Air Vanuatu Islander sold for VT8 million despite VT14 million offer

September 28, 2026 10:40 pm | Posted in Business News | Share now TwitterFacebook

By Ezra Toara.

Air Vanuatu’s BN2 Islander aircraft YJ-008 was sold to Unity Airlines for VT8,050,000 (including VAT), despite Vanuatu Air Charters Ltd, trading as Air Taxi Vanuatu, saying it had submitted an indicative offer of A$175,000, approximately VT14 million, for the aircraft.

Air Taxi Chief Executive Officer (CEO) Julia Johnstone said on Saturday, 26 September, that the company had submitted a letter of interest to the liquidators and had sufficient cash on hand to fund the purchase without third-party financing.

Air Taxi said YJ-008 was currently unserviceable and required an SB190 and a freshly overhauled engine.

“We are pleased to present this indicative offer for the acquisition of the Air Vanuatu BN2 Islander, registration YJ-008, by Vanuatu Air Charters Ltd, trading as Air Taxi Vanuatu,” Johnstone said.

The company currently operates three BN2 Islander aircraft and had also purchased a fourth, which Johnstone said was expected to be brought into operation.

Air Taxi also expressed interest in operating scheduled flights to Vanuatu’s outer islands.

Johnstone said the company already had the infrastructure needed to begin scheduled domestic flights, although Government assistance, such as support for aviation fuel, could be required if services were to operate more than once a week to some islands.

The company would also need approval from the Civil Aviation Authority of Vanuatu (CAAV) to amend its Air Operator Certificate to cover regular passenger services.

Air Vanuatu explains VT7 million sale

Air Vanuatu Chief Commercial Officer Flavio Carvalho said the circumstances surrounding the sale needed to be clarified.

Carvalho said Air Vanuatu’s reference to the aircraft’s two engines requiring overhaul did not mean the engines had already been overhauled.

He also clarified that Air Vanuatu had not offered Unity Airlines VT15 million for the aircraft.

According to Carvalho, Unity Airlines had previously offered VT15,007,000 for YJ-008 but withdrew that offer on 18 August 2026 after re-inspecting the aircraft.

Following the re-inspection, Unity offered VT7 million.

Carvalho said the VT8,050,000 eventually paid included the VT7 million purchase price plus 15 per cent VAT.

He said Air Vanuatu accepted the offer because the aircraft had previously been included in a public tender during the liquidation process, but the tender had not resulted in a completed sale.

He said no second auction was conducted because the previous tender had produced no buyer, Unity was the only operator of the aircraft type that had expressed interest, and the aircraft was continuing to lose value while sitting outside.

“It was sold by direct negotiation with that operator, on an as-is, where-is basis,” Carvalho said.

No other offer received

Carvalho said no other party had made an offer for the aircraft after the liquidation.

He said Unity’s initial VT15,007,000 offer was withdrawn after the airline re-inspected YJ-008 and found that it had deteriorated while sitting in the open.

Carvalho said the cost of overhauling the two engines alone exceeded the eventual sale price and that further delays would continue to reduce the aircraft’s value.

“The alternative to accepting was not a higher price; it was no sale,” Carvalho said.

Air Taxi’s A$175,000 indicative offer represents a higher nominal purchase price than the VT7 million figure accepted from Unity.

Air Taxi has questioned why the aircraft was not subjected to another auction or tender process that would have allowed other operators to submit offers.

The company said there were other BN2 operators in Vanuatu who could potentially have been interested in the aircraft.

Air Vanuatu says aircraft was not needed

Carvalho said YJ-008 was the only aircraft in Air Vanuatu’s possession that was not operating and that no other aircraft was currently being offered for sale.

He said the airline’s direction was to add capacity rather than reduce its fleet.

Carvalho said the BN2 Islander was no longer suitable for Air Vanuatu’s current fleet plan.

Air Vanuatu’s network is operated by 19-seat Twin Otters and a 72-seat ATR, while the nine-seat piston-powered Islander had not been part of the airline’s operational fleet since December 2023.

He said returning YJ-008 to service would require significant expenditure, including overhauls of two engines and two propellers, completion of overdue inspections and rectification of corrosion that had developed over several years.

Carvalho said those costs would be several times the sale price and that Air Vanuatu did not have a current route for the aircraft or engineers and pilots current on the type.

He said the aircraft leased by Air Vanuatu were turbine-powered aircraft that matched the airline’s current operational requirements.

“Spending subsidy money restoring the Islander would have been the wrong use of public funds,” Carvalho said.

Future of YJ-008

Carvalho said an aircraft requiring engine and propeller overhauls should not necessarily be regarded as condemned.

He said YJ-008 could not fly until the required work and inspections had been completed, and that any decision on whether it would return to service would ultimately be made by the buyer in accordance with CAAV regulations.

“The aircraft is not condemned; it is an aircraft that cannot fly until the work is done,” he said.

Carvalho said the change of registration had been processed through CAAV and noted that Unity Airlines had operated the BN2 Islander type in Vanuatu for more than two decades.

He said selling a grounded aircraft on an as-is, where-is basis was standard practice and that scrapping a repairable aircraft would have destroyed the asset without providing any return to the company.

Carvalho said the Islander was a rugged aircraft designed for island environments and that its 20,187 recorded hours were not unusual for an aircraft of the type if properly maintained.

He said the aircraft’s future airworthiness would depend on inspections and certification by the aviation regulator.

Air Vanuatu recommended that questions about the aircraft’s future plans be directed to Unity Airlines.

Air Taxi eyes outer island services

Air Taxi said its interest in YJ-008 was linked to its plans for domestic aviation.

Johnstone said the company was interested in operating scheduled services to outer islands and already had infrastructure that could support such operations.

She said Government assistance could be required to make more frequent services commercially viable on longer routes, particularly because of aviation fuel costs.

Air Taxi would also need CAAV approval to amend its operating certificate before commencing regular passenger services.

The company said its existing experience with BN2 Islanders and maintenance capability would support its operation of the aircraft if the purchase had proceeded.