PAPEETE — All the way from Central Pacific, Air Tahiti Nui celebrated the opening of its brand-new headquarters building next to Fa’a’ā International Airport in Papeete, exactly two decades after launching operations as French Polynesia’s only international carrier.
Air Tahiti Nui also welcomed the arrival of the first of four Boeing 787-9 Dreamliners it ordered to replace its aging Airbus A340-300s, revolutionizing the hard and soft product the carrier offers its passengers on flights to and from Papeete.
Through the many partnerships the airline has fashioned in Asia, Oceania, America, and Europe, and with a 20th-anniversary celebration that includes brand-new Dreamliners, Airbus Helicopters, and state of the art offices, the horizons couldn’t be more turquoise for Air Tahiti Nui.
Airways visited Air Tahiti Nui in December, and sat down with its CEO, Michel Monvoisin, and Managing Director, Mathieu Bechonnet, spending valuable time chatting about the airline’s past, present, and future.
This High Flyer Interview is part of the Cover Feature printed in the January 2019 issue of Airways. Order your copy today to read the full review on Air Tahiti Nui.
Thank you for having us come all the way from the US to the beautiful island of Tahiti. And what better time than on the opening day of your new headquarters! It is all very amusing. How have things shifted since year one and year twenty?
BECHONNET: Yes, Air Tahiti Nui is quite a surprising airline! Since the very
Two decades ago, the country decided that it was important to have a national airline. For such a small country like French Polynesia, to be able to sustain international development in this very competitive market, it was a big challenge.
When 9/11 happened, we saw three airlines quitting services to Tahiti. It was clear that the first thing we had to do was to create an international airline to maintain and sustain development of French Polynesia’s tourism.
We have gone from one plane in service, up to six. We started alone, now we have a big portfolio of partners.
For our 20th anniversary, we are reinforcing this partnership strategy. We’re going beyond.
This partnership structure has proven to be tremendously effective for an airline that has scored profits for six continuous years. Tell us about this.
BECHONNET: Yes. We are a petite airline, but we are making sure that we have the right partner to provide the ‘beyond’ network for our customers.
French Polynesia is one of those destinations that rely solely on the tourism industry. For many airlines, it is not critical to have Papeete as a key place on their network. But for us, we saw that those big airlines would have issues providing all the tourism we needed, which is 80% of the overall business in French Polynesia.
We realized that in this world of airline business—and especially in the international scene—you need partnerships to sell effectively to the market. For us, partnerships are critical.
Today, we are very proud to have a nice portfolio of relationships with various airlines around the globe—whether it’s American Airlines in Los Angeles, Air France in Paris, or Japan Airlines in Tokyo.
We feel very encouraged to know that the airline that we are managing right now is going through one of the greatest financial positions in its 20 years of existence.
Congratulations! But you now have United and French Bee jumping into the market with nonstop flights from San Francisco. And French Bee is also flying to Paris. Are you worried this might stop your positive trend of financial results?
MONVOISIN: I don’t know ‘worried’ is the right word to use. We are concerned, for sure.
United is a big airline. They’re a Star Alliance member and they can funnel a lot of traffic through their mega-hub in San Francisco.
But we know the US market really well. We’ve been operating to Los Angeles for the last 20 years and we know our customers. We have a super strong partnership with American Airlines in Los Angeles, too.
BECHONNET: We are in a very strong position for big battles.
Honestly, things have changed too many times during these two decades. The competitive landscape has also dramatically shifted—it has provided some interesting opportunities for us.
But now, these two airlines are adding about 33% more seats into the market. That is pretty big, considering they both entered during the same quarter.
We will fight for our market, no doubt. I’m certain we can endure this period of time of heavy competition.
A threat would be thinking that we cannot go through it; that we cannot retain our piece of the market. We surely can.
MONVOISIN: You see—we know that in this business, loyalty is very important to passengers. We know that people, who collect Star Alliance miles, will certainly choose to burn them with United and come here.
However, the ones enrolled in oneworld miles—like those who are American Airlines members—they can now burn their miles with Air Tahiti Nui.
