Air Vanuatu’s Chief Executive Officer defended his airline’s decision to downsize the catering operation, arguing that gains in other departments more than compensate for the losses in that division.
In an exclusive interview with the Vanuatu Nightly News, Derek Nice claimed that the airline has already hired more than a dozen flight attendants, and is currently seeking to fill seven other positions in the company. “As we grow and add more aircraft, we’ll be adding more pilots, even more flight attendants, more ground staff and of course everywhere in the company there will be more jobs created.”
He added, “At the end of the day, employment is going to increase substantially.”
He added that the company was not substantially changing the amount of food purchased locally versus overseas, and insisted that local suppliers would only see increases in orders as the airline scales up its operations.
In the short term, he said, “most suppliers won’t see any difference at all.”
“We’re not necessarily outsourcing something that wasn’t outsourced before,” he said. “We’ve been sourcing 90% of all the material that goes into our meals in Australia and New Zealand. We’ve been flying them up in the cargo holds of our aircraft, where they’ve been blocking space that we can sell for revenue… and then when they arrive here, we’ve been putting it all together on plates.”
He went on, “So the only difference that we’ve got now is that all these ingredients are being put together in Australia.”
A total of nine positions were eliminated, he told the Daily Post. Of those nine staff members made redundant, four found employment in other positions with the airline. The others, he said, were receiving assistance in their work search.
“We’ve got to balance profitability and our social responsibilities,” he said. “We’re being told by the community that they want to see lower fares, they want to see more service, and they want to see us operating profitably. We’ve got to ensure that we’ve got the cost structure that will allow us to deliver on those expectations.”
“We are growing. We are adding employees, and we are continuing to add employees in the future. The number of employees that we’ll have when we have four aircraft is a lot more than we have right now.
“Maybe we’re not going to be growing the catering department, but we’re certainly going to be growing other parts of the business.”
He claimed that the search for cost savings was essential, citing the company’s competitors, including Virgin Pacific and Fiji Airways. They “are also being driven to offer the lowest possible fares. They have to control their costs as well. We can become an outlier by maintaining a cost structure that makes us uncompetitive.”
The Daily Post asked whether these cost-cutting measures were a sign that the company was struggling. “I don’t think that there’s an issue with us managing day to day. All airlines experience seasonality. So if you’re flying in February you have fewer passengers than you do in July, and the revenue is lower.” That’s the way things are throughout the airline industry, he said. All airlines save cash during peak periods to help them make it through the slower parts of the season.”
Asked if he was confident with the condition of the company even without the new aircraft entering service, he hedged. The long-term viability of the airline, he said, is contingent on the success of the new business plan. “Any airline that’s flying just one aircraft, that’s incurring all of the costs for the infrastructure, the overheads, the safety systems and so on—it’s a challenging business plan.
“That’s one of the reasons why the new business plan says we’re going to add additional aircraft, we’re going to increase the revenue, and we’re going to spread those overheads across a bigger operation.”
Social media commenters have noted that Mr Nice may have grand ambitions, but asked what qualified him to make this bet on behalf of the people of Vanuatu. “That question is probably best answered by the board and shareholders who selected me and appointed me. But from my perspective, I’ve been in the aviation industry almost 35 years now. I have a Master’s degree in aviation management, and I won the award for the highest academic achievement in that department of the university I attended. I’ve got an MBA. I’m a chartered Director, which means I’ve got a university qualification in board management.
“I’ve owned my own business that I grew from 13 employees to over 600, and took it public.”
He cited experience turning around troubled airlines in the past. In one case, he said, he was the court-appointed restructuring officer for an airline in Canada. He was former COO of an airline in Canada whose revenues were “approximately two to three times the size of Air Vanuatu.”
He told the Daily Post he’d gained experience flying into remote communities in Canada, Asia and the Caribbean as well.
He claimed that although he is not Ni Vanuatu, the company’s strategic commitment to elevating Ni Vanuatu to senior positions remained strong. “We are developing Ni Vanuatu staff to be able to run this airline. We’re developing our management talent. We’re actively recruiting people who’ve got the skills and attributes to be able to be the future of this airline.
“We’re not going to and hiring people just to do this job. We’re saying ‘will they be capable of doing this job in five years, and that job in ten years?’”
He shared a list of approximately 20 Ni Vanuatu managers who had been promoted within the airline, some of them to front-rank positions.
“It’s almost offensive to hear people saying that this is just another sign that expats are coming in and raiding the company and laying off staff. That’s not the intention in any way whatsoever.”