overall passenger traffic was up slightly (1%) with load factor of 75%. They see weakness in Japan market, but otherwise inbound tourism market improved for first time in 2011.

Cost of kerosene was the main blame this time.

Airline says they hope 2012 will be little more positive as they continue to seek cost reductions program including staff cut, and reduce fleet size, along with hope for improved revenues generated with new code-share agreements with Qantas and American Airlines.

Airline also confirmed they plan their cabin refurbishment program (eliminate F class, new C class), with the new cabin being available starting April 2013.


Bon chance

Story (in French)
http://www.pros-du-tourisme.com/actu...hiti-nui-a-perdu-87-m-en-2011.html
http://www.quotidiendutourisme.com/s...jours-dans-la-tourmente-67218.html


Oh and in anticipation of the news – staff at airport went on strike over weekend causing disruption and rescheduling of services.   
 
spiritair97
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RE: Air Tahiti Nui – One More Year, One More Loss

Thu Jun 28, 2012 5:39 pm

Twelve straight years of loss? Why didn't they try to reconsider what they offer and maybe save a few bucks here and there by say................year 3?
 
laddb
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RE: Air Tahiti Nui – One More Year, One More Loss

Thu Jun 28, 2012 5:39 pm

That is sad news. I have only flown them once, but it was a better experience than my AF flight to Tahiti. Forgive my questions, because I have not followed Air Tahiti Nui much lately....

If they reduce their fleet, then they must also reduce their destinations, or frequency? Any speculations?

Do you know where to find information on losses in prior years?

It seems that when there were 3 cruise ships doing the Tahiti area, (2 Renaissance and 1 Regent) that is when they should have had the largest load factors.
 
cat3dual
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RE: Air Tahiti Nui – One More Year, One More Loss

Thu Jun 28, 2012 6:35 pm

Put a fork in it, Tahiti.

Plenty of other carriers out there that will fill the gap overnight.
 
mercure1
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RE: Air Tahiti Nui – One More Year, One More Loss

Thu Jun 28, 2012 6:40 pm

Quoting spiritair97 (Reply 1):
Twelve straight years of loss? Why didn't they try to reconsider what they offer and maybe save a few bucks here and there by say................year 3?

Yes well we have had this discussion before but come down to politics, and desire of some on island to run an exotic enterprise. Many enterprises were forced to invest and back TN even in face of poor economic prospects.

Over the years many competing airlines were run off the island, and now essentially everyone is hostage to continuation of TN as there is no alternate capacity.

Global economic hardship is now causing great stress and even government has finally realized they cannot continue endless subsidy for airline venture. As discussed on this board they brought in new management from Europe that make suggestion of needed changes but that CEO was fired and run off island after one year. Now government appoint their own person, who is also trying to make decisions to reduced cost and balance finances. Right now lots of talk, but not much improvement while airline continue to bleed.

Quoting laddb (Reply 2):
If they reduce their fleet, then they must also reduce their destinations, or frequency? Any speculations?

The required fleet is barely 4 frames, so they were able to removed a 5th aircraft. For long period they offered it for charters.

Keep in mind TN has already dropped several markets, such as SYD, JFK and KIX. Remaning destinations at LAX, CDG, AKL and NRT.

Quoting laddb (Reply 2):
Do you know where to find information on losses in prior years?

I have infos, however with the government recapitalization of the company last year, investors were wiped out as accumulated losses had reached €100mil exceeding capital of the enterprise.

Quoting laddb (Reply 2):
It seems that when there were 3 cruise ships doing the Tahiti area, (2 Renaissance and 1 Regent) that is when they should have had the largest load factors.

Yes tourism was high back then, but airline still lost money. Such ships no longer are based in Polynesia.
 
PA515
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RE: Air Tahiti Nui – One More Year, One More Loss

Thu Jun 28, 2012 7:02 pm

Quoting mercure1 (Thread starter):
Air Tahiti Nui auditors released the 2011 figures and no surprise little French Polynesian airline recorded loss of more than double of 2010 with net loss of EUR 8.7mil after all the figures were adjusted including economic subsidies by France in overseas territories.

I must admit I expected worse, but if you haven't got 8.7M Euros it's a problem. I think all the aircraft are leased, so a sale and leaseback isn't possible. What happens now?

PA515

[Edited 2012-06-28 12:07:35]
 
panpan
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RE: Air Tahiti Nui – One More Year, One More Loss

Thu Jun 28, 2012 7:08 pm

that seems like a pretty small loss for a state run airline. good for them. i wonder whether after all the downstream stuff is tallied if it's a loss at all.
 
koruman
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RE: Air Tahiti Nui – One More Year, One More Loss

Thu Jun 28, 2012 8:28 pm

Mercury, don't exaggerate.

I went to meet the strikers at Faaa on Monday: their action is because the employers have not honoured their commitments under the 2010 contractual agreements. And the strikers are ground staff.

A contract, is a contract, and should be honoured.
 
mercure1
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RE: Air Tahiti Nui – One More Year, One More Loss

Thu Jun 28, 2012 9:32 pm

€8.7mil is large for such a tiny airline and country. Its more than double the €3.6mil of 2010. Also remember this is a “NET” number and is the final loss after benefit of things like Metropolitan France economic subsidy to the airline. No one says what this subsidy figure was in 2011, except they say it was €2.5 mil less than 2010. So in reality airline actual operations produce even worse results that are covered by these government assistance.

