SUVA, Fiji – To ensure compliance with international law and bilateral requirements governing air service rights granted to national airlines that fly to other nations, the Republic of Fiji has updated its ownership and control criteria for airline companies registered in Fiji through the passage of the Civil Aviation (Ownership and Control of National Airlines) Decree 2012.
“Fiji has long been out of step with the Chicago Convention and consequent international practices, and the bilateral requirements of other nations that govern visiting and domestic national air carriers,” said Attorney-General and Minister for Civil Aviation Aiyaz Sayed-Khaiyum. “By implementing this new law, Fiji will now comply with these international laws and requirements, as well as international best practices.”
The Civil Aviation Decree necessitates that all Fijian-registered air carrier companies must satisfy these international requirements and be under the “substantial ownership and effective control” of a citizen of Fiji, meaning:
The Government of Fiji or any institution of the State;
An individual who is a citizen of Fiji;
A partnership each of whose partners is an individual who is a citizen of Fiji; or,
A corporation or association of which at least 51 percent of the voting interest is owned and controlled by persons who are citizens of Fiji, at least two thirds of the board of directors and any committee are citizens of Fiji, and such corporation or association is under actual and effective control of citizens of Fiji.
Currently, Air Pacific and Pacific Sun are Fiji’s only international and domestic airlines, and they are majority-owned by Fijians. However, since 1998, minority and non-Fijian shareholder Qantas has maintained effective control of these airlines through supermajority and veto rights over significant areas of the company, including the appointment of the Chairman, Deputy Chairman, annual operating budget, any expenditures, new air routes, variations to Air Service schedules, management appointments, employee incentive schemes including bonuses, and numerous other key areas of oversight, control and decision-making.
While Qantas currently has veto power over most areas of Air Pacific’s operations and business decisions, Qantas also competes directly against Air Pacific through its wholly-owned low cost carrier subsidiary, Jetstar, which flies overseas visitors to Fiji from Sydney.
Concerns about ownership and control requirements are not unusual in international aviation law. Indeed, just last week Qantas called for the Australian International Air Services Commission (IASC) to undertake a comprehensive public review of Virgin Australia’s ownership and control position to determine if Virgin complies with the ownership and effective control provisions of Australia’s aviation laws.
In the European Union and United Kingdom, air carriers must be owned and effectively controlled by Member States and/or nationals of Member States. Similarly, in New Zealand international airlines must be owned and effectively controlled by New Zealand nationals.
With this law, the Bainimarama Government has now corrected the activities of prior Fijian governments, which allowed foreign citizens to control Fiji’s national airlines. Since Air Pacific is responsible for carrying more than 70 percent of visitors to Fiji, its success is critical to the health of the Fijian economy and the livelihoods of Fijians.