Airport Authority’s $43 million loss

In assessing its expenditure, the Committee noted an increase of travel expenses from $55,832 in 2009 to $217,575 in 2010

The Samoa Airport Authority (S.A.A.) ran at a $43,224,061 loss for the Financial Year 2009-2010.

That’s what Parliament’s Works, Transport and Environment (W.T.E.) Committee told Parliament in a report tabled and discussed during its last sitting.

Chaired by Falealili M.P., Tusa Misi Tupuola, a copy of the report has been obtained by the Samoa Observer.

The report recommends that the government provide financial assistance to the Authority to pay its loans due to the impact on its revenue.

“In the Financial Year ended 30 June 2009, the Authority contributes well on its expenses, however there was always a need of share for assets maintenance,” the report reads.

“The current Management continues monitoring its expenses with other activities to promote and improve its service.

“It was noted the continuation of the Authority’s loss till the year ended 30 June 2010, as recorded the total loss of SAT$43,224,061 compared to SAT$41,540,357 in 2009.

“The increase in expenditure for audit fees of at least SAT$11,000, 2009 — SAT$26,701 and 2010 — SAT$37,585, was due to the auditing progress, which was completed in 2010 since 2007-2008.

“The Authority confirmed that by 2011, expenditure for audit fees will decline.”

According to the Committee’s report, during the same period, there was a huge impact on its income.

But in assessing of its expenditure, the Committee noted an increase of travel expenses from SAT$55,832 in 2009 to SAT$217,575 in 2010.

“The Authority confirmed that having Members of the Board and Members of the Management to attend these conferences, is an effective programme to assist the improvement of its services,” the report reads.

“Some of these conferences were funded by Donors including travelling allowances and accommodation, but other conferences are the ongoing programmes, which the Authority funded air fares and travelling allowances.

“It also included normal General Manager visits to other operations in Savaii.

“Conferences attended by Board Members included usual conferences of International Organisations where Samoa is one of its member countries.”

According to the Committee findings, the initiatives and activities of the Authority reflects that there is no difference in the two Financial “Even though departure taxes increased is in progress, it does not meet the quantity needed for the Authority to operate.

“The increase of employees was due to the shortage of hands to precede the services especially the safety and security of the Airport.

“In fact, there are more expenses than revenues in each year.”

The Committee referred to Airport services as being in a state of “misery.”

“Before this happened, the Authority received 30 per cent of its revenue from the exact services, which is more than SAT$300,000 a year,” according to the report.

“This was due to the dual control of the Authority in the past.

“However, the complaint by the Oceania Company led to the separation of the Authority, which involved the Polynesian Airline.

“The Airport Authority should earn SAT$300,000 because they are responsible for the services control.

“However, the Polynesian Company is a Public Body.” The report reads that the Authority struggled to wrest this from Polynesian Airline from the period of assessment, but were told to leave it to the airline.

“The Airspace is a Government belonging however, the Authority have not received any money from it usage,” according to the Committee.

“The Committee noted that in New Zealand, Airlines are paying the usage of Airspace to the Authority. In Samoa, the Airlines are paying SAT$25,000 to the Ministry of Finance since 2004.”

In addition to the Chairman Tusa, the T.W.E. Committee comprised of Deputy Chairman Afoafouvale John Moors, Leaupepe Toleafoa Apulu Faafisi, Levaopolo Talatonu, Lealailepule Rimoni Aiafi, Peseta Vaifou Tevaga and Toeolesulusulu Cedric Pose Salesa Schuster.

The report in full is published below:

1. RECOMMENDATION:
The Works, Transport & Environment Committee recommends that the Assembly takes note of its Report.

2. PREAMBLE:
The Works, Transport & Environment Committee is constituted pursuant to Standing Orders 176.

Members:
Appointed:
Tofa TUSA Misi Tupuola Chairman 31/05/2011
Afioga AFOAFOUVALE John Moors D. Chairman 31/05/2011
Hon. LEAUPEPE Toleafoa Apulu Faafisi Member 31/05/2011
Tofa LEVAOPOLO Talatonu Member 31/05/2011
Tofa LEALAILEPULE Rimoni Aiafi Member 31/05/2011
Afioga PESETA Vaifou Tevaga Member 31/05/201 1
Afioga TOEOLESULUSULU Cedric Pose Salesa Schuster Member 31/05/2011

3. STANDING ORDERS 176:
It shall be the duty of the Committee:
(a) To consider any bill, petition or any other matter referred by the Assembly or pursuant to Standing Orders; and such Estimates or review of ministerial performance as maybe referred by the Finance & Expenditure Committee;

(b) To examine the policy, administration and expenditure of ministries and associated government organisations related to construction and development, transport and transport safety, energy, conservation, environment, land information and surveying.