Maybe to put in better perspective, the proposed cuts of 100 staff (out of 700) and aircraft grounding at ATN was meant to credit €5.0 mil in savings. Clearly that is not enough with these result. Maybe they need to revise target to €10mi now?

If it was no big deal, you would not have the President of the country personally involved now meeting with unions, potential business partners, and making comments that things are no longer sustainable. For the first 10-years everyone seems to have ingnored the inherit economy fallacy airline was built upon, but now €100mil later its become a real problem.

Quoting koruman (Reply 7):
A contract, is a contract, and should be honoured.

I think as they say in America - "A times are changing".

Its not just airline or airport people put also government and all types of private employees also. The world is changing, including in French Polynesia and what was promised or economic possible once is no longer supportable.
Market conditions at FAAA are different. For example the regional airline Air Tahiti once long profitable itself is also having economic problems for the first time in ages.

Anyhow these unions (fire fighters & fuelers) they seem to enjoy striking in June. Both in 2011 and 2010 they also were the same strikes that effected FAAA June activity.
 
koruman
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RE: Air Tahiti Nui – One More Year, One More Loss

Thu Jun 28, 2012 11:40 pm

Mercure1, I agree with what you say about Air Tahiti Nui.

But the strike is another matter. I live in Australia, and adherence to a contract by both employer and employees is not optional. That should be universal. After all, none of us in non-US western countries would tolerate the US labour situation, where an employer can give a worker less than four weeks annual leave. There would be blood on the streets.

Times are tough in French Polynesia, but a contract is a contract.
 
LAXintl
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RE: Air Tahiti Nui – One More Year, One More Loss

Fri Jun 29, 2012 12:01 am

These guys really sound like a broken record.

Kinda feel bad to the local’s. They were promised a shinny airline that would make them proud, instead its been more a nightmare that continues to empty the bank, while now having created a situation where there is not much alternate service in place.

I’d be curious to know also how much mainland France subsidizes the airline operations directly and indirectly. I recall much of the A340 financing was covered by mainland France and approved in the French parliament.

I guess the true losses of the venture are even worse than the public numbers, as parts of the accounts can be conveniently covered by government funds.
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zkojq
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RE: Air Tahiti Nui – One More Year, One More Loss

Fri Jun 29, 2012 1:13 am

Quoting mercure1 (Thread starter):
and reduce fleet size
Quoting mercure1 (Reply 4):
The required fleet is barely 4 frames, so they were able to removed a 5th aircraft. For long period they offered it for charters.

Which aircraft was removed from the fleet? And what was its fate? If they could make money from charters elsewhere in the world to support their main business (flying passengers to Tahiti) then that is beneficial.
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Aesma
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RE: Air Tahiti Nui – One More Year, One More Loss

Fri Jun 29, 2012 2:54 am

Quoting mercure1 (Reply 8):
If it was no big deal, you would not have the President of the country personally involved now meeting with unions, potential business partners, and making comments that things are no longer sustainable.

You mean the president of French Polynesia, right, not François Hollande ? The one that is changed every year or so because of political instability ?

BTW, I don't know much about what's going on over there, but I just read that this president thinks that now that a left-wing president is in place in mainland France, money will flow for Polynesia. I guess he doesn't know what's going on in "mainland Europe", but even then, I also read he's independentist. So why would the national government send money to him that wants to break off with it ?
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Motorhussy
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RE: Air Tahiti Nui – One More Year, One More Loss

Fri Jun 29, 2012 3:20 am

Quoting LAXintl (Reply 10):
These guys really sound like a broken record.

You have only to hear the broken record of local politics to understand why so little has been done to remedy the situation with this French Territorially owned airline. Look up the names of Gaston Flosse, Oscar Temaru and Gaston Tong-Sang and you'll see that their infighting has left the territory impotent to do anything meaningful in terms of affecting positive change - this includes that of the airline which continues to rely upon the patronage of Paris.
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koruman
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RE: Air Tahiti Nui – One More Year, One More Loss

Fri Jun 29, 2012 8:27 am

LAXintl, the whole of French Polynesia depends upon cash transfers from France, just like American Samoa and Guam float only through American largesse.

French Polynesians are French citizens, and a free market won't deliver them first world living standards, so the two options are the Guadeloupe/Martinique option of most of the country on government handouts, or subsidised social engineering with France underwriting service industries, airlines, tourism and TV channels which are otherwise unviable but employ significant numbers of people. And at least when French Polynesia's left is in power those people actually exist, and do real work!

Americans seem indifferent to lamentable living standards in American Samoa and Micronesia, but the French will not allow French citizens to live like Third World residents. If you think someone is going to pull the plug you're kidding yourself.
 
goosebayguy
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RE: Air Tahiti Nui – One More Year, One More Loss

Fri Jun 29, 2012 10:26 am

This is a loss of about €2m per aircraft even with a 75% load factor. Not bad going! I love the colour scheme on these aircraft so want it to survive especially as they pass over Yorkshire every day bringing a bit of the tropics with it! What to do though?

Fuel costs are currently receeding which may help it into the black? However oil is dropping because the economy is going to hell which means fewer passengers. Perhpas AF should help out by not flying there and they can share the revenue?
 
mogandoCI
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RE: Air Tahiti Nui – One More Year, One More Loss

Fri Jun 29, 2012 10:57 am

Maybe it's the damn LAXCDG tag that's really screwing the financials ... How about let AF handle that and let TN focus only on intra pacific nonstops out of Tahiti ?
 
koruman
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RE: Air Tahiti Nui – One More Year, One More Loss

Fri Jun 29, 2012 11:18 am

The problem is that if AF and TN codeshare and pool their services, fares will rise, yields will rise and profits will increase, especially if they cut capacity.

