EAP - The Pacific Infrastructure Challenge - World Bank (2006).pdf

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