4. PAPER CONSIDERED:
(Tabled19/12/20I1)(Referred 20/12/2011)
(i). P.P.20l1/2012 No. 65, Annual Report of the Airport Authority for the Financial year ended 30th June 2009. (Tabled 17/1/2012)(Referred 18/1/2012)
(ii). P.P.2011/2012 No. 90, Annual Report of the Airport Authority for the Financial year ended 30th June 2010.

5. WITNESSES: In the course of its consideration the Committee was able to hear evidence submitted by:-

Samoa Airport Authority:

Magele Hoe Viali - General Manager

Tafilipepe Alefosio Matulino - Deputy General Manager
Palepua Solaese - Assistant General Manager
Tumanuvao Evile Falefatu - Assistant General Manager
Linda Alapae - Principal Finance Officer
Ioane Iosefo - Principal Officer, Fire and Emergencies Division
Emil Westerlund - Consultant

6. FINDINGS: The Committee noted that the Authority determined to continue prioritizing its principle initiatives, this includes the:
- Authority’s income through the exploration of both flight movements and other aeronautical services;
- close monitoring of its expenditure; - assurance of the Airport’s safety for Aircraft movement;
- reviewing of its Act to strengthen and improve its services.

According to the Committee findings, the initiatives and activities of the Authority reflects that there is no difference in the two (2) Financial Years reviewed. As noted by the Committee, the Authority’s revenue depends most on aircraft movement, although it was a disaster faced by the management in the assessed period. In the year ended 30 June 2009, aircraft movement increased to 12% compared to 2008, though a decline of 34.8% was recorded in 2010 at Faleolo International Airport. The Authority approved that this was due to the:

- increase flights and Polynesian aircraft operation to Fagalii; - cessation of South Pacific Express Airlines; and

- cessation of AVGAS-100 supplied by Petroleum Products Supplies at Faleolo causes piston engine aircraft to divert to Pagopago International.

From the decline of aircraft movement at Faleolo, passenger movement decline in 9.5% compared to 1.8% of passenger arrival and 2.6% increase of departed passengers in 2009. Most of the decline in 2010 caused from reasons such as:

(i) Fagalii Airport reopening diverging passenger movement from Faleolo;

(ii) South Pacific Express Airlines ceases operations;

(iii) impact of global recession on international travellers; and

(iv) effects of Tsunami in the destruction of hotels and beach resorts caused a decline in inbound passengers. These are the significant areas the Authority’s is taking into account for improvements as it is an important part of its services for its revenue to rely on.

The Committee noted that the business is at cost because revenue depends on passengers and aircraft movement. Even though departure taxes increased is in progress, it does not meet the quantity needed for the Authority to operate. The increase of employee was due to the shortage of hands to precede the services especially the safety and security of the Airport.

In fact, there are more expenses than revenues in each year. The Airport services is now a misery, before this happened, the Authority receive 30% of its revenue from the exact services, which is more than SAT300,000 a year.

This was due to the dual control of the Authority in the past. However, the complaint by the Oceania Company leads to the separation of the Authority which involved the Polynesian Airline.

The Airport Authority should earn SAT300,000 because they are responsible for the services control. However, the Polynesian Company is a Public Body. The Authority struggle to request the Government but they were informed to leave it to the Polynesian Company.

The Airspace is a Government belonging however, the Authority have not received any money from it usage. The Committee noted that in New Zealand, Airlines are paying the usage of Airspace to the Authority. In Samoa, the Airlines are paying SAT25,000 to the Ministry of Finance since 2004.

As a member of the Airport Council International (ACI), Samoa continues to pay SAT2000 every year. The Authority confirmed that the Council reviewed subjects that involved sizeable Airports such as America and other wealthy countries which is not suited for Samoa. The Authority is now taking into account whether it is possible for Samoa to continue or resign from being a member. The reason for this is because the Authority is looking at the Pacific Council, which included New Zealand and Australia, which is suitable for Samoa.

