The Fiji government revises its foreign ownership laws to limit QANTAS Airways’ control of Air Pacific

Air Pacific (Nadi) is maintaining normal operations after the Fiji government revised its foreign ownership rules to corral and limit the control of QANTAS Airways (Sydney) over the carrier.

The government issued the following statement:

“To ensure compliance with international law and bilateral requirements governing air service rights granted to national airlines that fly to other nations, the Republic of Fiji has updated its ownership and control criteria for airline companies registered in Fiji through the passage of the Civil Aviation (Ownership and Control of National Airlines) Decree 2012.

The Civil Aviation Decree necessitates that all Fijian-registered air carrier companies providing international service must satisfy these international requirements and be under the “substantial ownership and effective control” of a citizen of Fiji, meaning:

  • The Government of Fiji or any institution of the State;
  • An individual who is a citizen of Fiji;
  • A partnership each of whose partners is an individual who is a citizen of Fiji; or,
  • A corporation or association of which at least 51 percent of the voting interest is owned and controlled by persons who are citizens of Fiji, at least two thirds of the board of directors and any committee are citizens of Fiji, and such corporation or association is under actual and effective control of citizens of Fiji.

Currently, Air Pacific and Pacific Sun are Fiji’s only international airlines, and they are majority-owned by Fijians. However, since 1998, minority and non-Fijian shareholder QANTAS Airways has maintained effective control of these airlines through supermajority and veto rights over significant areas of the company, including the appointment of the Chairman, Deputy Chairman, annual operating budget, any expenditures, new air routes, variations to Air Service schedules, management appointments, employee incentive schemes including bonuses, and numerous other key areas of oversight, control and decision-making.

While QANTAS currently has veto power over most areas of Air Pacific’s operations and business decisions, QANTAS also competes directly against Air Pacific through its wholly-owned low cost carrier subsidiary, Jetstar Airways, which flies overseas visitors to Fiji from Sydney.

Concerns about ownership and control requirements are not unusual in international aviation law. Indeed, just last week QANTAS called for the Australian International Air Services Commission (IASC) to undertake a comprehensive public review of Virgin Australia’s ownership and control position to determine if Virgin complies with the ownership and effective control provisions of Australia’s aviation laws.

In the European Union and United Kingdom, air carriers must be owned and effectively controlled by Member States and/or nationals of Member States. Similarly, in New Zealand international airlines must be owned and effectively controlled by New Zealand nationals.

With this law, the Bainimarama Government has now corrected the activities of prior Fijian governments, which allowed foreign citizens to control Fiji’s national airlines. Since Air Pacific is responsible for carrying more than 70 percent of visitors to Fiji, its success is critical to the health of the Fijian economy and the livelihoods of Fijians.”

Air Pacific issued the following statement:

“The Fiji Civil Aviation Decree 2012 is a shareholder matter. For our customers and our team here, it’s business as usual as Air Pacific, our board, our business partners, and our great team of professionals continue to work together to revitalise, modernise, and ensure the future success of our airline.

Air Pacific’s mission remains the same: to be the preferred airline of the South Pacific and the country we are privileged to call home.”

Copyright Photo: John Adlard.

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