AV3 under fire for unpaid creditors and unreliable service

According to internal sources, despite the Vanuatu government injecting a substantial 1.5 billion Vatu into AV3 (formerly Air Vanuatu), the company has still failed to pay its creditors. This has led to a loss of confidence from major tourism and business bodies in the AV3 board and executive management, who are expressing concerns about the airline's failed domestic operations, which have severely disrupted inter-island commerce and essential travel.

These concerns include unreliable flight schedules due to frequent cancellations and delays without clear communication to passengers; a lack of convenient booking options; customer service failures; inadequate emergency and maintenance planning; and a loss of public confidence. The source stated, "There is a growing feeling that AV3 is failing to meet even the basic expectations of an airline."

The source also raised the issue of the Australian government's six-month commitment to support Vanuatu's aviation industry. "Where is this commitment? Is it still sitting with the former Minister, Matai Seremaiah (who is also the AV3 Chairman), awaiting action? Unless a formal proposal is submitted to the Australian Department of Foreign Affairs and Trade (DFAT), it cannot be confirmed whether the assistance will be extended."

Creditors, tourism operators, and consumers are demanding accountability from the government and AV3 leadership and immediate action to restore confidence in the aviation sector. The government has stated that the operation of Air Vanuatu under the new company AV3 remains a key priority in its 100-day plan to ensure passengers can continue to travel within the country. Government Public Relations Officer Kiery Manassah said, "The government fully understands the level of frustration from Air Vanuatu's customers. However, the government is appealing for patience as it works to resolve the current state of affairs to have the airline back up and running in approximately three months, with a particular focus on domestic services."

Currently, shareholders are awaiting recommendations from the board regarding proposals from two companies, both of which have offered partnerships with AV3. Australia has also proposed an interim six-month arrangement involving Fiji Airways. However, Prime Minister Jotham Napat recently told visiting Australian Minister for International Development and the Pacific, Pat Conroy, that the proposal remains an option. The Deputy Prime Minister wants all options to be fully considered before a decision is made about the airline's long-term future. Manassah stated, "All of this is happening amid liquidation processes from Ernst and Young that have not been properly completed."

Manassah also indicated that the government can release the final payment of over 200 million Vatu once the liquidator submits the final report. Due to the liquidation process, shareholders are restricted, meaning the AV3 board remains in an interim state. This will continue until suitable board members are recruited under the new Business Enterprise Act passed in Parliament last year. The Public Relations Officer also mentioned that the Deputy Prime Minister indicated that Air Vanuatu has been operating under Articles of Association and a Companies Act that are not robust enough.

According to him, the government firmly believes that with the operations of AV3 and Air Vanuatu brought under the new Act, Air Vanuatu should be able to find its feet again and operate more like a true commercial entity without politicians or anyone interfering in its management, let alone its operations – a key reason for the airline's collapse. The Public Relations Officer added, "As far as this government is concerned, the airline is critical to our connectivity and tourism industry. We are addressing many issues, but given enough time, the airline should be back up and running. The airline's domestic services are prioritized over international services, which is why 1 billion Vatu has been specifically allocated in the 2025 budget for the purchase of two new Twin Otter aircraft, as the Deputy Prime Minister has publicly announced."

Despite the challenges facing the government and AV3, the airline is still striving to provide services to Vanuatu's provinces, with the ATR aircraft having returned to the fleet after maintenance in Indonesia.