I understand that to those of you in the USA that sounds like a good thing, but it would be an act of national suicide. The problem is that visitor numbers would fall, hotels would close, unemployment would skyrocket and the state would have to subsidise the people who lost their jobs.

That's why the current losses are not necessarily a severe problem.
 
sunrisevalley
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RE: Air Tahiti Nui – One More Year, One More Loss

Fri Jun 29, 2012 2:52 pm

Quoting mercure1 (Reply 8):
€8.7mil is large for such a tiny airline and country. Its more than double the €3.6mil of 2010

What was the change in their cash position year over year? This is a useful marker.
 
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Vio
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RE: Air Tahiti Nui – One More Year, One More Loss

Fri Jun 29, 2012 3:37 pm

I don't think it's their service that brings these poor (economic) performances. The truth is, Tahiti, is extremely expensive and most people can't afford to go there. Why would I spend 6000 from Canada / US to spend a week in Bora Bora or elsewhere, when I have Cuba / Dominican / Jamaica, etc for 1500 / week (all inclusive)...?

Tahiti can't compete with the Caribbean when it comes to value of a vacation, not to mention the amount of time you have spend to get there. After spending 2 weeks in the Cook Islands, I understand why very few North Americans go there... not to mention the Europeans, when they have Greece, Bulgaria, Spain, etc that's a stone-throw away for them.
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edina
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RE: Air Tahiti Nui – One More Year, One More Loss

Fri Jun 29, 2012 3:48 pm

Quoting laddb (Reply 2):

It seems that when there were 3 cruise ships doing the Tahiti area, (2 Renaissance and 1 Regent) that is when they should have had the largest load factors.

There's still plenty of cruise traffic....

The Paul Gaugin is still homeported in Tahiti....she is still a popular high end ship & is now directly operated by her owners rather than being operated under a management contract with Regent.

Renaissance Cruises may no longer exist, but the management team behind them started Oceania Cruises nearly ten years ago with two of the former Renaissance ships. Regatta, the former R2, has just completed her Polynesian season, with their larger 1250 pax newbuild, Marina, set to operate similar itineraries next year. As an aside, Oceania now have Regent as a sister brand when Oceania's financial backers Apollo Management, created Prestige Cruise Holdings as a parent company to both lines, and is managed by the senior executives of Oceania.

There are several other lines that use PPT as a turnaround port on a less frequent basis, but be assured that TN is still bringing a large proportion of this traffic flow to their ships.
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mogandoCI
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RE: Air Tahiti Nui – One More Year, One More Loss

Fri Jun 29, 2012 3:48 pm

Quoting vio (Reply 19):
I don't think it's their service that brings these poor (economic) performances. The truth is, Tahiti, is extremely expensive and most people can't afford to go there. Why would I spend 6000 from Canada / US to spend a week in Bora Bora or elsewhere, when I have Cuba / Dominican / Jamaica, etc for 1500 / week (all inclusive)...?

Tahiti can't compete with the Caribbean when it comes to value of a vacation, not to mention the amount of time you have spend to get there. After spending 2 weeks in the Cook Islands, I understand why very few North Americans go there... not to mention the Europeans, when they have Greece, Bulgaria, Spain, etc that's a stone-throw away for them.

I'd add that even Oceania is not close to PPT at all. SYD-PPT is only barely shorter than PPT-LAX. (those king's ransom that HA call economy class on HNL-PPT aren't helping either)
 
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Mortyman
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RE: Air Tahiti Nui – One More Year, One More Loss

Fri Jun 29, 2012 4:13 pm

Quoting vio (Reply 19):
Tahiti can't compete with the Caribbean when it comes to value of a vacation, not to mention the amount of time you have spend to get there. After spending 2 weeks in the Cook Islands, I understand why very few North Americans go there... not to mention the Europeans, when they have Greece, Bulgaria, Spain, etc that's a stone-throw away for them.

Most of the islands in the Pacific has alot less tourists and are not as developed as most of it's Caribbean counterparts wich is why atleast I prefer to go to the islands in the Pacific rather than the Caribbean.

The islands of the Pacific has alot less hotels, flights and tourist activity than their Caribbean counterparts and is for most people alot further away, wich is why it's alot more expensive to get there and stay there.

While it can be problematic for the island people of the Pacific to live in such a place, I for one hope that the islands don't become too comercially developed.

[Edited 2012-06-29 09:13:34]
 
mercure1
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RE: Air Tahiti Nui – One More Year, One More Loss

Fri Jun 29, 2012 4:55 pm

Quoting Aesma (Reply 12):
You mean the president of French Polynesia, right, not François Hollande ?

Correct

Quoting Aesma (Reply 12):
The one that is changed every year or so because of political instability ?

We have a assembly system, and as either elections change the makeup (very often coalition governments) or people resign the government leadership also changes. In nearly 30-years, there has been about 15 changes in government. Current president has served the position 5 occasions over the decade.

Quoting Aesma (Reply 12):
BTW, I don't know much about what's going on over there, but I just read that this president thinks that now that a left-wing president is in place in mainland France, money will flow for Polynesia. I guess he doesn't know what's going on in "mainland Europe", but even then, I also read he's independentist. So why would the national government send money to him that wants to break off with it ?

