The new Chief Executive of Air Niugini, Alan Milne, says its prospects are looking much better following two difficult years. Milne says he is adopting a ‘four pillar’ program to transform Papua New Guinea’s national airline.

Air Niugini’s Alan Milne addressing a business gathering in Port Moresby last week.

Milne has been travelling the country this month spreading the message that Air Niugini is engaged in a program of internal transformation.

‘The catchphrase we are using is: we are turning a really good airline into a great airline,’ he told a business gathering in Port Moresby last week.

‘We asked our staff to contribute a name. You can’t have a good program without a name.

‘Out of 400 suggestions from our people—which I think is a message in itself—we came up with the name of “Higher Altitude”.’

Four pillars

Alan Milne addressing business people in Lae earlier this month. Credit: Air Niugini

Milne, who joined the airline in October 2108, was previously Head of Operations Performance at Qantas.

He said the company has undertaken an organisational restructure, including slashing direct reporting lines to the Chief Executive.

There has been review of the management systems, and an operational focus on ‘on-time performance’.

The biggest opportunity, said Milne, was in improving customer engagement.

‘I think the other day we questioned the purchase of a four-litre tin of paint. People are seeing that there is a real focus on every cent we spend’

‘When I asked who was responsible for choosing the in-flight videos or catering … it was quite scattered across the business.

‘We have pulled together a centralised customer group now that “own” that end-to-end customer proposition.

‘It is everything from what the website looks like, the check-in experience, the lounge experience, in-flight, catering—all is now owned by one centralised group to bring that accountability.’

The High Altitude project, said Milne, has four ‘pillars’:

• Cost control
• Revenue enhancement
• People development
• Operational and customer excellence

Milne says the Higher Altitude program started in December 2018. He said it has already ‘captured a K20 million saving in three months’.

‘We have a cost control committee that sits daily, chaired by our CFO. Most invoices go across the table of that committee and are signed off.

‘I think the other day we questioned the purchase of a four-litre tin of paint. People are seeing that there is a real focus on every cent we spend.’

Milne said revenue gains can come from better yield management.

Codeshare arrangements with Qantas (including in the domestic network), and other international carriers, such as Cathay Pacific and Philippines Airlines, are being explored.

With the airline employing almost 2000 staff, people management is also a priority.

‘We need to make sure that we have a development plan for every person in the business.’

Financial performance

Milne believes it is important to be transparent about the airline’s financial performance.

‘There is lots of discussion about whether we should show our financial performance.

‘Townsville, Denpasar, the suspension of China and of seasonal flying to Japan were really tough decisions we had to make.’

‘Why wouldn’t we? Air Niugini is the national airline. It belongs to the people.’

In 2017, Air Niugini had an after tax operating loss of K45.8 million. In 2018, it incurred an after tax operating loss of K54.6 million.

It is projected to have a net operating profit after tax of K4.5 million in 2019—a K60 million turnaround.

Route rationalisation

Milne said the company has rationalized many of its non-profitable routes.

‘Air Niugini is agile. [Getting out of the routes to] Townsville, Denpasar, the suspension of China [originally announced for 2018], and of seasonal flying to Japan were really tough decisions we had to make.

 ‘A national airline is always held to a different standard to every other business’

‘You can imagine the feedback we get from those destinations; it is really hard work.

‘But for the sake of the business we have to do it. We have to get the health of the business back and then expand into actually profitable areas—see where we can make this business work.’

Hub

Milne said the hubbing strategy (having transit passengers go through Jacksons International Airport) ‘is working’ for Air Niugini.

‘With that Asian traffic into Jacksons and then hubbing on to the South Pacific, it is far easier, far shorter and far cheaper than going through Australia. We are seeing that traffic starting to build.

Milne describes the outlook as ‘hesitantly good’.

‘A national airline is always held to a different standard to every other business: “You are our national carrier, we expect you to perform to the top level.”

‘That is exactly what we want because that is the passion and support we need.’