Leseprobe
Teresa Boneberg
Student of tourism management, Kempten University of Applied Sciences, Germany
ABSTRACT
The purpose of this research is to describe the current situation of air connectivity on Samoa and its chances and risks related to the recent developments. Therefore, it’s important to reveal the overall situation in the South Pacific. Government ownership, geographical isolation and missing coordination are the main challenges. Furthermore, this paper monitors the drivers of air connection on Samoa. The existing airport infrastructure, the airline business models and the political framework are influencers on the degree of integration in the global network. Restructuration programmes, negotiations and agreements with other states and airlines, as well as social and environmental factors cause chances and risks for the Small Island Developing State (SIDS). Reducing government interference and increasing coordination between the networks participants will lead to a lower risk of failure and an improvement in air connection. Air connectivity is the key to market access and economic development on Samoa and dependent on the government decisions and strategy.
Keywords: Air connection Samoa; Faleolo International Airport; Tourism Samoa; South Pacific airlines; Government ownership; Virgin Samoa
INTRODUCTION
Agriculture and fishing are the most important industries in the South Pacific. As these sectors are vulnerable to cyclones and diseases a step towards diversification was made. Especially the tourism sector belongs to the growing segments. According to the South Pacific Tourism Organisation (SPTO) 144,883 tourists crossed the boarders of Samoa in 2016. This marks an increase of 4,2% to the previous year (Cocker, 2017). In the Small Islands Developing State (SIDS) the tourism sector is an important industry, which showed steadily increase since 2013. Ccyclone Evan in 2012 and the flooding in 2013 were the reasons for a significant decrease in those years. In 2016, 20% of the GDP was generated by tourism and about 10% of the workforce is working in the tourism sector (Berno & Hunter, 2016).
Despite all the limitations on Samoa like geographical isolation, the lack of natural and human resources, low investments and the vulnerability to natural disasters (Scheyvens & Momsen, 2008) there is potential to grow. Therefore, the offered transport services should be improved, which includes a better coordination of airline operations and airport management (ICAO, 2013). On Samoa, the current airport reconstruction project, the change in the airlines business models and the negotiations with China, Singapore Airlines and Emirates implicate chances as well as risks for the small islands economy. To understand the complexity of the air connectivity network it’s important to investigate the influencing factors of air connection on Samoa.
The type of research that will be used is qualitative research and includes the collection of literature relevant to the study. The author collected journals, books and government papers to get an in - depth insight on the air connection in the South Pacific and Samoa. Furthermore, the interview with Mister Semisi Taumoepeau from the New Zealand Tourism Research Institute gave clarification about airport issues. Through several webpages of airlines and airports based in the South Pacific as well as comparative platforms, e.g. skyscanner, the author gained knowledge about the current connections and seasonal flight details. As fares and flight schedules change constantly, the paper is a snapshot in time. The current findings lead to various chances and risks the small island will have to face in the next years. This paper presents the situation of air connection on Samoa and the chances and risks according to the recent developments.
AIR CONNECTIVITY & HISTORICAL DEVELOPMENTS
Samoa is considered as a Developing economy with developing tourism destination. In order to fulfil the potential, market access has to be improved which turns the focus on air transportation (Taumoepeau, 2016). Air connectivity plays a key role in economic growth and is the tool to market access. It's the capability of providing a framework in which it is possible to transport people from their origin to their destination as fast, comfortable and cheap as possible. Stakeholders mainly influence the surrounding framework. The participating state, the owner of aircraft and airport facilities as well as every customer is interested in the availability of frequent air transport services (ICAO, 2013).
There are plenty of air connectivity measurements depending on the priority of the customer segment. For example, a business traveller is more interested in direct flights and flight times, a leisure traveller instead focuses on prices and travel times (Morphet & Bottini, 2014). The World Bank Index measured the air connectivity of 211 countries, including Samoa. The measurement rates the value of a route, based on the number of connections, direct and onward flights. The United States head the table with 22.78%, Samoa was rated with 3.06% on position 116. This is an indicator for the integration level in the global network (Arvis & Shepherd, 2011). The current status reflects historical developments.
After the Second World War, the airline industry was regulated by so called air services agreements (ASAs). The governments have decided which airline has the permission to fly, which routes are requested, which aircraft should be used and the frequency was authorized. In 1978, the USA started to deregulate the airline market and decreased regulations which were the key to increasing competition, international investment and economic growth. The Liberalisation of air services took place and the open skies agreement allows all partners to operate in the USA. State regulations were removed and government control in the airline market reduced. The Airline Deregulation act caused increasing frequency of air services. Furthermore, low fares and a higher service standard throughout the flight led to a boost in tourism and to overall economic benefits (Guasch & Hahn, 1999). Liberalisation became a global trend and new business models, e.g. Low Cost Carriers, were developed which forced lots of traditional airlines into alliances and codeshare agreements. Low cost carriers (LCCs) are characterized by flight services to a minimum fare, a standard aircraft fleet, a frequent flight schedule and economical distribution policy (Barrett, 2016).
