Papua New Guinea regional carrier Link PNG (Port Moresby), a subsidiary of national airline Air Niugini (PX, Port Moresby), is attempting to acquire a majority stake in PNG Air (CG, Port Moresby), raising concerns of a monopoly emerging.
On May 27, Papua New Guinea’s Independent Consumer and Competition Commission (ICCC) announced that Link PNG had submitted an application seeking authorisation for its proposed acquisition of up to a 60% stake in PNG Air.
“Link PNG proposes to firstly acquire 40% of the shares in PNG Air owned by National Superannuation Fund Limited (NASFUND); and followed by the acquisitions of shares of minority shareholders,” the ICCC said.
The Commission invited interested parties to submit comments and views on the likely pro-competitive and anti-competitive implications of the proposed acquisition. Comments and submissions are due by June 10.
Link PNG, in a statement on May 27, said NASFUND’s board had approved the sale of its shares in PNG Air to Link PNG, subject to ICCC and other required approvals. General manager Alex Kia said the proposed merger would be a huge coup for passengers, who would benefit from reduced air fares.
“With the savings we will generate, we will be able to pass this back onto our customers through more affordable airfares,” he said, adding that more destinations would also be available.
Kia added that there would not be substantial changes at PNG Air, but Link PNG’s network would be integrated into PNG Air’s schedule.
PNG Air, in a statement on May 28, said Link PNG’s bid was a “terrible choice” and “starts the creation of a monopoly of the airline industry in Papua New Guinea. It will be a terrible move which will be extremely detrimental to the travelling public of Papua New Guinea as there will be no competition.”
PNG Air said airfare prices would rice, efficiency would decrease and Link PNG would have absolute power to dictate to the travelling public on how, when and where they will travel in the future.
“Air Niugini has already lost over 15% of the passenger market share to PNG Air over the last few years. Our freight revenue has increased by 30% and charters by 25%. PNG Air now has 50% of the market share and is at an even level playing field with Air Niugini.” It added that its fares are on average 10% lower than that of Air Niugini due to “open market competition.” It warned that jobs would be lost if the merger goes ahead.
Due to the fact that there are only two airlines competing in the domestic freight and passenger market, the ICCC will carefully assess Air Niugini’s application, ICCC commissioner and chief executive officer Paulus Ain is quoted by the Post Courier as saying.
