SBM speaks with the CEO of Solomon Airlines, Mr Brett Gebers
SBM. On the financial side, how is Solomon Airlines surviving in the pandemic?
CEO: We have managed to remain in business which is more than many other bigger airlines have done. We took decisive action in April where salaries were reduced and all unnecessary expenditure was curtailed. We renegotiated contracts where possible. Some of them have very specific clauses in them which required notice periods etc. We stopped domestic
weekend flying to reduce the costs of the operation and because the demand for seats had dropped considerably as a result of no international passengers. We also put many of
our staff on a rotation basis to keep them employed and reduce costs.
Having done all we could to the expense side of the business we simultaneously focussed on generating additional revenue which we have done through flying a weekly cargo
flight from Brisbane to Honiara and charters for several different countries and charter organisations in the world.
We received SBD20m in the form of a stimulus package which is made up of a SBD5m and a SBD15m loan from the Government in October. This money was very useful and timely
but is a small amount in the context of running the airline. We should also remember that at the time of announcing the stimulus package, the world experts were expecting that
the COVID-19 problem would be starting to decline from October onwards and was aimed at providing immediate relief. We now know that we will have a tougher year in 2021 as
there will be very few international passengers who are prepared to pay for and go through the entire quarantine process in each country. We don’t expect to see much change
to the international travel restrictions before mid-2022 at this point. I hope I am proven wrong.
SBM: In comparison to pre COVID-19, how much money is the airline losing in the past year?
CEO: This number varies from month to month depending on Charters. The monthly losses have declined over the past few months as our international charter business has increased.
SBM: The government has allocated $20m under the stimulus package for Solomon Airlines, are you receiving the funds? And how is the money used?
CEO: The money was used to settle creditors who had worked with us and had waited a long time for payments which were not possible when we were forced to immediately stop international flying on 27 March 2020.
SBM: Just before COVID-19 arrived early last year you leased a new aircraft which is currently used by
the airline, how is the lease going and are you coping with the repayments?
CEO: The aircraft is running very well and we use it to fly cargo and international charters.
SBM: Whilst international flights are affected, how is the domestic routes performing?
CEO: Domestic passenger numbers are about 60% of last year’s numbers. This is caused by a slower economy and no international passengers.
SBM: Given what is happening (COVD-19), and if the international borders are opened, how long would you think it will take to recover from the pandemic?
CEO: I don’t think we will see any return to normality before 2024. Firstly, international travel will be difficult until most of the world’s population has been vaccinated and there is a high level of immunity. Secondly the vaccination does not stop people from getting COVID-19 but it is most likely going to be a much milder version and won’t be fatal. That said, if you can still get COVID-19 after having the vaccine, it means that you could still be a carrier and therefore we are likely to see lots of testing accompanied by quarantine to curb the spread.
We must also remember that the world economies are all struggling because of the costs of COVID-19 and the enormous effect that the lack of normal business has caused. Tourism for an individual is not an essential item and is normally comes out of savings. With many industries taking salary cuts and rising unemployment, there will be less money to spend on travel.
A lot more business is now done through digital meetings such as ZOOM, Microsoft Teams etc. This will result in less business travel as people have had to adapt to new ways of doing things. At the same time, there are lots of people who would love to travel again if it was easy. It will be up to every Government and the travel industry to find ways of making travel an enjoyable experience again.
SBM: You had laid off some of your workers, what is going to happen to them after the pandemic?
CEO: We reduced our staff count by about 20% through layoffs, retirements and having people work month on month off. If and when business increases, we will aim to rehire those staff members who can add value to the business and who want to re-join us.
SBM: In the COVID-19 period, the aircraft has flown to Asia on chartered flights, if the borders open will you with consultation with the government open up new direct flights to Asia?
CEO: We will fly anywhere that it makes good business sense to do so. If we believe there is a case to be built on flying to Asia we will be very happy to factor this into our planning. We need to ensure that there will be enough passengers to make the flights viable.
To do this we need to be sure that there is a need for people to visit the Solomon Islands. These reasons include:
1. Visit family and friends
2. Conduct business
If we want tourism to grow, we must invest in accommodation that is competitive (ideally better) with the other tourism markets now or we will be trying to catch up when travel restrictions are lifted. The standard of accommodation must be acceptable (including health precautions) and must be pitched at the right prices for the target market. The global tourism industry will have several years of losses to recoup and this is likely to be through high volumes and low profit margins. People are going to go where they believe they are going to get the most value for every dollar spent. Solomon Islands will be competing with many short and long haul destinations, so must provide better value than anywhere else.