Course Name: Managerial Accounting

Course Code: AF201

AF201 Assignment 1

Name: Artika Singh

Student ID: S11157203

Signature: Artika Singh

i
 TITLE:

Challenges, Growth
Opportunities, Structures,
Systems and Practices
Implemented by Fiji Airways

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 Executive Summary.
Information on Fiji Airways remained resulting difficult but it was managed. The persistence
of this research report is to find, recognise and analyse challenges faced by Fiji Airways and
the growth opportunities on how Fiji Airways has created more opportunities has made
modernizations for the growth. Secondly, it will also discuss in this report how the Fiji
Airways devises answered in relation to its structures, systems and practices. Lastly, it will
argue in what way the management accounting can support the Fiji Airways. All this
gathering information on Fiji Airways was crucial to find.
Moreover, in this research report the most finding is that Fiji Airways faced lots of challenges
such as increased in fuel price which will continue to be a challenge of fuel prices in future.
Second point was insufficient supply of pilots it has difficulties in finding pilots in any
airways. Third point was the hotel price, during the peak season in tourism the Fiji’s hotel
prices are too expensive and it affects the travellers travelling from a particular country, the
final point was diversifying products that includes the quality hotels, customer’s services and
better infrastructures. The opportunities Fiji Airways got through codeshare partnership by
Finnair and Fiji Airways. The growth of Travelport Fusion Product introduces a new mobile
application.

Finally, this research report will discuss the importance of management accounting for
Airways that helps to increase operational efficiency. This research will discuss other
relevant findings in this research report.

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 TABLE OF CONTENT

Table of Contents
1.0 Introduction.....................................................................................................................................1
2.0 Challenges faced by Fiji Airways....................................................................................................2
2.1 Fuel Price.....................................................................................................................................2
2.2 Insufficient Supply of Pilots..........................................................................................................2
2.3 Hotel Price...................................................................................................................................2
2.4 Diversifying the Tourism Product.................................................................................................2
3.0 Growth Opportunities......................................................................................................................3
3.1 Codeshare Partnership Agreement..............................................................................................3
3.2 Infrastructure Development.........................................................................................................3
3.3 Mobile Application- Travelport Fusion Product..........................................................................3
3.4 Induction of Airbus A350.............................................................................................................3
4.0 Structures, Systems and Practices....................................................................................................4
4.1 Donations.....................................................................................................................................4
4.2 Loan Repayment to Fiji National Provident Fund (FNPF)..........................................................4
4.3 Fiji Airways Formal Partnership with the University of the South Pacific..................................4
5.0 Management Accounting Assist the Fiji Airways in Decision-Making...........................................5
6.0 Conclusion.......................................................................................................................................6
7.0 Bibliography.....................................................................................................................................7

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 1.0 Introduction
Fiji Airways that consist of six decades of flying to Fiji has an ironic history since humble
beginnings to the national carrier of Fiji. On first September 1951, De Havilland Dragon took
off a 7-seater plane from Fiji’s Nausori Airport to Drasa Airport near Lautoka, on the main
island of the west coast. This was the first commercial flight saw the introduction of what
today is a genuinely global, Fijian carrier. Pacific Sun with its domestic and regional
subsidiary, Fiji Airways flies more than 400 flights per week to nearly 15 cities in 10 nations
around the world. Taking on numerous challenges in the worldwide airline industry that has
no airline is resistant from Fiji Airways that has conceded numerous assessments with flying
colours and more than capably satisfying its double jobs of flying Fiji and contributing
fundamentally to its economy.

To begin with, through the 60-years, an attempt of Air Pacific was at linguistic feature that
practically succeeded. Early in the 1970s, under British colonial rule held shares in Air
Pacific of some islands of the Pacific. Fiji Airways has continually been punching way
beyond its weight for a small airline. In the early 1980s, the code-share concept with Qantas
was established. On 25th January 1995, Fiji’s Airline launched another watershed date was
supposed to be a trail blazing concept of joint leasing of airliner with the Royal Tongan
Airline. This idea was completed and originated with 2 carriers coated on each half of the
Boeing 737-300 fuselage.

In May 2012, it was announced the name of Fiji Airways that has reintroduce to reinforce its
role as the proud national airline of Fiji. It introduces the new Airbus 330-200 airplanes
posing its customers warm friendly Fijian services. Fiji Airways developed into Fiji’s proud
flag airline that has started for an airline by an acclaimed air pilot, maker, airline manager and
legislator.

