Air Niugini MD ‘cautiously optimistic’ about a return to profitability


With successive years of financial losses, an air-crash investigation and ageing fleet, Alan Milne’s first year as Managing Director of Air Niugini was always going to be turbulent. But, 12 months later, a lot has changed.

Air Niugini’s Alan Milne. Credit: BAI

Air Niugini needed some quick attention from incoming Managing Director Alan Milne. The company had seen two years of financial losses and a Boeing 737 crash at Chuuk International Airport had marred the airline’s otherwise positive 45-year safety record.

But the life-long aviation executive approached the role with a pilot’s calm, instituting some simple fixes and turning his focus to a range of new opportunities.

Milne, a self-confessed aviation tragic, started in Air Niugini’s engineering department, an area he knows well from his time at Qantas. He wanted to address reliability and aircraft availability issues but instead uncovered a potential new growth area for the airline. He realised that the engineering department was not being utilised to its full capability.

New ventures

‘We did some work on improving processes in our heavy maintenance area and that gives us the opportunity to open up some slots for customer airlines to come in,’ he says. ‘Solomon Islands’ Dash 8 was the first of the customer airlines to come into Air Niugini, which was a wonderful opportunity. We delivered that aeroplane back to the customer on time, on budget and on quality, which was just an amazing outcome.’

More importantly, it showed the potential of Air Niugini to become a regional hub for aircraft maintenance. The company may be starting small with Dash 8s but Milne has his sights set on some Australian carriers flying their larger aircraft for four days to London to get heavy maintenance checks done in PNG. Milne wants carriers to consider PNG as the new local option for their heavy work to be done, praising the commitment of his engineering team and seeing it as an opportunity for local jobs growth.

‘I think that there’s enormous opportunity there for freight in PNG, and I don’t think Air Niugini has really maximised that opportunity just yet.’

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To address other issues in the airline, Milne instituted the Higher Altitudes Transformation Program, a wide-reaching corporate philosophy that looks at four main areas: cost control, revenue opportunities, the people component of staff and customers, and operational excellence.

The strategy is already showing signs of turning the business around, with its half-year financial report showing revenues on the rise and putting the airline on track for a profit by the end of the year.

Expansion plans

Air Niugini has pulled out of low-margin routes and looked at expanding codeshare and ancillary revenues.

Some local routes, including those of low-cost subsidiary Link PNG, will run at a loss due to the necessity of air travel in PNG, but Milne says it is about being smarter about those routes. Can they be feeder routes to other destinations? Are there other, perhaps less conventional, routes that make sense to the PNG airline?

‘Cathay pulling out of Cairns was a really good example. That’s an opportunity that we’ve jumped on,’ says Milne. Air Niugini recently announced a partnership between the Queensland Government and Air Niugini on an expanded service between Cairns and Hong Kong via Port Moresby from 30 October 2019. Milne said the route will benefit freight shipper and passengers as well as agricultural businesses.

He adds that Air Niugini was the only airline agile enough to offer to replace the Cathay route, which has run for 25 years.

‘We were down in Cairns a week after Cathay announced they were pulling out, talking to businesses, to the freight companies, to the Government and trying to say “well, what can we do to make this a win?”,’ he explains.

Air Niugini’s Alan Milne [left], Queensland State Member for Cairns Michael Healy [middle] during the Cairns–Port Moresby–Hong Kong route announcement. Credit: Air Niugini

Freight also offers opportunities in PNG. ‘I think that there’s enormous opportunity there for freight in PNG, and I don’t think Air Niugini has really maximised that opportunity just yet.’Milne And a return

There are more challenges on the horizon. Air Niugini has four of Boeing’s ill-fated 737 Max’s on order as part of a fleet overhaul but Milne is keeping all options on the table, including the airline’s right to opt out of the order if Boeing does not sort out the issues.

Milne is hopeful that the changes at the airline are beginning to bear fruit.

‘You know, last year was an eighty million kina loss, the year before was fifty million,’ says Milne. ‘So you need to make some pretty dramatic changes pretty quickly, which the organisation has done.’

And a return to profitability?

‘We’ve still got a few months to run on this year, but the words I’ve been using are “cautiously optimistic”.

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