Yes Hollande promise as part of campaign to reestablish funding that was cut to overseas territories by Sarko. For instance in FP subsidies for teachers were cut, along with many other assistance.
Also Hollande has stated he is more open to a more independent relationships with territories so local politicos heavily supported Hollande in election due to this fact.

Quoting sunrisevalley (Reply 18):
What was the change in their cash position year over year? This is a useful marker.

Different accounting systems and not regularly reported. But in essence airline accounts had zero value in the last fall when company was recapitalized by government and wipe out nearly everyones previous investment. This was the 3rd recapitalization with one previous in 2009. Now government owns 85% of airline and written off over €100mil direct investment so far. Who knows how much all the private investors over the years lost also.

Quoting vio (Reply 19):
Tahiti can't compete with the Caribbean when it comes to value of a vacation, not to mention the amount of time you have spend to get there.

French Polynesia is not trying to compete against the Caribbean. The entire hotel capacity in FP can probably be fit inside a Caribbean mega resort or two.
 
zhiao
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RE: Air Tahiti Nui – One More Year, One More Loss

Fri Jun 29, 2012 5:07 pm

Quoting koruman (Reply 14):
Americans seem indifferent to lamentable living standards in American Samoa and Micronesia, but the French will not allow French citizens to live like Third World residents. If you think someone is going to pull the plug you're kidding yourself.

But there are no natural US citizens in either of those places. At most you are a US national. If you want a direct comparison, lets compare Hawaii with Tahiti, and one sees that the former has a much healthier economic model, with much less reliance on the mother country, and more than double the income per capita.
 
koruman
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RE: Air Tahiti Nui – One More Year, One More Loss

Sat Jun 30, 2012 1:10 am

If you are talking about Hawaii's population and economy you are talking about Oahu.

And there is even less even distribution of wealth than in Tahiti, with levels of poverty unthinkable in French Polynesia. Moreover, much of the largesse comes from the US armed forces for the US armed forces, such as the H3 freeway.

I do largely agree with Mercure1, but you must understand that the end result to the state coffers is better when it subsidises employment by Air Tahiti Nui or TNTV rather than paying benefits to an unemployed population. At least it encourages people to better themselves and study and work, and it delivers services.

This week I watched one Euro 2012 semi-final on TNTV and tried to watch the other on the national government channel Polynesie Premiere, which is delivered from Paris. Believe me, like the Tahitians I was grateful for their local and subsidised TNTV channel.
 
LAXPPT
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RE: Air Tahiti Nui – One More Year, One More Loss

Wed Jul 04, 2012 12:03 am

The story is better looked at from the position of Five year business plans. The first five years was 1999-2004. During this time ATN reached break even in 2002 and was profitable in 2003 and 2004. A remarkable and excellent performance for a new airline, growing from one aircraft to four and expanding its route network.

The second 5 year plan, 2005-2010 saw the addition of service to NYC and SYD. For various reasons these routes did not work, the airline incurred about $35 million is losses. During this period, it like many other airlines ( CX), hedged the wrong way on fuel and suffered another large loss of close to $30 million on the hedging.

The third Five year plan, 2011 - 2016 sees consolidation with a fleet reduction from five to four aircraft, reduction in staff by about 15%, both of which are underway. Strategically the airline signed a major code share with AA for 15 US cities and rumors are another big code share is to come. These savings and partnerships should see a return to profit.

In respect to ATN's contribution to the Tahitian economy, its presence has allowed investors to build 4 major hotels in Bora Bora ( Bora Nui, Thalasso, St Regis and Four Seasons) and sustains three major cruise lines in its waters, Paul Gauguin, Princess and Oceania. Literally thousands of tourists and jobs have resulted from this positive economic impact on the Tahitian economy.

Apart for the two major events above, ATN's loss has been a manageable 1% to 3% on gross sales, with good cash flow. This in a worldwide context which has seen UA, DL, AA in chapter 11, Air New Zealand saved by its Government and AF about to go through major cost reductions and staff layoffs.
 
airxliban
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RE: Air Tahiti Nui – One More Year, One More Loss

Wed Jul 04, 2012 2:05 am

I think the more relevant question is whether the airline is providing a net economic benefit to Tahiti.

In the context of the statement below, I tend to think that the net economic impact is positive:

Quoting LAXPPT (Reply 26):
In respect to ATN's contribution to the Tahitian economy, its presence has allowed investors to build 4 major hotels in Bora Bora ( Bora Nui, Thalasso, St Regis and Four Seasons) and sustains three major cruise lines in its waters, Paul Gauguin, Princess and Oceania. Literally thousands of tourists and jobs have resulted from this positive economic impact on the Tahitian economy.

That being the case, -8.7 mil net operating loss is not as bad as you may think. That's of course not to say that the airline as an independent unit shouldn't be profitable, or shouldn't improve its cost management, but rather that the airline exists not as a purely financial value proposition.
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mcg
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RE: Air Tahiti Nui – One More Year, One More Loss

Wed Jul 04, 2012 5:08 am

Quoting Airxliban (Reply 27):
That being the case, -8.7 mil net operating loss is not as bad as you may think. That's of course not to say that the airline as an independent unit shouldn't be profitable, or shouldn't improve its cost management, but rather that the airline exists not as a purely financial value proposition.

That is true, as long as someone is willing to fund the 8.7 million loss.
 