After the two horrific plane crashes in the past five months, the only airline company
operating in Australia is Fiji Airways using Boeing 737 MAX 8[ CITATION Ash19 \l 1033 ].
It was declared by SilkAir that six 737 MAX 8 jets were a temporarily ground and operated
between Singapore, Cairns and Darwin.

Finally, in this research report will discuss the challenges played by the Fiji Airways and the
growth opportunities on how Fiji Airways has created more opportunities and has made
modernizations for the growth. It will also discuss in what way the Fiji Airways has
responded in relation to its structures, systems and practices, and how the management
accountings can assistance the Fiji Airways.

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 2.0 Challenges faced by Fiji Airways
2.1 Fuel Price
The major challenge faced by Fiji Airways is the increased in the fuel price. In 2018, the
airline cost of fuel price represents use of 30% to 40% which has gone up abruptly to $80 a
barrel and two years ago it cost $50 a barrel which cost already $43m[ CITATION Nai18 \l
1033 ]. Due to higher fuel prices rose 28 per cent in a year, which has an impact on the bottom
line resulted F$31.5m[ CITATION aus19 \l 1033 ] . The challenging was given the pressure of
fuel price increases, increased rivalry and instability of the US dollar said by Mr Viljoen. For
all airlines, it will continue to be a challenge of fuel prices and the fiscal discipline will not
get contented required to meet its financial targets.

2.2 Insufficient Supply of Pilots

Like many countries Fiji Airways had difficulties in finding pilots. For years the looming
shortage of pilots in Fiji airways is now becoming clear that the industry will not be able to
achieve the growth rates unless certain immediate action is taken to change a pipeline of
trained air crews. Due to the unavailability of pilots, the number of aircraft grounded is
growing, for now this issue have been contained but the recruiting pilots is becoming
important for all airline looking for to expand.

2.3 Hotel Price

During the peak season in tourism the Fiji’s hotel prices are too expensive compared to other
countries like Bali and Gold Coast in Australia, it affects the travellers travelling to a
particular country[ CITATION Cha18 \l 1033 ]. Airways are always to expand its operations in
search of flying destination, in order for travellers to reach desired destination, it plays a huge
role for the accommodation prices. For instances, the Sofitel Fiji Resort & Spa, the rate for a
week is $1600 therefore during the peak seasons causing in decreased flight services for Fiji
Airways [ CITATION Boo19 \l 2057 ].

2.4 Diversifying the Tourism Product

The products in tourism market include the quality hotels, customer’s services and better
infrastructures. The target is to diversify the National Tourism Policy by tourism Fiji to
introduce new, to boost airline services and profitable tourism products like the outline of
rugby games between Crusaders and Highlanders, golfing tournaments, water sports and
many other activities. Tourists are to enjoy a travel package that gives affordable in range of
everyone.

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 3.0 Growth Opportunities
3.1 Codeshare Partnership Agreement
On 17th October 2019, a new codeshare partnership agreement made by Finnair and Fiji
Airways between Helsinki (HEL) and Nadi (NAN) in Fiji through 3 gateways served by
Finnair[ CITATION Fij192 \l 1033 ]. The code for Finnair’s AY will be added to Fiji Airways
flight among Hong Kong (HKG), Singapore (SIN) and Nadi, for Finnair customers it offers
new destination in the South Pacific. Subject to applicable government approval, Finnair’s
flight will be also added to Fiji’s flight between San Francisco (SFO), Los Angeles (LAX)
and Nadi. Also the code for Fiji Airways FJ will be added to Finnair’s flights to Helsinki
through Singapore. The Managing Director and CEO, Mr Andre Viljoen of Fiji Airways said
that through codeshare partnership we are looking forward to work and introducing Finnair
customers to Fiji’s authentic cultures.

3.2 Infrastructure Development

Airports Fiji Limited (AFL) is starting a redevelopment project at Nausori International
Airport Fiji about $60 million. This redevelopment will includes building international
runway and installing approach lighting to facilitate night-time operations. This
redevelopment project will includes the improvement passenger services and construct a new
control tower, the new terminal of the expansion of the airport apron and extension to the
runway from 1868m to 2300m from large airplanes such as the Boeing 767 and Airbus A330
aircraft[ CITATION Nau12 \l 1033 ]. The infrastructure development such as Terminal upgrade
project at Nadi International Airport and the new Denarau Bridge this will result in the
developments in the tourism sector that leads to unprecedented achievement in records
passengers’ arrival and earnings.

