Tonga Airlines Funding Under Scrutiny
A former deputy governor of Tonga’s National Reserve Bank has raised serious questions over the State Retirement Fund’s decision to inject TOP10 million pa’anga (approximately USD4.15 million) into Lulutai Airlines without access to audited financial statements. Samiuela Tukuafu, writing in the Matangi Tonga digital newspaper, emphasized that the significant sum—comprising a TOP6 million loan and a TOP4 million equity investment—should have warranted a board-level decision supported by transparent financial documentation. Tukuafu expressed his concern that without audited accounts since the 2020/21 financial year, it is unclear what financial metrics or due diligence processes were relied upon by the retirement fund board when making such a critical decision. He stressed that audited financial statements are essential tools that allow directors to gauge the true health of a business, and their absence raises serious doubts about the soundness of Lulutai Airlines’ management and the reliability of the information used in the decision-making process.
The former deputy governor also pointed out that the airline’s leadership, including former prime minister and ex-chairman of the board Siaosi ‘Ofakivahafolau Sovaleni, had a legal obligation to submit audited accounts in accordance with the Companies Act of Tonga. Failing to do so for three consecutive years, Tukuafu argued, not only constitutes a breach of the law but also casts a long shadow over the management practices at Tonga’s national airline. Lulutai Airlines, which operates the country’s only scheduled domestic passenger service using a single DHC-6-400 aircraft, was established after the collapse of the privately owned Real Tonga Airlines to ensure that a vital public transport service continued to serve the archipelago. Despite its essential role, the airline has been operating at a loss, with its primary clientele consisting of tourists and government officials—many of whom travel on taxpayer funds—while local residents prefer boat travel as a more practical alternative.
Recent developments have intensified concerns about the airline’s future. Lulutai Airlines has recently requested a loan of TOP7 million (about USD2.9 million) from the government, claiming the funds are necessary to keep its operations running. This request comes on top of the TOP10 million already provided by the State Retirement Fund, along with a further TOP15 million (roughly USD6.2 million) directly sunk into the carrier by the government. Public enterprises minister Piveni Piukala stated at a media conference on February 28, 2025, that without the additional TOP7 million, the company would face the grim prospect of being wound up. Tukuafu remains skeptical about the proposed Royal Commission that aims to investigate the alleged maladministration of Lulutai Airlines and the State Retirement Fund’s financing decision. He questioned whether such a commission would genuinely hold those involved accountable or merely serve as a political gesture with little impact on the airline’s deep-seated operational problems.
Overall, the funding decision and the subsequent lack of audited financial oversight have sparked a broader debate about the management and accountability of public enterprises in Tonga. Critics like Tukuafu argue that operating a loss-making airline with insufficient transparency is unsustainable and that any financial support must be matched by rigorous financial discipline and compliance with legal standards. The unfolding situation at Lulutai Airlines serves as a cautionary tale of the risks associated with bypassing proper financial governance, especially when public funds and taxpayer money are at stake.
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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com