Tonga’s Lulutai Airline Skating on Thin Financial Ice

Tonga's Minister for Public Enterprises Paula Piveni Piukala has told the Australian Broadcasting Commission (ABC) that Lulutai Airlines is still financially and operationally struggling and has asked for a TOP2 million pa'anga (USD830,500) top-up to keep flying.

State-owned Lulutai Airlines is Tonga's only domestic airline, and it plays a vital public service role in connecting the country's islands. It was established following the collapse of Real Tonga Airlines in early 2020.

Lulutai Airlines currently has one DHC-6-400 (Twin Otter) and one Chinese-manufactured Y12 in service. It is also damp leasing a Saab 340B from New Zealand's Air Chathams until the end of June. Lulutai's own 340B has been out of service since colliding with a concrete block at Tongatapu Airport (TBU) in December 2023.

Lulutai Airlines operates scheduled flights from Tongatapu to Eua (EUA), Ha'apai (HPA), and Vava'u (VAV). It also swings in action as a medivac carrier when required – further underscoring its importance in Tonga.

Piukala says the government has no plans to sell Lulutai Airlines but are actively looking for partners to help run it. He said two companies have expressed interest in doing so. Aside from keeping the airline going, Piukala said the government's priority was to safeguard public monies already put into Lulutai.

Taxpayers have pumped TOP15 million pa'anga (USD6.3 million) into Lulutai since it started flying in September 2020. The airline has also controversially borrowed TOP6 million pa'anga (USD2.53 million) from Tonga's State Retirement Fund, a decision that contributed to the sacking of former Lulutai CEO Poasi Tei. The ABC reports that Lulutai has recently taken out another TOP1.3 million pa'anga (USD555,000) loan to maintain operations.

A report prepared by Australia's Department of Foreign Affairs and Trade was presented to Lulutai's former management. It laid out four strategies to help resolve the airline's challenges. The strategies focused on Lulutai operating the correct type of reliable aircraft for their market. However, these options depend on the government's ability or willingness to replace aircraft.

The airline's mismanagement and its close ties to the Tongan Government have also raised concerns. In 2023 and 2024, it contributed to two no-confidence motions brought against now-former Prime Minister Siaosi' Ofakivahafolau Sovaleni. In May 2024, Tonga's King Tupou said the government needed to be more transparent about its involvement in Lulutai Airlines and less involved in business. 

The ABC says concerns about mismanagement at Lulutai among ordinary Tongans may end up influencing votes at the upcoming general election in November.