Fiji rule change to curb Qantas's control of Air Pacific

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The government of Fiji has passed a new law that allows it to take greater operational control of the nation's international carrier, Air Pacific, and its subsidiary Pacific Sun, effectively cutting the influence of Australia's Qantas Airways in managing the airlines.

The Civil Aviation (Ownership and Control of National Airlines) Decree 2012 was announced in a statement issued by attorney-general and minister for civil aviation Aiyaz Sayed-Khaiyum.

"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," says the statement. "Since Air Pacific is responsible for carrying more than 70% of visitors to Fiji, its success is critical to the health of the Fijian economy and the livelihoods of Fijians."

Fiji contends that since 1998, "non-Fijian shareholder Qantas has maintained effective control of these airlines through super-majority 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."

The Fijian government also implies a conflict of interest, noting that Qantas has substantial veto power over "most areas of Air Pacific's operations and business decisions", while at the same competing with Air Pacific through its unit Jetstar Pacific. It cites Qantas's recent questioning of Virgin Australia's ownership structure as an example of concerns about ownership and control of airlines that it feels are "not unusual in international aviation law".

The new law means Fiji-registered airlines must be under "the substantial ownership and effective control" of a citizen of Fiji. It gives four definitions for this: the Fijian government, an individual who is a Fijian citizen, a partnership of which every partner is Fijian, or a corporation in which 51% of voting interest is controlled by Fijians.

Fijian prime minister Frank Bainimarama, a former naval officer, came to power during Fiji's constitutional crisis in 2009. Since taking power, his government has been labelled a pariah, owing to international concerns about the state of democracy in Fiji.

According to Flightglobal, the Fiji government owns 51% of Air Pacific, Qantas 46.3% and Air New Zealand 1.94%. The governments of Kiribati, Nauru, Samoa, and Tonga hold a combined stake amounting to less than 1%.

Flightglobal was unable to reach Qantas for comment about the situation in Fiji.

Air Pacific operates six aircraft: three Boeing 737-800s, two 747-400s and one 737-700. It has three Airbus A330-200 aircraft on order and one 767-300 in storage. It operates services to a number of destinations in the Pacific region, including Australia, Hong Kong, and New Zealand.

Air Pacific's wholly owned regional unit, Pacific Sun, operates two ATR 42-500s and two De Havilland Canada DHC6-300s.