QANTAS747-438
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RE: Air Tahiti Nui – One More Year, One More Loss

Wed Jul 04, 2012 5:45 am

Quoting LAXPPT (Reply 26):
In respect to ATN's contribution to the Tahitian economy, its presence has allowed investors to build 4 major hotels in Bora Bora ( Bora Nui, Thalasso, St Regis and Four Seasons) and sustains three major cruise lines in its waters, Paul Gauguin, Princess and Oceania. Literally thousands of tourists and jobs have resulted from this positive economic impact on the Tahitian economy.

Exactly. For this reason, I hypothesize the question, does it matter if Air Tahiti Nui makes a profit? The airline itself IS the thing that brings people into Tahiti and the Islands. Without ATN, tourism would be much worse. The airline helps the Tahitian economy more than it helps itself.
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mercure1
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RE: Air Tahiti Nui – One More Year, One More Loss

Wed Jul 04, 2012 6:21 pm

Yes but lets go back and remember how airline market was prior to TN.

Tahiti enjoyed a wide range of capacity and service options - Air NZ, Qantas, Corsair, AOM, US charter flights (United, ATA, World) and other airlines even wanted to enter Tahiti such like Aloha when it started with its 737NG flights.

Post TN forming, various things happened that made the competitive situation hard for these other airlines. Corsair parent Nouvelle Frontiers permission to build hotel complex was cancelled, Air NZ and Qantas had their own local issues and pulled their links to US,

What island was left with was essentially a duopoly - TN & AF. I have spoke to enough people to know the situation last 4-5 years is not a happy one for tourism sector. Unfortunately it was a catch-22 as hotels were reliant on TN to bring clients and they become tied to TN fortunes good or bad.

Then lets look at it financially. Yes some 700-800 people are employed by TN, but at what cost to the island. Government direct investment tops €100mil. Additionally all those private Tahitian investors have seen their investments essentially wiped away over the years, as the company has continued to be recapitalized.

So at the end of the day, the question is would the sector today be better without having pumped few hundred mil into a TN venture, and just left the market dictate who and how they serve the routes.

I strongly suspect without TN, AirNZ would still happily serve its historic PPT-LAX route for example, there would be a leisure French carrier in the market (Corsair for example still), there would continue to be regular charters from America, and the consumer would have more choices, and travel partners like hotels, would also have more choice in making business deals with then being stuck with the affairs of TN holding their business hostage.

Ultimately, the birth of TN comes down to the aspirations (read ego) of one or two key people who were also supported by French mainland parties that helped with things like sweetheart A340 deal (approved by French Assembly no the less).

I'm sorry, but I still don't see the business case for TN. Many hundred millions have been poured into the Pacific, and the end result is a marginal airline, and the loss of what was a competitive market place.
 
LAXPPT
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RE: Air Tahiti Nui – One More Year, One More Loss

Wed Jul 04, 2012 11:59 pm

When discussing the reasons why airlines are not flying to Tahiti it helps if you have an understanding of airline and route costs.

Tahiti is a "long, thin route," It is 8 hours flying time from the nearest major market ( US and potentially Australia). It has a small base population of only 280,000 people. There is very little high yield P and J traffic. Fuel costs are very high. If you are an airline based in France, with the double crew cost of LAX and PPT, the economics are daunting.

These are the reasons that airlines do not fly to Tahiti. There are other routes in the world with a better traffic mix and lower cost structure and that is where airlines who do not have an overriding reason to fly to Tahiti, place their valuable aircraft.

Look at Fiji, LAX to Nadi. An Air New Zealand and Qantas route for years and years. Why is there only one airline ( Air Pacific) on that route today ? For exactly the same route/cost reasons that exist on LAX-PPT. It is not that ATN has driven other airlines off the LAX-PPT route, what has done this is the high cost of fuel and the overall route economics.

In regards to the E100 million cost - if your figure is correct, that is amoritized over the 13 year existence of ATN at E7.7 million per year. This has guaranteed essential air capacity to the major tourism markets of Japan, Australia ( via AKl), the US and France carrying in this time about 1.5 million tourist with an average stay of 11.7 nights and daily expenditure of say E150 per day bringing E2.6 billion in revenue for Tahiti, excluding the airfare.
 
LAXintl
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RE: Air Tahiti Nui – One More Year, One More Loss

Thu Jul 05, 2012 12:39 am

I am sure we all agree there is a finite market to Tahiti - after all there is only a fixed hotel capacity.

However a valid argument is that with TN in the market, sure others obviously dropped out. However if TN was not around one could venture to guess others would continue to find the justification to service the market.

After all, there still will need to be all the mainland French that seek to vacation in French Polynesia, whatever number of American's gong there, and obviously locals that desire to get off the island to go where ever.

So in this finite market (which based on FP tourism arrival statistics has not grown but actually declined in the last 10-years - 252,000 in 2000 down to 154,000 in 2010), TN has become the primary player, almost a monopoly, which the islands now have become beholden to.

Imo that's pretty bad, and as someone else mentioned catch-22 situation for the island nation.
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RE: Air Tahiti Nui – One More Year, One More Loss

Thu Jul 05, 2012 1:32 am

I agree with LAXintl more than LAXPPT.

For many years LAX-PPT was one of Air NZ's highest-yielding sectors - the eventual problem was that the 763 couldn't meet Business Class demand on LAX-PPT but the 77E alternative would have had too many unsold Economy seats. And the PPT-AKL continuation required the opposite configuration.