Whilst Europe kept pace with the trend, the Asia - Pacific market neglected the deregulation until the early 2000s. Governments regulated markets by owning airlines and signing bilateral agreements, including supervised seat capacities. The outcome were duopolies on almost every route in the Asia - Pacific region and deficient domestic connections (UNWTO, 2014). In 2004, Samoa signed the Pacific Islands Air Services Agreement (PIASA), which opened the market to the Cook Islands, Kiribati, Nauru, Niue, Papua New Guinea, Solomon Islands, Tonga, Tuvalu, and Vanuatu. This was the first step towards liberalization and an attempt to improve inter - island flight connection (ICAO, 2015). Today, the aviation sector in the Pacific is still strictly regulated and highly dependent on government aims. Currently, code sharing and alliances are getting discovered by the small national airlines and airports and runways are under construction to meet the international standards (Taumoepeau, 2013).
AIR CONNECTION IN THE SOUTH PACIFIC
Until 2004/2005, Air Vanuatu, Polynesian Airline, Air Ninguini and Fiji Airways were the most important airlines in the South Pacific region. These airlines are still completely or partly owned by their governments (Taumoepeau, 2009). A national airline is a symbol of pride and prestige for the small islands, economic reasons aren't priority. The lack of management knowledge in governments result in operation mistakes. The aircraft doesn't fit to the route planning and an unsatisfactory marketing strategy forced lots of airlines into bankruptcy. Another issue is the weak local currency earned by the small national airlines. To purchase fuel, spare parts or aircrafts the local currency has to be converted in US - Dollars which leads to financial trouble. In the last years the only way to survive for most of the airlines were partnership contracts (Taumoepeau, 2015).
Due to the isolated market in the South Pacific, most of the airlines cannot operate economically sustainable. Low load factors are the consequence of missing economies of scale (Teskey, 1989). As the markets are too small and airport charges are high, these routes aren't attractive for large international airlines. The emergence of the Low Cost Carriers (LCCs) caused a boost in tourism in the South Pacific and economic problems for traditional airlines got worse because of the increased competition. The first LCC emerging in the Pacific market was Kiwi International in 1994 which failed two years later. Jetstar, the subsidiary of Qantas, started operations from Australia to Fiji in 2010, which changed the attractiveness of the island for international companies to invest in infrastructure and tourism development. Fiji benefits until today from a large flow of tourists from the big source market (Taumoepeau, 2009).
Additionally, domestic air transport services can contribute to the attractiveness of a destination. Domestic and charter airlines in the South Pacific provide important feeder services. Mostly the fleet consists out of small aircrafts or propeller engines and is financed by donor funding. Irregular flight schedules are a barrier for tourists and therefore the accessibility to some of the islands is limited. Most domestic airlines provide necessary public transport services for the local population, even though financial losses are high (Taumoepeau, 2015).
Table 1 shows an overview of the operating airlines in the South Pacific in 2017. The two operating Low Cost Carriers are labelled with LCC, all other airlines are traditionally serviced airlines. Noticeable is the fleet structure in the South Pacific, with capacities from 19 up to 320 passengers.
Table 1: Airlines in the South Pacific region- excluding domestic and charter airlines (1 May 2017)
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Sources: 1 (Aircalin, 2017);2 (Air Kiribati, 2017);3 (Air New Zealand, 2017); 4 (Air Niugini, 2017); 5 (Air Tahiti Nui, 2017);6 (Air Vanuatu, 2017);7 (Fiji Airways, 2017);8 (Hawaiian Airlines, 2017);9 (Inter Island Airways, 2017);10 (Jetstar, 2017);11 (Nauru Airlines, 2017);12 (Polynesian Airlines, 2017);13 (Virgin Australia, 2017)
Most of the small national airlines in the South Pacific concentrate on air services between the home country and the major source markets. It can be observed, that there are a few codeshare agreements between the national airlines but they still do not cooperate to the extend it is necessary to provide efficient inter-island connection (S. Taumoepeau, personal communication, May 18, 2017). In 2007, a cooperation system to the small national flag carriers was proposed. The Managed Integrated Independent South Pacific Airlines (MIISPA) is based on cooperation and bundling economic objectives. The system could enable regional cooperation and resource pooling to improve economies of scale. The main aims are the reduction of operation costs by bundling management knowledge and implementing a fitting reservation system. Furthermore, the whole region could benefit from a coordinated marketing campaign. The governments were invited to negotiate entry conditions and develop operation strategies. In 2007, Polynesian airline, Air Vanuatu, Air Kiribati, Air Fiji and six other small airlines were invited to take part. The proposal wasn´t successful, the fear of losing independence and market share prevented consensus (Taumoepeau & Kissling, 2008). As market knowledge has increased in the recent years, there is a chance that an adjusted version of the MIISPA system or parts of it could be implemented in the future. It is an option for the national airlines to survive and avoid dependency on foreign carriers (S. Taumoepeau, personal communication, May 18, 2017).
