I have been following this launch of Samoa Air, the new airlines that is owned by the government of Samoa and seeing how they developed it. Too be quite honest, I am holding my breath about it because while Samoans can do many things, running large corporations does not seem to be in their skill set. The list of failed airlines in Samoa is quite long.
I want to see them make it, be profitable while still be competitive. It is even more critical that they do not that the government made the silly decision to ban Virgin Airlines from flying the Apia to Auckland leg.
The bottom line is that Samoa needs tourism. It brings a lot of money into the economy and it also gives the government the needed US Dollars to pay external debts. If there is less ability for people to come to the country, this could have major problem that would create a much higher cost of living for the average Samoan. It will also drive up prices for tourist that do come (that are already quite high).
Allow me to be very clear before we look at the reasons that I am concerned about this venture by the government: I believe this is a grave mistake. They are in no place to try and run an airline from an exotic island in the middle of nowhere.
10 reasons that Samoa Airways will fail
While I am sure there is some that I will miss but here is my list of the main reasons that I see trouble for the airline. I am praying that i am wrong and it is wildly successful but my expectations are quite low.
- Failed history with Polynesia Airlines
- Good ole boys mentality of government
- Lack of airline experience
- Marketing issues
- Political motivations
- High cost of operation
- Limited Customer base
- No solid business plan
- Samoan pride does not pay bills
- Prime Minister is involved
Failed history of Polynesia Airlines
Back before there are the Polynesia Blue that became Virgin Samoa, there was Polynesian Airlines trying to do the very thing that this airline will try. It failed them horribly and almost bankrupted the government.
They ended up gutting the airlines and only serving flights to American Samoa from Fagalii Airport which they have been halfway successful at doing. They have made it a lot longer than Inter Island Airways and new comer Samoa Air did.
Good ole boy system in the Samoan government
Sadly, the government there is a reflection of the culture. In Samoan culture, you look out for your friends and family. In business, there is a sure recipe for failure. You can’t give people “favors” and stay in business. It just does not work.
While the launch team of Samoa Airways claims they will not give credits to government and religious officials, they did take many officials on a free joyride around the Pacific at who knows the cost. I do not think the “No Credit” rule will last when the government is running the show.
Lack of airline experience
I understand they are getting from help from Icelandic Airlines but they still do not have a solid leadership team that understand how the airline industry works. Fiji Airways was ran until the ground until they bought in someone who understand how airlines works and kept them from being a total financial disaster. The leadership in Apia does not seem to have a similar CEO.
It goes past just the top brass as well. They will want it to employ as many Samoans as possible. Where will they get the Samoans that are competitive in their fields and are hired because they are the best person for the position? This remains to be seen.
No marketing plan
I have yet to see any real plan to market the airlines outside of the Samoan population in New Zealand. While there is many of them in Auckland, they can’t support the airline completely. They need to attract tourists and business people. In order to do that, they need to market it to them. Having a Facebook page is not cutting it as your marketing plan when you want to be a national flag carrier.
Alaska Airlines had to pull out of Redding, California a few years ago because they could not sell the tickets to support the route. They was also to operate at a loss for a few years because they had other routes to make up for it. Samoa Airways will not have this benefit. It is literally go big or go home with them.
Anytime that a government starts its’ plan because it wants more money, it is sure to be a failure. This is true in the United States and Europe. It is even more true in small countries with the GDP of a middle sized city. Thinking you could make money doing everything yourself is just not the place to start a discussion of an airline.
The whole banning of Virgin Airlines from Auckland to Apia was an example that will really ultimately hurt tourism but was done for political reasons. If the airlines stand any chance at all at success, the Fono (government) is going to have to get their little paws off of it.
High cost of operation
Let’s face it: airplanes are not cheap to operate and large Boeing aircraft cost over $10,000 per hour to use. If you do not make more money on a flight than it cost to operate the aircraft, you won’t last long.
Many airlines make up the difference by moving cargo from market to market. The problem is I do not see companies flying freight into Samoa at a premium cost and since the government has their hands on the shipping companies as well, it would be robbing Peter to pay Paul for them.
Limited Customer Base
It seems that they are planning to try and rely on the Samoan population to keep the airline going. That is not a big base of customers. They need to market to tourists. They need to market to travelers. It is not an easy thing to do but it will be critical. If they don’t, they have too small of a pool of possible passengers.
I am not convince that they can make it profitable even if they market effectively. Air New Zealand is able to operate to Apia because it is part of the upsell plan where they make the real money from the long haul flights to Los Angeles and Hong Kong. Samoa Airways does not have this option.
No solid business plan
As pointed out by many in the Samoan community, there is simply no solid plan for business or marketing. It looks like they just threw the whole thing together and said, “let’s make it work, guys.” This is silly when you are considering the cost of an airlines is tens of millions of dollar every month.
If they do not have a business model very quickly, they will be a sinking ship in a matter of weeks and without Virgin Airlines to compete with Air New Zealand, it won’t be good for tourism.
Samoan pride doesn’t pay the bill
It has become clear that the government is trying to use the “Support Samoan” concept to get people to use the airline to Samoans. While this might work in a limited role, many of them will still use whoever can get them to where they are going at the best price. Nationalism only goes so far.
People will not pay double the price to fly to Samoa on an airline just to have the Samoan flag on the tail. If it the prices are close, they might let emotional ties to make the choice but I do not see the airlines being able to compete with the big airlines to be honest.
Prime Minister issues
For whatever reason, the Prime Minister in Samoa thinks he has to be at the center of everything and his ego makes some very silly decisions. It almost always comes back to hurt the people of Samoa. It was just last week that BlueSky Samoa has to bail out the rugby team because the Prime Minister was wasteful.
If there is any chance of the airline making it, they are going to have to force him as far away from the board room as possible. There is no way around that.
Why a failure could have long term effects of Samoa Tourism
One of the most important factors for people when they are looking at a country to visit is the cost of flights. If Samoa Airways fails, it would mean that Air New Zealand (that is not that cheap anyways) would have a free for all at charging whatever they want for people coming from Auckland.
This will reduce the passenger traffic to the country and that will cause massive problems for the already struggling tourism sector that has been gutted alive by the government in other projects.
At the end of the day, I really hope they do make it because if they don’t, it is very bad news for a long time for Samoa’s tourism sector.