3.3 Mobile Application- Travelport Fusion Product

Travelport Fusion Product introduces a new mobile application to engage customers, it is
announced that agreement with South Pacific airline, Fiji Airways has a leading travel
commerce policy. The Travelport Fusion is a mobile application that helps airline to keep up
the fast changes in mobile technology and this mobile application with a robust tool is
providing for customers a more compelling and engaging experiences for Fiji Airways. This
mobile application makes the experiencing of managing travel continually better and it
provides distribution, technology, payment and tourism industry that operate a travel
commerce platform. Fiji Airways will benefit from future products upgrades as a part of the
support from Travelport.

3.4 Induction of Airbus A350

The new A350 is the airline that aims to use to revitalize its aging fleet and the growth for
Fiji Airways. This new aircraft capable of flying longer routes and opportunities are limitless
for the airline with Fiji Airways. Though, in this recent years the airline has joined a connect
partner that deliver some of the world’s newest aircraft, although in the South Pacific
boasting the youngest fleets.

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 4.0 Structures, Systems and Practices
4.1 Donations
When the hit of the tropical Cyclone Winston, the Fiji Airways has donated $1m to the Prime
Minister’s National Relief and Rehabilitation Fund. The donation was given to assist those
affected by Tropical Cyclone Winston. Through the National Disaster Management Office
coordinated, the airline declared that free carriage of relief supplies domestically and arriving
from other countries. The Managing Director of the Fiji Airways, Mr Viljoen said that the
donation will help the National Disaster Management Office to get many resources needed to
areas of critical need and help to rebuild our nation. In 2016, Fiji Airways Carries donated 16
boxes of rugby kit from Hong Kong to Fiji. This new rugby kit includes shorts, socks, jersey,
ball and bags.

4.2 Loan Repayment to Fiji National Provident Fund (FNPF)

Fiji Airways makes early down loan repayment for gaining of three A330 Aircrafts which
they acquired from Fiji National Provident Fund (FNPF). On its loan facility with the
superannuation fund they made a further lump sum repayment of $20m. For the initial down
payment for purchasing of three A330 aircrafts this repayment loan is over and above Fiji
Airways contractually required payment plan with the Fiji National Provident Fund (FNPF).
Last year in May, the original loan of $35.5m Fiji Airways had decided not to draw down
which also made an early loan repayment of $19m of its financial position to the new loan
facility. To date, the two entities under the term of agreement of FNPF, Fiji Airways has
respected its entire repayment obligation.

4.3 Fiji Airways Formal Partnership with the University of the South Pacific
The Managing Director of Fiji Airways, Mr Viljoen welcomed the official partnership
through the University of the South Pacific (USP) as the National Airline, they assist students
who are interested in aviation in the growth and development. The better place to get aviation
Engineering experience, Fiji Airways have Fiji’s aviation maintenance facility of aircraft
Engineers on staff. The Faculty of Science, Technology & Environment (FSTE) of the
University of the South Pacific and Fiji Airways has official attachment for students from
USP’s Bachelor of Engineering programs at the Fiji’s National Airline. While on attachment
students will work under the supervision of senior Fiji Airways Engineers at the main Hangar
facility in Nadi.

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5.0 Management Accounting Assist the Fiji Airways in Decision-Making

Management Accounting and organisation has responded properly through its structures,
systems and practices due to the changes taking place in Fiji Airways. Management
accounting in Fiji Airways is generally proposed who use the information to make decisions
for the use of internal users to achieve the aims and purposes of the Fiji Airways and it uses
both financial and non-financial information in management accounting. It assists Fiji
Airways to achieve overall goal of value creation for the customers and shareholders.

Fiji Airways airliners scheduling the arrival and departure of travellers that it aids the internal
managers of an administration to work as planners. It offers information to administrators and
decision makers of the organisation. The strategic plan in future for Fiji Airways increasing
the airlines route network, increasing operational revenues and the passenger and growing the
number of aircraft. This strategic plan was developed for the airline from the management to
its customers and stakeholders. Management accounting help Fiji Airways increase in
operational efficiency by helping managers making operational decision.