American Airlines has given us code-sharing ability on more than 30 of their flights out of Los Angeles. Sure, United says they can connect all the main cities in the US to Tahiti. But so do we.
Do you want to fly all the way from your Airways offices in Miami to Papeete on one ticket? You can do it with American Airlines and Air Tahiti Nui.
Now that you’ve mentioned American Airlines a few times, it is no secret that your affinity to oneworld is high. You also partner with Qantas, Japan Airlines, LATAM. Have you considered joining the alliance? Or even thought of joining as a oneworld Connect partner, like Fiji Airways did last month?
But in reality, our effort is going beyond what alliances are all about—it’s more about doing the right things on a bilateral basis than searching only for a global trade market
Fundamentally, securing better bilateral relationships with key partners is more important to us. Tahiti is not very well served by the global alliances, so we think we can provide a better service with the structure we have in store.
MONVOISIN: We are definitely pointing towards oneworld more than anything else. But like IAG’s Willie Walsh once very cleverly said, “when you have a good partner, a good codeshare, or a good joint venture, sometimes it’s better to have that than joining an alliance.”
We are working quite close with oneworld, true. But we also have partnerships with Air France, Korean Air, and Air New Zealand. They belong to SkyTeam and Star Alliance, respectively.
In essence, joining an alliance is quite tough because they have some of the biggest airlines in the world. When you speak of American Airlines, Air France, or Korean Air, you are speaking about really big airlines.
And we are a small airline with four planes in our fleet, located in the middle of the Pacific.
We are happy to have this close partnership with them—it’s very
important for us, and we say that all the time.
Brilliant. Now let’s talk about tangibles. Tell us about your brand-new Dreamliners. They’re that—a Dream to you all, right?
We ordered a total of four Boeing 787-9 Dreamliners—more than enough to
cover the current network that we have. Two of them were purchased directly
from Boeing, and the other two leased through ALC.
Why this mix? Walk us through the process of selecting this plane.
MONVOISIN: After Air Tahiti Nui recovered from our near-bankruptcy cycle, we decided it was mandatory to change our fleet. It was too expensive to keep flying with four engines when the rest of the world was switching to only two. Airbus had stopped producing the A340 and our planes kept getting older.
I have to say that thanks to Steven F. Udvar-Hazy, owner, and CEO of Air Lease Corporation (ALC), we are where we are today.
He is a great businessman; he loves to come to Tahiti. He keeps coming back every year, and he loves Air Tahiti Nui dearly.
He leased us our first plane, the Airbus A340-300 named Bora Bora, when he was at ILFC. This plane was just returned and phased out.
And when he learned that we were looking to renew our fleet, we met. He said “oh, Air Tahiti Nui, my favorite airline! I want to lease you more aircraft.”
That’s when we decided to buy two Dreamliners from Boeing and lease two more from him.
This proved to be the least risky combination and also helped us to take advantage of France’s overseas incentive package to finance the first two.
Did you ever consider other aircraft? Say, the Airbus A350?
MONVOISIN: Of course we did. When we launched the fleet renewal campaign, we asked both Boeing and Airbus to study all the possible routes we could open within the next 20 years.
We wouldn’t want to change these planes five years after we got them just because they wouldn’t meet our needs, right?
So when you look at Tahiti, in the middle of the Pacific, what kind of routes can you open?
They’re all long haul. That’s a fact.
And for ultra-long-haul, what we needed is
This plane would allow us to fly nonstop from Tahiti to Paris. We would beat the current Singapore – Newark flight in terms of time and distance. We are really thinking about it. The Los Angeles stop is not really that
But help me understand. You had five Airbus A340-300s and ordered only four 787-9s. Could this be considered as a capacity downgrade?
BECHONNET: No. Back in the day, we used to fly to New York and Sydney (…), we needed
Unfortunately, we launched these routes during the bad cycle of our business. We decided to cancel those two routes as we were near bankruptcy. Trying to get rid of our leasing contract was very difficult. It really was the perfect storm.
