Lulutai Airlines' chief executive has been replaced. Photo: Tonga High Commission Canberra
Prime Minister Aisake 'Eke's government is initiating a review of the operations of Lulutai Airlines, Tonga's only domestic airline, with a possibility that the company may be wound up.
The Minister for Public Enterprise Piveni Piukala said if the company is wound up and its are operations closed, the government will take the necessary action to ensure that domestic demand is met.
He confirmed the sacking of the airline's chief executive, Poasi Tei, as the first step toward taking control of the situation.
He has been replaced by Tevita Palu, the owner of Palu Aviation and Real Tonga Airlines.
Palu is a seasoned aviation industry expert and operated Real Tonga before the previous government of the late Dr Pohiva Tuioneto'a approved the setting up of Lulutai.
Piukala said Palu is being tasked with leading a review of Lulutai's operations and report back to government.
Minister Piukala also confirmed that the airline is seeking government assistance of $7 million Pa'anga (around NZ$5.1m) to help bail it out of its financial problems.
He confirmed that the government is taking steps to right the wrongs it has identified.
Asked what the government will do if Lulutai's operations are closed and whether the domestic air market will be opened up for other operators, Piukala said "yes, government will act appropriately".
He said the company has been in dire financial need and has not been able to recover money it had been given by the past government of former Prime Minister Hu'akavameiliku Siaosi Sovaleni.
Lulutai's issues were one of the points Piukala and his team had raised as part of the motion of no confidence they lodged with the Tongan parliament against Hu'akavameiliku in November last year.
Speaking to reporters at a news conference in Nuku'alofa last week, Piukala said he had discussed with Prime Minister 'Eke the possibility of approaching King Tupou VI to establish a Royal Commission to investigate the controversial purchase of Lulutai Airlines' Twin Otter aircraft in 2023.
This, he said, was because the aircraft had been plagued with maintenance issues since it started operating.
He said the company's operations was "very cloudy" and said the company had asked for $7m to revive the company.
"In a scenario where there is no $7 million, the company must be wound up," Piukala said in Tongan.
Meanwhile, Kaniva News reported Piukala saying that the biggest challenge they faced while reviewing Lulutai was that the previous governments had invested approximately $21 million in it.
He said he had just learned of a $10 million loan the airlines secured from the Retirement Fund Board, which is now the topic of discussions amongst civil servants in Tonga, since they were not advised about the investment.
He stated that out of the $10 million, $6 million was spent on the new Twin Otter, while $4 million was allocated for share purchases.