TN was designed to ensure flights to PPT, but got lost in patronage and local politics. A better outcome would have been reached by underwriting services by other carriers.

Those Americans and Canadians who are prospective $1000 per night overwater bungalow guests won't pay $10,000 for a pair of Business Class tickets unless they will get frequent flyer mileage. Air NZ delivered that to passengers of UA, AC and US ( as well as LH and BMI). Air Tahiti Nui fails.
 
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RE: Air Tahiti Nui – One More Year, One More Loss

Thu Jul 05, 2012 1:57 am

Indeed, if the desire was to maintain some level of seat capacity to PPT, then the easier (and cheaper) alternative would be to follow what is done many other places by offering things such fee reductions or waivers, performance incentives or actually direct subsidy for new or existing services. Even something like chartering added capacity during peak periods would work out cheaper then buying your own planes to start an airline.

But unfortunately, much of this discussion does not matter, as the local politics and patronage system is what provided the moral and financial boost the idea of having a Tahitian longhaul airline. Kinda reminds me of the early 1970s, when it was in fashion for one African nation after another to order toy widebodies regardless of the true need or economics.
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RE: Air Tahiti Nui – One More Year, One More Loss

Thu Jul 05, 2012 1:59 am

Quoting koruman (Reply 33):
TN was designed to ensure flights to PPT, but got lost in patronage and local politics. A better outcome would have been reached by underwriting services by other carriers.

Exactly. No one is saying that Tahiti shouldn't be supporting air travel in order to boost tourism and improve the local economy. Tahiti is a small and isolated market where air travel is a necessity but would be prohibitively expensive if not supported. But for a fraction of the money that they are spending on TN they could have subsidized or offer incentives to other carriers, across all three alliances, in order to increase tourism while not being completely reliant on the fortunes of 1 airline.

But then you can't brag about having your own airline, so of course they didn't choose that route.
 
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RE: Air Tahiti Nui – One More Year, One More Loss

Thu Jul 05, 2012 2:02 am

TN is not hopeless.

I can only imagine one of the reasons for their losses is not simply politics and lack of tourism, but their lack of an updated fleet. Not only are their cabin products outdated (versus Air France), but the A340-300 is simply the wrong aircraft at the wrong time. An A330-200 or A330-300X would be a much better fit for the airline and engine maintenance costs would drop dramatically. The cost of fuel is simply a deal-breaker for TN and the A340. A replacement plan with the A350-800 should also be immediately considered.

Many believe that joining an alliance does nothing for them (and they may be right), but I think it's safe to say that the tourist market may be increase slightly if they are granted entry into Oneworld. I've met multiple people (surprisingly) in the DFW area alone who would love to fly on TN to PPT via LAX as long as they can spend/earn/receive AAdvantage miles.

The airline game has changed around the island since 2000, and I believe current management has not realized this. They need to play the market in whatever way they need to as long as they can ensure a profitable service from PPT to the rest of the world.

[Edited 2012-07-04 19:03:30]
 
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RE: Air Tahiti Nui – One More Year, One More Loss

Thu Jul 05, 2012 2:12 am

Quoting Independence76 (Reply 36):
I can only imagine one of the reasons for their losses is not simply politics and lack of tourism, but their lack of an updated fleet. Not only are their cabin products outdated (versus Air France), but the A340-300 is simply the wrong aircraft at the wrong time. An A330-200 or A330-300X would be a much better fit for the airline and engine maintenance costs would drop dramatically. The cost of fuel is simply a deal-breaker for TN and the A340. A replacement plan with the A350-800 should also be immediately considered.

I don't think an early 2000s vintage A333 would have had enough range for the routes that they fly, and an A332 probably would have been pushing it too. Of course they are not in the financial position to immediately turn over their fleet to get better performing new build A330s. If they immediately ordered A358s the earliest that plane is entering service assuming no delays is 2016, which is still 4 years away.

Their product may be outdated versus AF, but they only compete with them on one route. Even with minimal to no competition on their other routes they still can't make the flights work.

Quoting Independence76 (Reply 36):
The airline game has changed around the island since 2000, and I believe current management has not realized this. They need to play the market in whatever way they need to as long as they can ensure a profitable service from PPT to the rest of the world.

I'm sure there are many at TN that realize it, but at the end of the day they are a tiny airline with 5 planes. It is difficult to make drastic changes without costing a lot of money they don't have, and being majority owned by the government makes it difficult to make cuts that might affect employment on the island.

[Edited 2012-07-04 19:15:35]
 
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RE: Air Tahiti Nui – One More Year, One More Loss

Thu Jul 05, 2012 4:39 pm

Yes I guess its important as mentioned to remember that TN was formed per the dreams of some of local politicos with help from mainland France. So maybe it should not be a shock at the tragedy.

At the time in late 1990s it was promised that by having a long haul airline it would benefit the islands and FP would be incharge of its own destiny and not reliant on others to provide critical link and bring tourist. I guess they were right as French Polynesia destiny indeed was held by TN, and now with large reduction in tourism, destiny is being stuck with a costly and essentially monopoly market airline.

Also I feel bad for all the entities that were “encouraged” to invest in TN have seen their monies disappear. Even the municipal water authority invested in TN, and off course that money is gone now, and it must go to public to cover the loss. Many others local companies also were “encouraged” to support TN, to see that island promise turn into zero now.

