No Rush to Resolve Problems at Air Vanuatu

The shelf company that purchased Air Vanuatu last year after the country's government called in the liquidators is failing to pay creditors, operating an unreliable service, and not undertaking proper contingency planning and maintenance, according to Port Vila's Daily Post. This is despite the government putting VUV1.5 billion vatu (USD12.1 million) into the airline.

Vanuatu's government pulled the plug on Air Vanuatu last May after it accrued debts it could not service and developed a reputation for unreliability. Air Lease Corporation repossessed its only jet while it was undergoing maintenance in Melbourne.

The government called in Ernst & Young to sell Air Vanuatu. Famously, EY went on to charge Vanuatu more for their services than the total of the airline's debts. They also decided a shelf company owned by Vanuatu's Ministry of Foreign Affairs was the best available buyer, even though no-one associated with the shelf company, AV3, had any significant aviation industry experience and a succession of previous governments had helped run the airline into the ground.

"There is growing sentiment that AV3 is failing to meet even basic airline expectations," a person familiar with matters told the newspaper.

The airline has resumed operations but is down to a single ATR72-600 after losing its B737-800 and having its three DHC-6-300s on the ground due to legal issues and/or a lack of spare parts.

A Vanuatu Government spokesperson said once EY files its final reports,  the government can release final payments of over VUV200 million (USD1.62 million) to creditors.

The Australian Government's Department of Foreign Affairs assisted during the liquidation stage and has offered ongoing assistance, pending a formal proposal from Vanuatu, which has not yet materialised.

Two other parties, one believed to be a consortium of Europe-based investors, have submitted proposals to develop Air Vanuatu in partnership with AV3. Those proposals remain with the airline's board of directors.

The Vanuatu Government says it will prioritise rebuilding Air Vanuatu as a domestic operator and has set aside VUV1 billion (USD8.01 million) in the 2025 Budget to buy two new DHC-6-300s.

Since ending its international flights, other carriers, including Solomon Airlines, Qantas, Jetstar, and Virgin Australia, have started or increased flights to Port Vila.