Open sky policy planned for PNG

PORT MORESBY, Papua New Guinea (PINA Nius) — The Papua New Guinea government will be opening PNG’s skies to foreign airlines by removing all policies and regulations that prevent new airlines operating in the country, Prime Minister Sir Mekere Morauta announced yesterday.

Sir Mekere said access by appropriately licensed operators to infrastructure such as terminals, navigational aids and airport services would be expanded.

Announcing Cabinet’s endorsement of Air Niugini’s community service obligations, Sir Mekere said price and other regulations had led to severe distortions in some areas of the airline’s operations.

Speaking at the launch of the privatization policy earlier yesterday, Sir Mekere said that with privatization of Air Niugini, the government would provide firm assurances that the current airports being served by Air Niugini would be maintained and made available to all airlines at reasonable cost.

He said the privatized Air Niugini would have to compete with other airlines, and to keep their business, they would have to offer good service at competitive prices.

Sir Mekere said the community service obligations approved for Air Niugini were based on the principle that market forces and competition would bring on the most efficient and least expensive provision of services.

“At present Air Niugini has no requirement to provide services on particular routes. Cabinet has therefore accepted that Civil Aviation policy should reflect that fact by stating that domestic air service providers will be free to service routes of their choice at times and frequencies of their choice,” he said.

All routes would be monitored constantly and those that showed community service obligation characteristics — that the routes were necessary but not commercially viable — could be operated by any commercial airline under special arrangements.

He said these could include service level agreements, possibly including some form of subsidy, by open tender through the Central Supply and Tenders Board. Guidelines would be formulated to ensure that only appropriate routes or route combinations were included in the plan.

Price and other regulations had led to severe distortions in some areas of Air Niugini operations. It had for example caused the use of inappropriate and inefficient aircraft on some routes, leading to higher than necessary prices.

Therefore domestic airfares were to be deregulated, allowing operators to charge fares that accurately reflected costs. This would encourage the development of more appropriate flight arrangements and innovative fare structures that later would reduce the pressure for big price rises.

“The only way to restore service levels, keep price raises to a minimum and to restore the national flag carrier to financial health is to proceed with privatization,” he said. “The alternative is a continuing decline in service and massive price rises.”

Sir Mekere said Cabinet had endorsed the sale terms of Air Niugini.

“This is an important final step in the privatization of Air Niugini, which is expected to be completed in the first quarter of the year,” he said.

“The sale of Air Niugini will be the first privatization of all significant government business enterprises after many years of failed attempts by leaders of all political persuasions.”