The Authority is now looking on establishing a Strategic Plan to disseminate its land for suitable development to help its revenue.

6.1 STATEMENT OF ACCOUNT: In the Financial Year ended 30 June 2009, the Authority contributed well on its expenses, however there was always a need of share for assets maintenance. The current Management continues monitoring its expenses with other activities to promote and improve its service.

It was noted the continuation of the Authority’s loss till the year ended 30 June 2010, as recorded the total loss of SAT43,224,061 compared to SAT41,540,357 in 2009.

The increase in expenditure for audit fees of at least SAT11,000 (2009 — SAT26,701 & 2010 — SAT37,585) was due to the auditing progress, which was completed in 2010 since 2007/2008. The Authority confirmed that by 2011, expenditure for audit fees will decline.

During the same period, there was a huge impact on its income but in assessing of its expenditure, the Committee noted an increase of travel expenses from SAT55,832 in 2009 to SAT217,575 in 2010. The Authority confirmed that having Members of the Board and Members of the Management to attend these conferences, is an effective programme to assist the improvement of its services. Some of these conferences were funded by Donors including travelling allowances and accommodation, but other conferences are the ongoing programmes, which the Authority funded air fares and travelling allowances. It also included normal General Manager Visits to other operations in Savaii. Conferences attended by Board Members included usual conferences of International Organisations, where Samoa is one of its member countries.

6.2. COMMITTEE VISIT The Committee visited most of the Divisions of the Authority at Faleolo on the 24th of May 2013;

- Rescue and Fire Services: The staff increased to a total of 34 for the purpose of safety and securing aircraft movement. The observation testifies the good state of poreholes and Fire Trucks for rescue services in preparation for accidents. Committee recommends the timely supply of the spareparts for the other fire truck to ensure safety preparation for unexpected disaster or accidents.

- Seawall: The Committee recommends timely construction of the seawall as recommended by a Special Consultant. To comply with International Airport Requirements, it is a must for Faleolo Airport to put up a seawall.

- Runway: The Committee supported the renovation work planned for the affected areas to sustain the security of aircraft movement.

- Runway Fence for Safety: The Committee considers renovation work to replace the existing fence with a Plastic Fence as recommended in terms of safety. - Departure/Arrival: Good control and managing of the renewal activities was observed. This is the relocation of the area for the benefit and safety of travellers.

- VIP Room: Renovation work for the VIP Room has been drafted but it was not yet settled. The plan was to expand the Room with construction of a counter for Immigration services in the area.

- Other Planning Activities: The Committee supported the Authority’s planning and renewal activities. These included the construction of a Multipurpose Hall, the Departure area on the second floor to have the same view as the overseas Airport, and the upgrading of the Arrival area at the lower floor.

7. ACKNOWLEDGEMENT: The Committee wishes to express gratitude to the Board and the Management for the effort to control and improve their services while they faced difficulties that affected their revenue. The Committee also supported the Initiatives that the Authority put in place to cater for future difficulties and the future improvement of its services. The Committee also Wishes to acknowledge the assistance provided by the General Manager and the Management for the completion of this report.

8. RECOMMENDATION: At the conclusion of its Findings, the Committee recommends the Government:

1. Provides financial assistance to the Authority in payment of loans due to the impact of its revenue.

2. Considers the function of collecting Airspace fee whether it is equitable if given to the Authority due to their responsibility of controlling aircraft movement as a requirement of this specific operation.

3. The Board should control its travel expenses and budget allocations for staff overseas trainings & workshops. If it is costly to fund these travels, consider if it’s economical to send a Specialist from overseas to conduct these programmes and workshops in Samoa.

4. Supports the Authority’s renovation work plan include: - Part of the Runway which started damaging; - Departure and Arrival Terminals; - The VIP Room.

5. Recommend the Authority to comply with the Act in submitting of its Annual Report to Parliament.

9. RESOLUTION: At the conclusion of its considerations, the Committee resolved to recommend that the Assembly approves the P.P.2011/2012, No. 65, Annual Report of the Samoa Airport Authority for the Financial Year ended 30th June 2009 & P.P.2011/2012 No. 90, Annual Report of the Samoa Airport Authority for the Financial Year ended 30th June 2010.

TUSA Misi Tupuola CHAIRMAN