EAP - The Pacific Infrastructure Challenge - World Bank (2006).pdf
EAP - The Pacific Infrastructure Challenge - World Bank (2006).pdf
EAP - The Pacific Infrastructure Challenge - World Bank (2006).pdf
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A.2.7 Institutional Analysis for Airports<br />
Most of the <strong>Pacific</strong> airports in this review are administered by government departments or<br />
statutory corporations. Non core services such as retail, ground handling or car rental are<br />
often provided by private operators. Table A.8 provides an overview of the institutional<br />
arrangements selected airports in the <strong>Pacific</strong>.<br />
Fiji 100<br />
In 1999 the Civil Aviation Authority of Fiji was reorganized into the operational functions of<br />
Airports Fiji Limited (AFL) and the Civil Aviation Authority of Fiji Islands (CAAFI). <strong>The</strong><br />
Ministry of Transport and Civil Aviation (MOTCA) is responsible for the sector’s legal<br />
framework.<br />
AFL is a state-owned entity. It is licensed by the Government to manage air traffic services<br />
in the Fiji Islands region, operate, maintain and manage the 16 public airports including the 2<br />
international airports at Suva and Nadi and control all associated revenue generating<br />
activities. AFL operates Suva and Nadi airports on a commercial basis. Revenue from Nadi<br />
(which runs at a profit) is used to cross-subsidize the Suva operations which are running at a<br />
loss of around 2 million Fijian Dollars a year. AFL receives a grant from the fiscal budget to<br />
manage the domestic airports as a supplement to airport revenues. <strong>The</strong>se funds have been<br />
insufficient to support airport operations and maintenance costs.<br />
CAAFI is responsible for sector regulation and owns 51% of Airport Terminal Services,<br />
which provides ground handling services at Nadi airport. It is also responsible for personnel,<br />
operator certification, licensing, aircraft worthiness certification and meeting the Fiji Islands<br />
obligations under the international aviation convention. <strong>The</strong> Government instructed CAAFI<br />
to reemploy approximately 300 staff members who had been made redundant when the<br />
Authority was incorporated. This imposes a significant additional expenditure burden on the<br />
organization and raises a question about its efficiency.<br />
AFL has managed to reduce its total workforce from 562 to 450 people. <strong>The</strong> government<br />
will not support any attempts to terminate staff or make people redundant even for poor<br />
performance. <strong>The</strong> airport management recognizes this as a ‘social obligation cost’ and<br />
recognizes that productivity levels could be increased by outsourcing activities to the private<br />
sector. Terminal cleaning was recently outsourced to a private operator because of the<br />
extremely poor performance of existing cleaning staff. <strong>The</strong> cleaning staff could not be made<br />
redundant so they have been re-deployed to perform other activities such as porter services,<br />
serenading parties for arriving visitors and kerbside management within the car park.<br />
AFL acknowledges that some of the key issues in the past have been a lack of revenue<br />
growth, poor profitability, rising costs, poorly maintained assets, overstaffing, lack of<br />
strategic business direction and challenging industrial relations. <strong>The</strong> company is trying to<br />
develop additional revenue streams in an effort to cover operating and maintenance costs.<br />
One initiative currently under review is to develop the land around the airport.<br />
100 Sources: Castalia interview with the CEO of Airports Fiji Limited, September 2004; “Technical Assistance<br />
to the Republic of the Fiji Islands for Preparing the Civil Aviation and Airports Improvement Project”, ADB<br />
2003 and Republic of the Fiji Islands 1999 Economic Report, ADB <strong>Pacific</strong> Studies Series, 1999<br />
147