The fall of the former government has triggered growing concerns regarding the loan from the public servants’ investments for retirement to fund the Lulutai Airlines’ recently purchased Twin Otter aircraft.
The former Hu’akavameiliku government borrowed approximately $4.5 million but also faced strong criticisms from the Opposition for not addressing the loan transparently and in a timely manner in the House.
Most MPs only learned about the government’s intention to purchase the Twin Otter last year from Kaniva News, which prompted heated debates in the Parliament before Hon Hu’akavameiliku admitted the purchase and the loan.
A letter had been recently sent to the Retirement Fund Board and members of the Lulutai Board of Directors, including Hon Hu’akavameiliku, asking for an explanation about the loan’s status.
Mele ‘Amanaki, representing the Tonga Work Association (TNWC), reportedly said the letter raises concerns with the authorities regarding the change in government, as anticipated policy changes could impact the loan repayment process.
She asked who would pay back the loan if Lulutai would cease operation.
She claimed on Facebook that the new government could cancel the loan guarantee.
In Tongan she said: “He ka mate ‘ae Lulutaii, ko hai te ne totongi fakafoki mai e lauimiliona na’e noo? Kuo mahino ‘oku lava pe he Kapineti Fo’ouu ‘o kaniseli ha malu’i ha noo na’e fai e Kapineti motu’aa”.
Loan guarantee
Dr ‘Aisake Eke, the Prime Minister Elect, previously said in an interview with Kaniva News that Lulutai’s loan from the Retirement Fund Board might be secure because it was guaranteed by the government.
However, he was concerned about the airline’s lack of transparency and the allegations of associated financial losses.
He said that if Lulutai failed to repay the money, the government would need to reallocate funds from other parts of the budget, which would be a problem.
It follows accusations raised in the House regarding the government being required to pay millions as a guarantee to Tonga Development Bank for loans associated with companies involved in the Tu’i’onetoa government’s controversial multi-million roading project.
Lulutai Airlines has been controversial since its inception in 2020 by the Tu’i’onetoa government, in which most Hu’akavemeiliku Cabinet Ministers were members.
The then Opposition Leader Semisi Sika criticised the government’s involvement in operating airlines after it took over the services from Real Tonga Airlines.
The government stated that Real Tonga was operating at a loss and owed significant debts to the government.
However, critics said it was better for the government to leave the airlines for the private sector as operating such services in Tonga is unlikely to be profitable due to the high costs and limited market size. They said it was the government’s responsibility to support the private sector.
Lulutai status
The national airline has faced significant operational challenges following its Saab 340 De Havilland crash, which collided with a cement block at the Fua’amotu Domestic Airport in December 2023.
It appears that the aircraft did not have insurance coverage, and no replacement has been provided since the incident.
Lulutai recently hired an aircraft from New Zealand’s Chatham Airlines, a company previously providing domestic services in the kingdom, to fill in at peak times. Chatham was forced to leave Tonga in 2012 after the then government partnered with Real Tonga Airlines to establish new domestic services.
Kaniva News has contacted Lulutai CEO and former Prime Minister Hu’akavameiliku for comment.
