Air Mauritius: Sink or Save?

Editorial

As from 15 July 2021 international travellers will be allowed to visit Mauritius and stay in 14 unique resort bubbles specially set up to welcome them here. This partial reopening is being made in advance of the full reopening on 1 October 2021 – and against the backdrop of the uncertainty prevailing to this day as regards the fate of Air Mauritius. In the meantime, Emirates and other global airlines will add additional flight capacity from 15 July 2021in the lead up to 1 October 2021.

Given the government’s focus on the tourism sector’s revival (which contributed at least 23% to GDP in earlier years), one would have expected it come out with some concrete policy decision regarding our national airline instead of allowing it to remain in voluntary administration. None of that has taken place, and the Finance minister chose in his last budget speech to keep mum about air access policy and what the government would be proposing to do with Air Mauritius that used to carry around 55% of tourists prior to the lockdown and before it was placed into voluntary administration. So much for the sector’s revival even as the expectation of the Finance minister in terms of tourist inflow are of 650,000 tourists within the next 9 months!

No major decision has been made about Air Mauritius for more than a year, and the so-called watershed meeting scheduled initially for December 2020 was postponed a first time to June 2021and now to January 2022. It would require an injection of Rs 10 billion to keep it afloat, it was revealed at a press conference by Sattar Hajee Abdoula who, together with Arvindsingh Gokhool of Grant Thornton, has been tasked with the voluntary administration exercise. He added that the situation at Air Mauritius is “very, very serious”, and that “our role is to save the company and not to close it”. The watershed meeting planned for December 2020 was meant to invite the company’s creditors to take a vote on the administrators’ proposals – either to restructure the company’s financials, assets and operations back on a recovery path or place it in liquidation. One however gets the uncanny feeling that it’s the second option that appears to be the preferred one.

national airlines do sometimes fail for different reasons, and Air Mauritius has also been through several storms in the course of its existence. Political interferences and consequent weak managements are partly to blame. Open skies policy and the resulting competition forced it to take the cue not to take things for granted. But it was the quality of service for most of its existence which helped sustain the business. It overcame poor mismanagement decisions on occasion, such as when it landed into catastrophic hedging contracts for its fuel oil, admittedly in a period of heavy uncertainties on rocketing international aviation oil prices.

Aviation, passenger and cargo, requires more than customary accounting or management skills. It weaves specialist knowledge covering a multitude of factors from aircraft and fleet purchase/maintenance, flight destinations and overseas traffic hubs, seat and cargo marketing and sales, industry evolution analysis in addition to having well-trained air and ground personnel, etc.

We would like to believe that accountants have the necessary specialist industry overview and skill range to prepare a sustainable forward-looking plan for what remains of our national carrier. We trust as recommended by Rama Sithanen in an earlier interview to this paper, that they have roped in airline industry expertise to propose viable solutions. “There are no 25 solutions to the problem of MK. Its main shareholder – government – must inject funds to revive the company,” he added. What government decides on that score and what emerges from next January’s watershed meeting will have a determinant impact not only for the carrier’s personnel and air operators but also for our exporters, our tourism and hostelry sectors, our foreign exchange inflows and throughout the national economy.

Air Mauritius played its part in our successful economic history. If those in charge of saving the company bear this fact in mind, they will not allow it to sink.


* Published in print edition on 9 July 2021

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