Tonga’s 2026–2027 national budget has allocated $3.2 million to Lulutai Airlines, despite the government previously acknowledging the national carrier’s financial struggles and warning it was on the verge of collapse.
The budget allocation appears to be the first time the government has provided a clear indication that it remains committed to the struggling airline, despite earlier efforts to offload or privatise the business.
Last year, the airline was put up for tender by the former government in an attempt to attract private bidders and reduce the financial burden on taxpayers.
At the time, former Minister of Public Enterprises Piveni Piukala had warned that the airline was facing a critical financial crisis and required urgent government support to continue operating.
He claimed Lulutai Airlines was carrying debts of around $40 million.
Piukala revealed that Lulutai needed approximately TOP$7 million (NZ$5.2 million) to sustain its operations.
He cautioned that without immediate financial intervention, the airline risked collapse.
He said the bailout was intended to keep the airline operational while awaiting a successful bidder to take over.
However, Kaniva News understands that potential bidders later withdrew after determining that the costs and outstanding debts were too substantial to make the business viable.
The latest budget allocation signals a continued reliance on public funding to sustain the airline, raising further questions about why the government continues to pour millions into what appears to be a failed project.
Lulutai Airlines’ establishment was controversial from the outset, with many critics believing it was politically motivated by the government of the time.
The move was justified by citing the financial impact of COVID-19 on Real Tonga Airline, which was used as a basis for returning the national carrier to full government ownership.
