National Assembly throws a lifeline to Air Seychelles By Elsie Pointe |04 February 2021

The National Assembly has agreed to keep Air Seychelles afloat, albeit with conditions

Following meetings regarding the national airline on Saturday and presentations by the management and staff of Air Seychelles, the Ministry of Finance and Ministry of Transport on Tuesday, members of the National Assembly yesterday agreed that Air Seychelles should be saved.

Setting down the National Assembly’s consensus on the matter, leader of government business, Bernard Georges, noted that the airline will however have to undergo yet another restructuring programme if it hopes to remain afloat.

The report proposes that conditions should be attached if the airline is allowed to keep flying internationally, and this includes the setting up of a board and management that is proactive, responsible and efficient, and which are very closely supervised.

The Ministry of Finance has been advised to explore ways outside of the national budget to raise funds for Air Seychelles’ debts.

Hon. Georges noted that all members had agreed to the conclusions made in the National Assembly’s report on Air Seychelles. Adopted in unanimity yesterday, the report is expected to be sent to the executive branch of the government to assist with its decision on the fate of Air Seychelles.

“The majority party in the National Assembly is in favour of a foolproof business model to tackle operations in which Air Seychelles is losing money, so as to ensure that capital from the government is not always placed in the airline but freed up for other economic expenditures,” explained Hon. Georges.

“Generally, the opposition is in favour of maintaining the operations as is but with a restructuring plan that will not threaten the employment of any staff, so as to allow the company to prove itself,” he continued.

“On these two points, it seems that we have reached a consensus for a restructuring programme with the aim of saving the airline.”

Leader of the opposition, Sebastien Pillay, said that the United Seychelles supports a restructuring plan that will not lead to any staff losing their job.

“We are a progressive party that has always supported the interest of the workers and will continue to do so[…] we know that the government will be under a lot of pressure from international donors, especially IMF and World Bank, in regards to Air Seychelles. One of the key factors that these donors have always raised is that they never quite understood why Seychelles has an international airline,” added Hon. Pillay.

“I would like to plead to the current administration to resist any maneuvers from these entities, through their programmes, that will bring about a rushed restructuring of our airline that could lead to people losing their jobs.”

The National Assembly report touches on the direct and indirect benefits of Air Seychelles, the consequences of closing down Air Seychelles’ international operations as well as the possible outcomes if the government chooses to allow the airline to continue its international flights.

Some of the benefits of keeping Air Seychelles’ international operations includes connectivity to the outside world; Air Seychelles as an insurance policy for our tourism industry; Air Seychelles’ potential to make USD7 million per year when it becomes financially viable again in regards to its domestic and ground-handling operations.

Indirect benefits include the benefits to the tourism industry, its training programmes that has helped to skill many Seychellois professionals and an aspiration for the young generation. The report highlights the point of view that Air Seychelles constitutes of a number of operations (domestic, international and ground handling) and henceforth cannot function efficiently if one of these operations was sidelined.

Meanwhile, to cut Air Seychelles’ international network could lead to the government having to reimburse USD19 million when it returns the two recently acquired A320 Neo, while the millions of dollars owed to bond holders in the United Arab Emirates will still stand and will still have to be paid.

Around 200 Air Seychelles employees will also be faced with redundancy and this will come at a cost.

Other consequences of closing down the national carrier’s international segment includes an increase in domestic and ground-handling fees, with ground-handling depending entirely on foreign airlines.

However if the government and Air Seychelles were to accept the risks to continue with international services, the country will continue to observe the direct and indirect benefits of Air Seychelles.

The government will have to continue subsiding Air Seychelles at a cost of around USD15-19 million per year, and as a result, it will have to cut down on its expenditures in ministries, departments and government agencies.

The report highlights that MNAs have agreed on the salient point that Air Seychelles is the casualty of years of mismanagement.

While some MNAs such as Hon. Gervais Henrie had described the Air Seychelles as a “failed airline” which has constantly sought out subsidies, financial rescue lines and undergone numerous restructuring programmes, other members of the parliament in the report conceded that the country should continue to support the airline.

Proportional member Johan Loze, among others, had stressed that having Air Seychelles carry on with international flights is a matter of sovereignty and survival for Seychelles.

The debate on Air Seychelles saw MNAs who proposed that the government gives Air Seychelles another chance while some called for the country to, once and for all, cut its losses in a company that has been and continues to be a financial sieve.

Additionally, the report requests that the government undertake in-depth investigations in the past management of the company to find the reasons behind its current state.

Following the successful adoption of the report – 29 in favour, none against – Speaker Roger Mancienne noted that the debate on Air Seychelles had been productive and reflects the varied public opinions on the subject.

The parliament’s debate on the airline was propelled by President Wavel Ramkalawan in his state-of-the-nation address last month, in which he highlighted the dire economic circumstances caused by Covid-19 and the country’s inability to cover Air Seychelles’ staggering debts.