AV3 under fire for unpaid creditors and unreliable service

March 9, 2025 10:00 pm | Posted in Business News | Share now TwitterFacebook

By Doddy Morris.

AV3 (formerly Air Vanuatu) has not paid creditors despite a massive VT1.5 billion injection by the government into the airline, claimed an internal source. 

He stressed that major tourism and business organizations are losing confidence in the AV3 Board and Executive Management, having raised concerns about the airline’s domestic operational failures, which have significantly disrupted business and essential travel between the islands.

Concerns include unreliable flight schedules due to frequent cancellations and delays, with no clear communication to passengers, lack of accessible booking options, customer service failures, poor contingency and maintenance planning, and loss of public confidence.

“There is growing sentiment that AV3 is failing to meet even basic airline expectations,’’ said the source. 

“Adding to the concerns is the question surrounding the Australian government’s commitment to supporting aviation in Vanuatu for six months. Where is this commitment?

“Is it sitting with the former minister Matai Seremaiah, who also chairs AV3, waiting for action? There is no confirmation that assistance will be extended unless a formal proposal is presented to DFAT.”

Creditors, tourism operators, and consumers are demanding accountability and immediate action from both the government and AV3’s leadership to restore confidence in the aviation sector, said the source.

According to the Government, Air Vanuatu’s operations under the new company AV3 – remains a key focus of its100-days plan, to ensure passengers can continue to travel within the country. 

“The Government fully understands the level of frustration customers of Air Vanuatu have. However, the Government calls for patience as it works its way through the current state of affairs to restore the airline within the next three months or so with a particular focus on the domestic service, said the government’s Public Relations Officer (PRO) Kiery Manassah. 

Currently the shareholders are awaiting recommendations from the Board of Directors on proposals from two companies – both of which have proposals to partner with AV3, he conveyed. 

He said that there is also an offer from Australia on the table involving Fiji Airways in a temporary six-month arrangement.

However, Prime Minister (PM) Jotham Napat has recently told the visiting Australian Minister for International Development and Pacific Affairs Pat Conroy that the offer remains an option. 

“In addition, the Deputy PM wants to give all the options due consideration before deciding the long-term future of the airline. All of these, amidst a liquidation process that is yet to be properly wrapped up by Ernest and Young,” said Manassah.

“The Deputy PM says as soon as the liquidators have filed their final reports then the Government can release final payments of over VT200 million. He says the shareholders are hamstrung by the liquidation process, which means the AV3 Board remains under temporary directorship. It will remain so until a proper board of directors is recruited under the new Commercial Business Enterprise Act passed in parliament last year,” he said. 

The PRO also mentioned that the Deputy PM says that Air Vanuatu has been operating under an Articles of Association and the Companies Act that was not robust enough. 

According to him, the government is adamant that with AV3 and Air Vanuatu operations coming under the new Act, Air Vanuatu should find its feet again and operate more as a proper commercial entity without politicians or anyone getting a foothold in its management, let alone operations – the key reason for the airline’s demise. 

“As far as this Government is concerned, the airline is so vital to our connectivity and for the tourism industry. We are tackling so many issues but given enough time, the airline should be back up. The airline’s domestic service is being prioritized over the international service, which is why a billion vatu in the 2025 budget is ear-marked towards purchasing of two new Twin Otters, the Deputy PM has already declared publicly”, the PRO added. 

Despite the challenges faced by the Government and AV3, the airline still manages to provide service to the provinces of Vanuatu, with ATR returning to the fleet after maintenance in Indonesia.