I like to note the comments above of LAXPPT regarding the billions that TN allegedly benefit FP.
I would like to ask how much more FP might benefit without TN. For example – maybe tourism would not be down 40% from historic levels, maybe many more hotels would still be open, maybe lots more people be employed, and maybe all those people earn and spend lots of money and FP economy be larger, stronger and better off today if this TN experiment never happened.
So yes its easy to say TN bring people to island – but what other choice is there really currently? Not much. Its like saying Aeroflot benefit USSR as it carried XX passengers generating XX rubles during Soviet days. But imagine what market could be, if there was freedom and not monopoly instead? Thankfully many are waking up in FP and realize the TN experience has not been good.
 
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RE: Air Tahiti Nui – One More Year, One More Loss

Thu Jul 05, 2012 8:06 pm

Yes I am sure the A340 is not helping things these days with fuel cost.
Even Airbus happily shows off the 20%+ fuel burn advantage the A330 has over the A340.
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RE: Air Tahiti Nui – One More Year, One More Loss

Fri Jul 06, 2012 12:34 am

Quoting mercure1 (Reply 38):
maybe tourism would not be down 40% from historic levels,

Have the reasons for the tourism drop been identified? There has to be a reason for the drop from 252000 to 154000 over 10-years. Reduction in marketing efforts or what? Lack of value for money?
 
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RE: Air Tahiti Nui – One More Year, One More Loss

Fri Jul 06, 2012 6:48 am

A significant part, in my opinion, relates to passengers being reluctant to buy the most expensive air ticket of the year on a carrier which earns them no miles.

When NZ and QF flew to PPT from LAX that meant all three alliances were covered.

The loss of NZ services hurts French Polynesia the most, as Tahiti was a desirable earn and burn destination for frequent flyers of UA, US, CO, AC, BD and LH.
 
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RE: Air Tahiti Nui – One More Year, One More Loss

Fri Jul 06, 2012 4:02 pm

Well first lets look at how things were in 2000. That year there were 10 airlines that offer overseas scheduled flights to PPT (Air France, Air NZ, AOM, Corsair, Lan Chile, Qantas, Polynesian, Hawaiian, Air Caledonie, & TN) plus there were 6 charter carriers including Tower Air and United from America. Total overseas seat annual capacity at PPT was about 425,000 of which TN was about 20%.
Go forward to 2010, those 16 airlines had been reduced to 7 and total annual seat capacity offered was down to 330,000 of which TN now make up 65%.

The decline on tourism arrivals can be attributed to many things I suppose.

American 9/11 event certainly had an impact in 2002/2003, but by 2004 traffic was increasing again.
There was merger and bankruptcy of AOM/Air Liberte with loss of capacity
Corsair also leaving FP after business conditions in Tahiti were made hard on its parent company by refusal to built resort
Club Med closing its resort
Cruise ship traffic leaving Tahitian ports
Air France reducing capacity (744 to 340/777)
Bird flu fears, especially hurting Asia traffic
Fuel price spike 2008
Currency rates make FP even more pricey
Closure of even more hotel properties
Current global economic malady
Japan earthquake 2011

And yes certainly the lack of air options including fare competition also play role and hurt as TN is not appeal to all.

At the end I think it just became a bad cycle that feed on itself. Between outside problems, and issues with lack of capacity options it just snowball on itself to lead to massive declines. Some hotels were reporting mere 30% occupancy a few years ago and many good names have closed. Decline of tourism hurts local economy, which also hurts local consumer spending. For instance even inter-island travel on Air Tahiti (the ATR airline) is down again in 2011.

Now island almost don’t have a choice than continue to back TN as other options have left. However FP has own budget problem so at time TN needs more money, the government also is struggling and now making lots of noises trying to clean up TN finally.

[Edited 2012-07-06 09:07:58]
 
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RE: Air Tahiti Nui – One More Year, One More Loss

Fri Jul 06, 2012 7:22 pm

Air Tahiti Nui is nothing but a typical "political" airline with NO economical justification.
They never made a single $ of profit and they never will.
They only live on the money injected by the local corrupted Gov. ... so paid by the French taxpayers.

Same thing for Air Bourbon and for Air Caraibes.
 
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RE: Air Tahiti Nui – One More Year, One More Loss

Fri Jul 06, 2012 8:41 pm

Quoting FlySSC (Reply 43):

Air Tahiti Nui is nothing but a typical "political" airline with NO economical justification.

Arguably, Tahiti is very isolated and would try to justify the airline on the basis of its tourism industry as a whole. Maybe this is wrong, but Tahiti seems to have a better living standard than its neighbors.
 
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RE: Air Tahiti Nui – One More Year, One More Loss

Sat Jul 07, 2012 12:12 am

Quoting mercure1 (Reply 4):
and now essentially everyone is hostage to continuation of TN as there is no alternate capacity.

That sums it up. It sounds like new service would be dependent upon new hotels...

A market for EK?  
Quoting koruman (Reply 25):
but you must understand that the end result to the state coffers is better when it subsidises employment by Air Tahiti Nui or TNTV rather than paying benefits to an unemployed population. At least it encourages people to better themselves and study and work, and it delivers services.

I agree with that. But long term, the PPT market should be able to break out of subsidized service. How? That is the challenge. PPT is just a bit too far from China for most tourists and that is where the money is today.  
Quoting LAXintl (Reply 32):
I am sure we all agree there is a finite market to Tahiti - after all there is only a fixed hotel capacity.

