Two Bidders Compete to Acquire Tonga’s Lulutai Airlines
Tonga’s Prime Minister, ʻAisake Eke, has confirmed that two companies, including dormant local carrier Fly Niu Airlines (Tongatapu), are in the running to acquire the financially struggling national airline, Lulutai Airlines (L8, Tongatapu). The Tongan government, which has been seeking to privatize the carrier, initially expected to finalize a decision in July, but the process has since been delayed.
Fly Niu Airlines, which briefly operated in 2004 before being grounded under the government’s one-airline policy, has expressed renewed interest in taking over Lulutai. The airline has been pursuing a relaunch for several years and has positioned itself as a domestic competitor capable of restoring reliability to Tonga’s inter-island air network.
According to earlier reports, Fly Niu first signaled interest in acquiring Lulutai Airlines in 2021, when the government agreed in principle to explore the proposal. The carrier renewed its offer in 2024, outlining a plan to provide an aircraft under a wet-lease arrangement, supply operational management services, and secure an equity stake within 12 months.
Prime Minister Eke did not identify the second potential buyer, but industry sources suggest New Zealand’s Sunair Aviation (Tauranga) may still be involved. Lulutai Airlines reportedly held preliminary talks with Sunair in June regarding potential collaboration or investment.
A key issue in the sale process is Lulutai Airlines’ outstanding debt of TOP 6 million (USD 2.5 million) owed to Tonga’s National Retirement Fund. The loan, backed by a government guarantee, was used to finance the purchase of a DHC-6-400 Twin Otter. The airline has repaid only TOP 800,000 (USD 332,000) so far, leaving an estimated balance of TOP 5.7 million (USD 2.4 million) including principal and interest.
The government has acknowledged concerns over Lulutai’s ability to meet its repayment obligations if privatization efforts fail but maintains that the loan remains fully secured. The sale process aims to bring in private investment, improve operational sustainability, and restore reliable connectivity between Tonga’s islands.
Lulutai Airlines currently operates one DHC-6-400 and one Y12 turboprop, while a Saab 340B(Plus) remains inactive. The carrier is also operating a damp-leased Saab 340B from Air Chathams to maintain limited domestic services pending a long-term fleet solution.
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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com