Air Niugini boss reveals the challenges and plans for the airline
Air Niugini’s managing director Alan Milne has been in the job for 12 months and is guiding the national carrier out of turbulent air. Paul Chai reports.
With successive years of financial losses, Alan Milne’s first year as Air Niugini managing director was always going to be turbulent. But 12 months later a lot has changed.
The long-time aviation executive approached the role with a pilot’s calm, instituting some simple fixes and turning his focus to a range of new opportunities.
Milne, a self-confessed aviation tragic, first focused his attention on the engineering department, an area he knows well from his time at Qantas. He wanted to address reliability and aircraft availability issues, but instead uncovered a potential new growth area for the airline. Milne realised that the engineering department was not being fully utilised.
“We did some work on improving processes in our heavy maintenance area and that gives us the opportunity to open up some slots for customer airlines to come in,” he says. “Solomon Islands’ Dash 8 was the first of the customer airlines to come into Air Niugini (for servicing), which was a wonderful opportunity. We delivered that aeroplane back to the customer on time, on budget and on quality, which was just an amazing outcome.”
More importantly, it showed the potential of Air Niugini to become a regional hub for aircraft maintenance. They may be starting small with Dash 8s, but Milne has his sights set on some Australian carriers who are flying their larger aircraft for four days to London to get heavy maintenance checks done. Milne wants them to consider Papua New Guinea as the new local option for their heavy work, praising the commitment of his engineering team and seeing it as an opportunity for local jobs growth.
To address other issues in the airline, Milne instituted the Higher Altitudes transformation program – a wide-reaching corporate philosophy that looks at four main areas: cost control, revenue opportunities,
The strategy is already showing signs of turning the business around, with the halfyear financial report showing revenues on the rise …
the people component of staff and customers, and operational excellence.
The strategy is already showing signs of turning the business around, with the half-year financial report showing revenues on the rise and putting the airline on track for a profit by the end of the year.
Air Niugini has pulled out of low-margin routes and looked at expanding codeshare and ancillary revenues. Some local routes, including those of lowcost subsidiary Link PNG, will run at a loss due to the necessity of air travel in PNG, but Milne says it is about being smarter about those routes. Can they be feeder routes to other destinations? Or are there other, less conventional routes that make sense to the airline?
“Cathay Pacific pulling out of Cairns was a really good example. That’s an opportunity that we’ve jumped on,” says Milne, referring to Air Niugini’s new Cairns– Hong Kong service.
The service, via Port Moresby, started on October 30 and
Milne says it will benefit freight shippers and passengers, as well as agricultural businesses that depend on the route.
Milne says that Air Niugini was the only airline agile enough to offer to replace the Cathay route that has run for 25 years.
“We were down in Cairns a week after Cathay announced they were pulling out, talking to businesses, talking to the freight companies, talking to the government and trying to say ‘well what can we do to make this a win’,” he adds.
Freight also offers opportunities in PNG. “I think that there’s enormous opportunity for freight in PNG, and I don’t think Air Niugini has really maximised that opportunity just yet,” he says.
Among other challenges,
Milne recently had to cancel Air Niugini’s order for four of Boeing’s troubled 737 Max aircraft, instead opting to focus on aircraft from Embraer and Airbus for the airline’s fleet-renewal program.
“You know, last year was an PGK80 million loss, the year before was PGK50 million,” says Milne. “So you need to make some pretty dramatic changes pretty quickly, which the organisation has done. We’ve still got a few months to run on this financial year, but the words I’ve been using are ‘cautiously optimistic’.”