Air Mauritius and Our SOEs

Editorial

Air Mauritius, once the pride of the island, is still battling for survival, weighed down by years of mismanagement, political interference, and mounting financial pressures. The airline has undergone numerous crises, including a near collapse during the 2019-2020 period when it was forced into receivership and injected with billions in public funds to prevent liquidation. During Covid it rushed to sell for petty cash brand new aircraft it had just received and refurbished ones while hundreds of experienced staff were laid off and more billions were injected in the new holding company that swallowed it up.

Despite these substantial financial injections, the company has failed to regain its former glory. Instead, it has continued to face challenges such as delayed flights, cancellations, poor customer service, and questionable management decisions. With the appointment of its next (thirteenth) CEO in just over two decades, it’s evident that Air Mauritius’ leadership struggles continue to impact the airline’s future.

The current situation at Air Mauritius is a direct reflection of the company’s turbulent past, where political interference and inconsistent management practices have consistently undermined its operations. Political appointments to the company’s board and top management have often resulted in decisions driven by political considerations rather than the strategic needs of the airline and its operational effectiveness. This has left the airline vulnerable to poor management practices, which have taken a toll on its finances and reputation.

In the latest development, Dass Thomas, who had been initially considered for the role of CEO, was passed over before he even had the chance to settle into the position. Instead, André Viljoen, a former CEO, is set to return to lead the company. The constant turnover of CEOs, with twelve different leaders since 2000, speaks volumes about the instability at the top of the company. The lack of continuity in leadership has made it difficult for Air Mauritius to implement long-term strategies that could help stabilize and grow the airline.

One of the critical factors in Air Mauritius’ continued struggles is the open skies policy and the competition that has emerged as a result. While the policy has brought benefits in terms of increased access to international routes, it has also put tremendous pressure on the national carrier to stay competitive. The arrival of new airlines and the expansion of regional competitors has forced Air Mauritius to rethink its business model and service offerings. Yet, it would seem the airline has been slow to adapt to these changes. While political interference has stifled the company’s ability to make swift and appropriate decisions, Air Mauritius has nonetheless attempted to maintain its position in the market, relying on its reputation for quality service as a primary differentiator.

Historically, the quality of service offered by Air Mauritius has been a major factor in sustaining its position in the competitive airline industry. However, in recent years, trade unionists and insiders suggest that the airline’s increasing customer dissatisfaction has been due to poor maintenance, the unavailability of spare parts, and the lack of qualified personnel. The public has become increasingly vocal about these issues, and with every flight delay and cancellation, the airline’s reputation has taken a further hit. The frustration of passengers, many of whom have missed connections or appointments, is understandable. Air Mauritius, once considered the gold standard of service in the region, now finds itself struggling to meet even the most basic expectations.

Beyond the operational challenges, Air Mauritius is also grappling with deeper financial issues. The airline’s management has repeatedly failed to make sound financial decisions, such as engaging in hedging contracts beyond their means for fuel oil during a period of significant volatility in international oil prices. These decisions placed the company in a precarious financial position. Coupled with this, the new regime’s rush to order new aircraft set the stage for its eventual insolvency in 2020. To stave off liquidation, the then government injected more than Rs 25 billion into the airline, a move that ultimately raised questions about the governance of state-owned enterprises (SOEs) in Mauritius.

The fate of Air Mauritius highlights the broader issue of accountability and transparency in the management of SOEs in Mauritius. Despite receiving significant public funds, Air Mauritius, like other major state-owned entities, has been largely immune from scrutiny. The lack of oversight and accountability has allowed mismanagement to persist, with little consequence for those responsible. This issue is not unique to Air Mauritius, as other state-owned enterprises have also faced similar challenges related to governance and oversight during the last ten years despite boasting our top public servants at their Board levels.

The absence of effective checks and balances at their Board levels has allowed political appointees and senior officials to act with relative impunity, often making decisions that benefit their own interests or those of their political masters, rather than the long-term viability of the companies they oversee. One example of this is the questionable decision to dispose of Air Mauritius’ new Airbus planes and lease older aircraft at unfavourable terms. These decisions have not only hurt the airline’s operations but have also damaged its public image and credibility. The lack of transparency surrounding these decisions, as well as the failure to provide adequate explanations to the public, has only served to fuel suspicions of corruption and mismanagement.

To address these issues, it is imperative that the government takes a more proactive approach in ensuring the good governance of its state-owned enterprises. One potential solution is the establishment of a permanent Select Committee, chaired by an independent figure, to oversee the operations of SOEs like Air Mauritius. This committee would be empowered to monitor the performance of these companies, ensure compliance with good governance practices, and hold management accountable for any deviations from established protocols. Additionally, the introduction of a Freedom of Information Act could provide greater transparency and allow the public to scrutinize the activities of state-owned enterprises more effectively.

Ultimately, the future of Air Mauritius depends on the ability of the government and management to put the airline back on track. This will require a clear focus on rational decision-making, free from political interference, and a commitment to professional management. Air Mauritius is more than just a company; it is a vital link between Mauritius and the rest of the world, and its continued success is integral to the island’s economic future. By ensuring that the airline is managed with the expertise and dedication it deserves, Air Mauritius can once again become a symbol of national pride, capable of weathering the challenges of a competitive and ever-changing global aviation industry.

Mauritius Times ePaper Friday 31 January 2025