What we did was mitigate the situation through chartering the plane to other operators. We did a lot of charter activity around the world. I remember some interesting ones (…), it just helped us pay for the aircraft during those difficult times.
Today, we can say that the A340’s performance is far away from what it used to be when it was new. Having that fifth plane helped us a lot
With the four Dreamliners, we can fly all our routes with ease. We’re saving about 25% in fuel and overall costs. And once we get ETOPS 180 certification, we might save a lot more.
MONVOISIN: I should also add that we are satisfying Tahiti’s demand for incoming and outgoing traffic with these four planes. Our average load factor, year-round, is about 70-75%. If we add more planes, then it becomes unfeasible for us.
The bigger issue is that there is a lack of hotel rooms and tourism infrastructure in French Polynesia to allow more passengers to come in.
People always confuse the terms here—they say that “to grow tourism you need to add more seats.” Even though that is a correct assertion, French Polynesia cannot accommodate more tourists. At the end of the day, it translates to less traffic growth.
Which is your best performing route, year-round?
MONVOISIN: Easy. Los Angeles is, by far, the most consistent and best route in our network. The US market is not far—it behaves well, year-round. It represents about 40-45% of our total incoming traffic.
In second place comes the French market via our Paris service.
Interestingly, about 20% of the aircraft is regularly filled with Tahitian citizens. This is great, because we are less than 300,000 people and only 30% of them travel. This is quite a lot.
If you take mainland France, for instance, less than 30% of the population travels. So if we want to fill our aircraft, we fill them with tourists.
And how about Japan? This is probably the biggest market for Hawaii. And they’re about to launch A380 services to Honolulu with ANA.
MONVOISIN: Japan is challenging for us. You see—the US market usually books their vacations with at least six months in advance. In Japan, they book three months ahead.
For this reason, Japanese travelers can’t find enough accommodations in French Polynesia. The hotel rooms are mostly sold to the European and the US markets, so there’s nothing else left for Japan. And they’re complaining.
Our biggest challenge in Japan is not in the aviation business in itself, but hotel capacity in French Polynesia
This explains why our average load factor rests at 70% year round, with a high season increase to 80-85%.
When you see load factors at 85%, you know that hotels are maxed out in the region.
Here in Tahiti, you bring overseas traffic and disperse it onto Air Tahiti’s regional network. Have you ever thought of launching your own intra-island operation?
MONVOISIN: It doesn’t make any sense for us to fly domestic.
You see—I’m a member of Air Tahiti’s board of directors, and the chairman of Air Tahiti is also sitting on my board.
We have shares in each other’s books. We are in the same family and it doesn’t make any sense for us to compete against each other.
We are also their biggest customer, as they provide us with ground handling and catering services in Papeete.
There are 47 airports in French Polynesia. Air Tahiti flies, sometimes, to some of these islands about once every week, mainly because there’s not much traffic and the distances can be very long. It’s not easy to operate Air Tahiti as a domestic carrier. French Polynesia is almost as wide as Europe.
My eyes keep wandering around your new office. I couldn’t help but notice an Airbus A321neo LR model. What’s going on here?
BECHONNET: [Laughs] It’s a fantastic aircraft!
MONVOISIN: Yes! That’s Airbus that wants to sell it to us [laughs].
Sure, it could make sense for us, but my friends at Boeing tell me that the 737 MAX is better [chuckles].
But now, Boeing is working on the NMA, or the 797. But for a small country like ours, taking the 797 would mean having to fly to Sydney with only 200 seats, instead of the 300 that we have now. It’s tricky.
BECHONNET: These first two decades have been challenging and surprising. All I have to say about this is that more surprises are coming in this next phase of our history.
I must congratulate you. Your onboard product is flawless. It’s very refreshing. Easily one of the best I have ever tried.
BECHONNET: Thank you. This means a lot. We have worked really hard and I will communicate this to my team. It will make them really happy.
I wish you the very best of lucks in the future. Consistency is key.
MONVOISIN: Yes! We hope you enjoy your flight back. Thank you for coming.
Note: Special thanks to Kimi Ozawa and Clelia Olivares.