By Tupou Vaipulu Jr.

Tevita Palu was appointed as the temporary CEO of Lulutai Airlines, Tonga’s domestic airline, on Friday 28 February, taking over from former CEO Poasi Tei.

The Minister for Public Enterprise, Hon. Piveni Piukala said that Palu was chosen for his expertise.

“The reason why we thought to seek the expertise of Tevita Palu is because first, he can help restore the airlines’ fleet and make travelling go back to normal,” he said, “second, so he can provide a thorough report on the status of the airline.”

Tevita Palu was the owner of the former Real Tonga Airlines, that operated as the sole domestic airline in Tonga from 2013 until 2020, when a bird strike grounded its SAAB340 aircraft, and left the company unable to meet its debts and Tonga without a domestic air service [2].

The Lulutai Airline Ltd, launched [3] in September 2020, is the second domestic airline to be owned by government and the 12^th national airline to operate in Tonga since 1937.

Challenges for domestic air service

Today Lulutai Airlines is facing serious challenges as two of its aircraft, the SAAB 340 and the 17-seater Y-12, are currently grounded and need expensive major engine overhauls.

The Twin Otter is the only functioning aircraft, however, both of its engines are due to be serviced in April, which will also be very expensive Hon. Piukala told a media briefing at St George Government Building last Friday.

Hon. Piukala believed that financially, the airline is in a very risky position because the sale of its assets would not recourse the money taken from the civil service retirement fund, if the airline were to collapse today.

Hon. Piukala revealed that when the Twin Otter was purchased for $15 million - this comprised of a $4 million investment from the National Retirement Fund, $7.5 million from Australian budget support and $3.5 million taken out as a loan from the National Retirement Fund.

The loan was taken out mortgaging the same aircraft. However, Hon. Piukala said that the aircraft currently had no value to cover the loan.

“This aircrafts’ engines need to be replaced, so if the airline were to default today, this aircraft will have no value.”

Hon. Piukala is calling for the Prime Minister Hon ‘Aisake Eke to advise the King that Section 2 of the Royal Commissions Act be activated.

This gives the King power to launch a commission of inquiry into matters of public nature. Royal Commissions can decide whether or not an inquiry will be held in public.

Lulutai Board

The new Prime Minister Hon. Aisake Eke has recently taken over the chairmanship of the Lulutai Airlines Board from the former PM Hon. Hu'akavameiliku (Siaosi Sovaleni). Hon. Eke is also the chairman of the board of the National Retirement Fund, which has a shareholding in Lulutai Airlines.