DRIVERS OF AIR CONNECTIVITY ON SAMOA
To understand the current air connection status on Samoa it's important to investigate the influencing factors. From the providers perspective, there are four drivers which have to be considered when it comes to the air connection network. The geography of the destination, the existing infrastructure, the business models of the airlines and the countries regulations and policy issues (Morphet & Bottini, 2014).
Geographical & environmental challenges
Samoa is located 1,800 miles (2,900 km) northeast of New Zealand, and 2,600 miles (4,200 km) southwest of Hawaii. The Pacific island country (PIC) consists of the two main islands Upolu and Savai’i as well as eight other islands, not all of them are inhabited. In total 195.470 people live on Samoa. The capital is Apia with one of the highest population densities in the South Pacific, 569 persons/km[2]. The islands are characterised by montane forests and volcanic peaks and due to the geographical isolation, Samoa is hosting unique species and plants. The Samoan ecosystem is vulnerable to exploitation and endangered by the rapid population growth in the past century (Hunt, 2013). Exporting agricultural goods is of major importance for the small island. Natural disasters as well as fluctuations in world prices for agricultural commodities stimulate vulnerability of the economic sector (Scheyvens, 2002). Uncoordinated development of tourism can be a threat for vegetation and wildlife. With rising arrival numbers, there is also an increasing need in managing resources and waste. Rapid economic growth can lead to irreversible devastation, therefore information on how to protect the environment should be provided. For the tourist as well as for the local population and especially for those who are working in the transport or tourism sector (Hunt, 2013).
In addition, the geographical location causes the wet and dry seasons. The wet season extends between October and March and the dry season between April and September. Especially in the months June to September there is a rise in arrival numbers observed which lead to seasonality on Samoa (Hunt, 2013).To give a comparable overview about seasonal fares on the different routes, the author chose a 10-day time range in the different seasons, which is the average length of stay on Samoa (Samoa Tourism Support Programme, 2013). The time range was also elected during school terms in Australia and New Zealand, to avoid holiday fares. All fares are based on single person, economy class.
Table 2: International roundtrips to Samoa - Fares (15 May 2017)
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Source:[1] (Skyscanner, 2017);[2] (Polynesian Airlines, 2017)
The fares for transportation in the South Pacific are high, most customers are forced to travel in groups or to use special offers, especially during high season (Taumoepeau, 2016). During holiday times in New Zealand and Australia the prices almost double compared to the fares in non - holiday seasons (Skyscanner, 2017). The school year in New Zealand is divided into four terms, there is a two-week break between the first three terms and a six-week break after term four (Ministry of Education New Zealand, 2015).
Flights from central Europe with stops in Singapore and Auckland or Brisbane take approximately 36 hours or more, depending on the stop duration. Whereas flights from the USA are bundled in San Francisco, stop in Nadi, Fiji and arrive at the international airport on Samoa after 30 hours or more. Flights from China stop twice, in Korea and Nadi, with a minimum duration of 23 hours (Skyscanner, 2017). The main source markets for the tourism sector in Samoa are New Zealand, Australia and American Samoa which are geographically close (Berno & Hunter, 2016) and hold direct air connections to the Faleolo International Airport or in the case of American Samoa to the Apia - Fagalii airport (Samoa airport authority, 2017). To get an insight on the level of geographical isolation, table 3 shows cities with direct flight linkages to Samoa, their distance and flight duration.
Table 3: Distances andflight durations to important source markets (3 May 2017)
(Distances calculated by Google Maps)
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Source: (Samoa Airport Authority, 2017)
Airport Infrastructure
All international flights, except aircrafts from or to American Samoa arrive at the Faleolo International Airport. The airport is located on Upolu, 30 km west of Apia. Currently the airport is under construction. The $400m project is part of the governmental strategy to develop Samoa to a travel and conference destination in the South Pacific. The so called Pacific Aviation Investment programme (SAIP) is a project designed by the Government of Samoa and the World Bank to improve safety and security standards in the transport sector. This contains not only investments in infrastructure and training but also technical assistance will be financed to strengthen the airport management. Implementing a data collection system is one of the aims of the project but the major goal is to improve the security and safety aspect. For example, Automatic Weather Observation Stations (AWOS) will be installed and firefighting and air traffic control equipment will be provided. Due to the islands topography, the Faleolo International Airport is located near the coast. This placement provokes the infrastructures vulnerability towards natural disasters. Especially cyclones, erosion, floods and earthquakes prevent a sustainable improvement and are reasons for an uneconomical and insecure infrastructure.To improve service performance, management and staff trainings are planned (Hunt, 2013). Due to customer reviews on the former webpage of the airport, the crisis management does not meet international standards. Travellers aren't satisfied with the service and the security standards provided.(Apia Airport Authority, 2016)
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