Air Pacific has announced a before tax operating profit of F$7.7-million for the financial year ended March 31, 2007, a 64 per cent reduction of the F$21.5-million before tax profit of the previous financial year.

The Fiji international airline’s income was F$500,8-million, an increase of F$51.4-million or 11.4 per cent. Expenditure was F$493.1-million, an increase of F$64.2-million or 15 per cent compared to the previous year.

The reduced level of profitability was driven by the three key factors of extremely high fuel prices, reduced tourism inflows and Fiji resident outbound travel and the deep discount of airfares, the airline’s chairman, Nalin Patel, said. The key expenditure increase was the cost of fuel which rose F$36.5-million from F$142.5-million in 2005-2006, to F$179-million in 2006-2007.

Air Pacific passengers increased to 857,336 from 838,150, growth of only 2.2 per cent, while the average fare increased by F$15 to F$501, inclusive of foreign exchange effects and fuel surcharges.

Tourism, the primary revenue source for Air Pacific, was adversely affected by the introduction of a hotel turnover tax, adverse reporting of Fiji’s stability before the 2006 election, the December 5, 2006, military coup, Australian and New Zealand travel advisories and competition from other destinations.

A dividend of 16 cents per share amounting for F$3.9-million was approved by the board, despite reduced profits. Income tax expense of F$2.5-million resulted in an after tax profit of F$5.2-million compared with F$14.9-million the previous financial year.

The current financial year represented an even greater challenge, managing director and chief executive officer, John Campbell, said, with a slower than expected tourism recovery, continuing high fuel prices, growing competition from other tourism destinations and discounted airfares.