“Everybody is complaining, it’s not good. Don’t book Air Vanuatu.” Those were the words of a taxi driver in March as he pulled away from Vanuatu’s Bauerfield international airport and headed into the heart of Port Vila, the oceanside capital of the Pacific island country.
Two months later and the frequent cancellations and delays that had become synonymous with the national carrier over the past year have given way to a government announcement that Air Vanuatu is in voluntary liquidation. In a country where 48% of gross domestic product is derived from tourism, business owners fear tourism will bear the brunt of the airline’s grounding.
“The livelihoods of thousands of ni-Vanuatu and their dependents employed in Vanuatu hotels and resorts are now at risk,” the Vanuatu Hotels and Resorts Association (VHRA) said in a statement. “Massive damage has been done to Vanuatu’s reputation in overseas tourism markets. Potential tourists are going elsewhere, and wholesalers are selling to other, less troubled destinations.”
Before the pandemic, the 83-island country welcomed about 90,000 tourists each year, drawn in by volcanic landscapes, brochure-worthy beaches and rich marine life. The majority came from Australia and New Zealand, and while Virgin Australia also flies to and from the archipelago, Air Vanuatu carried the majority of the country’s air travellers.
Joel Slattery, owner of hotel the Moso, located on an island of the same name, said Vanuatu was in the midst of a post-pandemic tourism boom but Air Vanuatu’s ongoing turbulent operations had led to people “crossing it off their list as a destination”. Speaking from the veranda of the resort’s main house with a view out to the ocean, Slattery said that over the past few months several guests had been forced to abandon their remote-island experience.
In April 2023 the airline’s only jet, a Boeing 737, was grounded in Brisbane. In September 2023 more than 25 flights were cancelled over a weekend due to another “ongoing engineering requirement”; and in January this year it was again forced to stay on the tarmac for scheduled maintenance. The required parts still have not arrived.
Boeing warned last year of supply-chain issues with parts, which across the aviation industry have been harder to procure since the pandemic and the war in Ukraine.
The news of liquidation had already impacted hotel reservations as well as employees, said Stella Nomalo, the office manager of Hideaway Island Resort and Marine Sanctuary, located on the island of Efate. “We have [had] to cut down from giving a lot of work to staff.” Tourism accounts for 35% of employment in the tropical archipelago.
Other factors, such as the cost of living and low tourism season, could also have been at play, said Rob Macalister, president of the Vanuatu Tourism Operators Association and managing director of Vanuatu Ecotours.
“Despite pressures on the broader industry”, the appointed liquidators – accounting firm Ernst & Young Australia – said they believed “the outlook for Air Vanuatu is positive” and stated that services would resume following safety and maintenance checks. In the meantime, flight have been cancelled, scuppering holiday plans.
“There’ll be some short-term pain – the industry is going to have a few quiet weeks,” Macalister said. “But in the long term we’re going to come out a stronger destination as we need to address these issues around our national airline. This is the start of that process.”
Should Air Vanuatu re-emerge, it would suffer “a reputation for being unreliable”, said British newlywed Rebecca Allen. In May 2023, five months pregnant and with a one-year-old in tow, she and her husband, Richard, spent five hours in the one-terminal airport waiting to return to Sydney for a secondary wedding celebration. Their initial nuptials took place to the backdrop of a Vanuatu beach. The jet would not take them home that day, nor the day after.
They missed the celebration and a year on still have not been compensated for the three extra days – equating to around A$1,000 – that they had to spend in Port Vila.
“[I’m] very upset as I will not get my money back now,” Allen said, adding that it would be a while before she would want to visit Vanuatu again. “Hopefully another airline can step in.”
Calling the airline “critical to Vanuatu’s economic wellbeing”, the VHRA has called on the government to urgently address “the immediate crisis and find a lasting solution”.
“They could sell part of the airline … they could merge, they could split the airline,” Macalister suggested. In the meantime, it was important to remember “it’s Air Vanuatu that’s in crisis, not the tourism industry”.