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 6.0 Conclusion

Finally to conclude, the role of management accountant plays a vital role in Fiji Airways. In
the decision making the part of management accounting of the organisation was recognised
as analysis of the use of management accounting is presented. In this research report the most
finding is that Fiji Airways faced lots of challenges such as increased in fuel price which will
continue to be a challenge of fuel prices in future, second point was insufficient supply of
pilots it has difficulties in finding pilots in any airways, third point was the hotel price, during
the peak season in tourism the Fiji’s hotel prices are too expensive and it affects the travellers
travelling from a particular country, the final point was diversifying products that includes the
quality hotels, customer’s services and better infrastructures.

Management accounting is helpful in Fiji Airways that generally proposed who use the
information to make decisions for the use of internal users to achieve the aims and purposes
of the Fiji Airways and it uses both financial and non-financial information in management
accounting. As it generally increases the operational revenues, growing the number of aircraft
and increasing the airlines route network these are the strategic plan in future for Fiji
Airways.

Fiji Airways faced a lot of challenges and were overcome with the challenges and the growth
opportunities of Fiji Airways in codeshare partnership, infrastructure development, mobile
application and induction of Airbus. Fiji Airways responded to its structure, systems and
practices as by donations and loan repayment.

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 7.0 Bibliography

Airways, F., 2019 . Finnair starts codeshare cooperation with Fiji Airways, extending its network in
the South Pacific. [Online]
Available at: https://www.fijiairways.com/en-au/about-fiji-airways/whats-new/
[Accessed 28 February 2020].

Anon., 2012. Nausori Airport to undergo redevelopment. [Online]

Available at: https://www.airport-technology.com/uncategorised/newsnausori-airport-to-undergo-
redevelopment/
[Accessed 4 March 2020].

Ashton, . K. & Smith, E., 2019. Fiji Airways the only company flying Boeing's 737 MAX 8 in
Australia, after other services grounded. [Online]
Available at: https://www.abc.net.au/news/2019-03-12/fiji-airways-the-only-company-flying-boeing-
737-max-8-in-aus/10891908
[Accessed 27 February 2020].

australianaviation.com.au, 2019. Fiji Airways orders two Airbus A350-900s, reports drop in full year
profit. [Online]
Available at: https://australianaviation.com.au/2019/05/fiji-airways-orders-two-airbus-a350-900s-
reports-drop-in-full-year-profit/
[Accessed 2020 February 27].

Booking.com, 2019. Hotels In Denarau. [Online]

Available at: https://www.booking.com/searchresults.en-gb.html?aid=356980&label=gog235jc-
1DCAsoSUITZmlqaS1yZXNvcnQtYW5kLXNwYUgJWANoSYgBAZgBCbgBCMgBDNgBA-
gBAfgBAogCAagCAw&lang=en-
gb&sid=105d63eb7999f1bf5b6298ae186408f1&sb=1&src=searchresults&src_elem=sb&error_url=ht
tps%
[Accessed 25 February 2019].

Chanel, S., 2018. Viljoen Tells of Growth Plans, Challenges. [Online]

Available at: https://fijisun.com.fj/2018/09/02/viljoen-tells-of-growth-plans-challenges/
[Accessed 28 February 2020].

Fiji Airways, 2018. Hong Kong Airlines Signs Codeshare Agreement With Fiji Airways. [Online]
Available at: https://www.fijiairways.com/en-in/about-fiji-airways/2017-media-centre/fiji-airways-
hong-kong-airlines-sign-codeshare-agreement/
[Accessed 24 February 2019].

Fiji Airways, 2019. Privacy Policy. [Online]

Available at: https://www.fijiairways.com/en-in/privacy-policy/
[Accessed 26 February 2019].

Naikaso, F., 2018. Fuel price a major challenge for Fiji Airways. [Online]
Available at: https://www.fbcnews.com.fj/news/fuel-price-a-major-challenge-for-fiji-airways/
[Accessed 2020 February 27].

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Travelport, 2017. Fiji Airways Drives Mobile Strategy With Travelport Fusion. [Online]
Available at: https://www.travelport.com/company/media-center/press-releases/2017-12-06/fiji-
airways-drives-mobile-strategy-travelport-fusion
[Accessed 25 February 2019].