Air Vanuatu Enters Liquidation, Cancels Flights Until May 12

Air Vanuatu, Vanuatu'snational carrier, has entered voluntary liquidation, cancelling all international flights until May 12 and stranding thousands of Australian and ni-Vanuatu travellers. The airline cited"extended maintenance requirements"on their aircraft as the reason for the cancellations.

Why this matters: The collapse of Air Vanuatu has significant implications for the country's economy, as tourism accounts for 40% of Vanuatu's gross domestic product. The disruption to air travel will also have a ripple effect on the region's tourism industry, potentially affecting other airlines and travel operators.

The Vanuatu government has appointed Ernst & Young Australia's Morgan Kelly, Justin Walsh, and Andrew Hanson as liquidators to oversee the restructuring process. The liquidators will prioritize safety and maintenance checks before resuming normal operations. "Air Vanuatu is critical to the people of the Republic of Vanuatu and a strategically important business to the nation," said Morgan Kelly.

Air Vanuatu has been grappling with financial difficulties due to labour shortages, rising operating costs, elevated interest rates, and the impact of tropical cyclones on tourist numbers in recent years. Tourism contributes 40% of Vanuatu's gross domestic product. "The outlook for the airline is positive, despite pressures on the broader industry, and we will be focused on securing the future of this strategically vitalnational carrier,"Kelly stated.

The liquidators will explore options to resume operations, including a potential sale process or partnership arrangement with another airline. "We'll be looking at all options. And the Vanuatu government has indicated that they would prefer to resume operations as quickly as possible," said Kelly. The existing management team will remain in place to ensure continuity of service to customers.

The flight cancellations have disrupted the travel plans of many, including Australian tourist Sally Witchalls who was stranded in Port Vila with her friends after their Air Vanuatu flight was cancelled. "We're now on our own working out how we pay for the accommodation from here on out while we wait to see how the situation with Air Vanuatu unfolds," Witchalls said. The Vanuatu Tourism Office has apologized to travelers for the disruption and is working with Virgin Australia and Fiji Airways to fly stranded passengers.

Air Vanuatu operates a fleet of four planes, including one Boeing 737 and three turboprop aircraft. The airline filed for bankruptcy protection on Friday after cancelling over 20 flights to and from Sydney, Brisbane, and Auckland for the rest of the week on Wednesday. Affected travelers will be informed of the disruption and rebooked on flights as soon as operations resume, which is expected by May 12.