Then break out of the situation. Tourism is a much larger industry than ten years ago. To fall behind means that Tahiti is doing a *very* poor job of marketing itself. They need to work on air, hotel, and cruise packages that appeal to a larger audience. In particular, where is the marketing to the Chinese? If one is in the luxury vacation industry, I'm left floored that I am the first to post about the Chinese in this thread. If one wants to make money, figure out what the customers with the money want.

Figure out how to have 1X/week to PEK, PVG, or HKG and grow from there.

Quoting koruman (Reply 41):
The loss of NZ services hurts French Polynesia the most, as Tahiti was a desirable earn and burn destination for frequent flyers of UA, US, CO, AC, BD and LH.

I think you're onto something there. Its also service. NZ had a good reputation.

Reading the reviews, Air Tahiti Nui has very inconsistent service:
http://www.airlinequality.com/Forum/air_tahiti_nui.htm

For a costly premium tourist destination, it is going to distract away if the airline isn't great. Tahiti's problem is the internet opens up far more travel destinations and the tourist business is being run as if the world was stuck where it was twenty years ago.

Quoting mercure1 (Reply 42):
Corsair also leaving FP after business conditions in Tahiti were made hard on its parent company by refusal to built resort
Club Med closing its resort
Cruise ship traffic leaving Tahitian ports

Those scream government problem. We can forgive any one incident. Three+ (how many cruise ships)   

Heck Dubai is now attracting cruise ships. I'm not saying make Tahiti the next Dubai, but they must grow the tourist industry. Start with a new 'Mandarin friendly' resort and flights.

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RE: Air Tahiti Nui – One More Year, One More Loss

Sat Jul 07, 2012 2:52 am

WOW - so many comments since my last posting and clearly with strong emotions with words like tragedy and terrible.! BUT - what I note is no comment at all as to why there is only one airline flying LAX-NAN and why QF, NZ, AA, CO etc pulled off that route. It gets back to the core of the situation. With jet fuel prices over $100 BBL, there is no economic interest to be made flying long thin routes, with very little P and J traffic, such as LAX-NAN, LAX-PPT or LAX-RAR. NZ still flies LAX-RAR based on a direct subsidy from the Cook Govnt, but I think that this is their sole remaining Pac island flight from the US. So this notion that airlines around the world are lined up to fly to Tahiti and only because of ATN and the Tahitian Government subsidy, they do not do so, is simply a figment of imagination.

Re the money invested by the Tahitian Govnt in ATN. Without ATN flying, the LAX-PT route would be capacity starved with maybe AF at 5 flights a week so they can maintain at least an 85% seat factor year round. Tourism numbers would be stunted and far lower than today.

Re the inflight service on ATN, it continues to win awards for top inflight service: Global Traveler, 2011 Best South Pacific Airline, Conde Nast, Travel and Leisure and Skytrax awards. Three of its aircraft will be re configured and totally new inflight entertainment system early next year and the remaining aircraft towards the end of the year.

Re China: The French/Chinese governments have not yet signed an air service agreement between China and Tahiti. Plus the French government needs to adopt the same visa regs as the Maldives and Fiji for the Chinese to visit Tahiti. Then you would see big numbers.
 
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RE: Air Tahiti Nui – One More Year, One More Loss

Sat Jul 07, 2012 7:12 am

The situation in terms of a monopoly is actually worse than it appears: LAN Chile is down from 2/3 flights weekly to once weekly, so is Air Calin, and Air New Zealand is down from six flights weekly to two.

I have recently visited both Hawaii and French Polynesia, both of whom depend upon the same demographics of American and Japanese tourists: FP targets the top end from both markets while Hawaii targets the top and middle.

In Hawaii, visitor numbers are at record levels, hotel occupancy is high and new routes and airlines are working.

In French Polynesia, visitor numbers are down from 250,000 per year to 150,000 per year, and a number of major hotels have closed down (Hotel Bora Bora, Orient Express Bora Bora, Novotel Bora Bora, Club Med Bora Bora, Club Med Moorea, Sofitel Huahine and Hyatt Regency Tahiti, to use their old names).

In a small market, that is a huge number of 4 and 5 star rooms lying rotting and empty. It's like every second hotel on Kalakaua Avenue in Waikiki suddenly being abandoned, and standing there rotting.

Meanwhile 2 of the 3 cruise lines have left, leaving the smallest ship as the last one operating.

The entire dialogue in French Polynesia has become twisted from "how do we get back the lost 40% of our tourists" to "what will it cost to keep Air Tahiti Nui's employees in a job". Unfortunately, a significant part of the population is now leaning back towards the former President, convicted on serious fraud charges, but still an active politician in that uniquely French and Italian way. That President saw Air Tahiti Nui both as his personal plaything (First Class was one row, largely for his entourage's use when he needed to fly between Papeete and Paris) and as an instrument of patronage to his supporters. His renaissance actually hardens the situation, with Air Tahiti Nui likely to be even more favoured.
 
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RE: Air Tahiti Nui – One More Year, One More Loss

Sat Jul 07, 2012 11:05 am

IMHO even tho TN hasn't made one little profit in 12 years, TN is certainly an interesting story.

Maybe its time to replace those V8 fuel guzzling A340s with V6 A330s or B777s. Roughly same type of pax numbers but with an aircraft thats more economical. TN needs to get into action now BEFORE its too late.
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RE: Air Tahiti Nui – One More Year, One More Loss

Sat Jul 07, 2012 11:33 am

As a Delta SkyMiles Member, you may redeem your miles for flight awards operated by Air Tahiti Nui. Accrual, however, is not possible.
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