Link PNG renews plans to acquire stake in PNG Air

Link PNG (Port Moresby) has renewed plans to acquire a minority shareholding in fellow Papuan domestic carrier PNG Air (CG, Port Moresby) just over six months after Papua New Guinea’s Independent Consumer and Competition Commission (ICCC) rejected an initial application on the grounds it would cause “serious harm” to the level of competition in the country’s domestic market. In a joint statement, Link PNG chairman Kostas Constantinou, and his counterpart at PNG Air, Augustine Mano, said the proposed tie-up between Link PNG and PNG Air’s main shareholder, the Mineral Resources Development Company Limited (MRDC), was based on PNG Air remaining an independent airline, setting its own airfares, and selling its own tickets separate from Air Niugini (PX, Port Moresby). “It is critical that PNG continues to have two independent airlines, PNG Air and Air Niugini, and there continues to be a strong competitive domestic market,” they said. “Covid-19 has gone on much longer than anyone in the world would have expected, and this has had a negative effect on both airlines, and hence, while it’s important we continue to operate independently at the commercial level, it is also important that the airlines leverage this opportunity to deliver cost reductions.” The key synergy benefits would come from back-office functions that can be more efficiently managed across the two airlines and through more efficient use of their joint fleets. At present, the two have limited commonality given Link PNG’s fleet entails five Dash 8-300s, two Dash 8-200s, and two Dash 8-400s while PNG Air operates seven ATR72-600s (including two combi variants) and eight Dash 8-100s (including one P2F freighter). Both offer an extensive network of point-to-point flights throughout Papua New Guinea. “We believe there is a compelling case for creating a stronger independent PNG Air, across a wider network, as well as ensuring job security. We will also ensure the savings created will be passed back onto our customers, through more affordable airfares; with the lower prices resulting from economies of scale and through the considerable cost efficiencies that are available,” the chairmen argued. The ICCC rejected Link PNG’s plans to purchase a 40% stake in PNG Air last year, citing the likelihood that the transaction would create a monopoly in domestic passenger and cargo markets due to the absence of any meaningful competition. Neither carrier has yet to comment on how their revised proposal differs from that rejected in 2020. The MRDC Group of Companies (MRDC, Mineral Resources Ok Tedi 2, and Mineral Resources Star Mountain) owns more than 41.09% of PNG Air in partnership with Nasfund Ltd and others. For its part, Link PNG is a wholly-owned subsidiary of the state-owned carrier, Air Niugini.