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Pacific Islands Development Program, East-West Center

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Vava’u Braces For Impact Of Airline Closure In Tonga
Loss of Chathams Pacific may lead to business failures, sackings

NUKUALOFA, Tonga (Matangi Tonga, Jan. 22, 2013) – In a shock email sent from his iPad yesterday, Tonga's Deputy Prime Minister, Samiu Vaipulu, has told the Vava'u Business Chamber he would like to see their members' tax returns for the last five years, before he will talk about their serious concerns over the withdrawal of Chathams Pacific domestic airline service.

Ian Jones, the president of the Vava'u Business Chamber, had warned the government last week that the imminent loss of the Chathams air service could lead to Vava'u business failures and staffing cuts during 2013.

In an email on 15 January written, "on behalf of the members of the Vava'u Business Chamber and the many distressed business owners in Vava'u," Ian told the Deputy Prime Minister, and copied to the Minister of Tourism Dr. Viliami Latu and the Vava'u Governor Lord Fulivai, that "the recent decision by Chathams to withdraw their service is a disaster for business in Vava'u and the rest of Tonga."

"The events that have led to this situation are most concerning and we as a community are distressed by the actions that have now developed into this totally unsatisfactory situation," he stated.

Today, January 22, Ian said the copy of his email to government had been widely circulated but it was not released publically or with the approval of the Vava'u Business Chamber.

He also confirmed that he had received the tax threat yesterday.

"Our executive received two responses from Samiu Vaipulu's iPad."

Ian said the first response was "reasonable" and was received only 17 minutes after Ian sent his email of 15 January.

But Ian said he came home yesterday and was "shocked" to find the second response sent from Samiu Vaipulu's iPad.

"Out of the blue the other response popped up. It is just a blatant threat," he said.

The text sent from Samiu Vaipulu's iPad read: "Dear All, I would like to see a copy of all Vavau Business Chamber members tax returns for the past 5 years if any of you could not get it and please authorize me to get it for you and we will start talking only to those that paid tax in the past 5 years."

[PIR editor's note: Vaipulu earlier announced that the move by government to procure two new aircraft from China for domestic flights was to provide competition and offer cheaper inter-island fares. This same action reportedly forced Chathams Pacific to make its decision to stop services.]

Major tourist destination

Vava'u is a major a tourist destination and a primary source of overseas revenue that is fed into the Tongan economy, Ian stated on January 15 when he spelled out the serious concerns over the impact of the current upheaval and uncertainties in the domestic airlines services.

"The situation with Chathams and / or a replacement air service needs an urgent resolution. Confusion in the market place will cause tourists to reassess their travel plans and change them to more secure and reliable destinations. Businesses in Vava'u have already endured a number of successive poor seasons and many do not have the financial resources to endure another. Without an urgent resolution a number of businesses will fail in the foreseeable future," Ian stated.

Economic impact

"The lack of an airline to service Vava'u and the other outer islands will negatively impact on more that just a few tourist businesses. A lack of future bookings will force businesses to downsize, reduce their running expenses and cut back the number of staff they employ or the hours they pay staff to work. This will roll-on throughout the community as the negative multiplier effect of reduced income within the community unfolds. This will in turn flow through to the greater Tongan economy.

"The decisions that have already been made have now put the businesses in Vava'u in a more difficult position than they were already in. We ask that you urgently address this situation so as to avoid economic disaster in Vava'u, and perhaps Tonga.

"We need certainty of a reliable air service until the new airline is operational," Ian stated.

Implored

Ian Jones implored the government "to take strong, considered and affirmative action without delay. We request that you keep us advised on you actions and plans."

"We need strong leadership and clear communication to all stakeholders about what is happening and what is being done to resolve this issue.

"We need to be able to address this with the people that have booked with us and are now considering canceling their holiday to Tonga in favor of a more stable and reliable destination. We need to give them confidence in Tonga and a destination.

"We are a business community offer you our assistance. We wish to be a part of the solution. Please feel free to seek our assistance in helping to avert this pending disaster," Ian stated.

Cancellations

Ian said the first response from Samiu Vaipulu assured the Vava'u businesses, "There will be no breakdown on the domestic air service it will be continued as usual, and new strategies are in place we will provide you with all information in the very near future and websites and all within this week we will announce the way forward but please be patient and continue with your normal business."

The Deputy Prime Minister added "I must thank you all for all the efforts you have made towards the Tourism Industry and it is sad that Air Chathams has to pull out at this time but it is a business decision that we have no say in. Please rest assured we will do our best."

But Ian said he was shocked to find the second response.

The Vava'u Business Chamber had not replied to the second message, he said. "At this point the Chamber is considering its next step."

Ian said there are about 25 businesses in the Chamber and already in the last week they had reported over TOP$100,000 [US$57,567] lost in tourism cancellations due to the expected disruption in the air services.

"Many of us are new to Tonga and now we are also worried that our visas might not be renewed," he said.

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