Mauritius: Georges Chung Tick Kan - "If it was not deliberate, it looked like deliberately done to torpedo the Corridor"

interview

The former senior economic adviser at the Prime Minister's Office and the brains behind the Mauritius-Singapore Air Corridor defends the legacy of the project, why it has been misunderstood and why it should be revived.

You say that the critics of the Air Corridor project have got it wrong. Why?

For quite some time now, the story has been that the Air Corridor project was a disaster; it has been referred to in parliament and the media like that. In the wake of Air Mauritius coming out of administration, the time has come to set the record straight. The Corridor was launched in March 2016 to coincide with the independence anniversary of Mauritius and was developing well until the end of 2018 when Air Mauritius, for some reason, decided not to extend the Corridor to Bangkok. What results did the Corridor deliver until then? Air Mauritius reported to the government that in the year 2017-2018 between Mauritius and Singapore, passenger load increased by 27 percent, cargo by 24 percent, revenue by 16 percent, and that the Corridor was profitable. In business, you do not normally expect it to grow by more than 3 to 4 percent. So, put that way, this is very impressive. All this was confirmed by Singapore's Changi Airport when in a progress report in 2017, they reported that passenger load went from 70 to 85 percent, exceeding 90 percent for three months and with full business class seats. This has to be put on record for history.

All this sounds impressive. The question is, if the Mauritius-Singapore Corridor was working so well, why did Air Mauritius choose to get rid of it?

I left the Prime Minister's Office (PMO) at the end of 2018. I don't know exactly why the Corridor was abandoned; all I know is that it just disappeared off the radar. There are lots of people within Air Mauritius who think they have the monopoly of knowledge on air travel and don't welcome anything that comes from the outside. I can see a second reason too: ego. They think they are there, are a listed company, and dismiss anything from outside as political interference and that they should only be answerable to shareholders. At the same time, they forget that the government is the main shareholder, while they are the operating arm of government policy. In the private sector you don't have this problem where you have shareholders and a board of directors, and the staff implements their vision. This is something that state-owned companies have to learn. My job at the PMO was to share a certain vision of a more diversified tourism sector and over the long term transform the country into a significant travel hub. I believe they saw my project as a threat to their freedom of action.

"What happened with the corridor was historic, with changi trying to pursue a small player like air mauritius, willing to do everything to make such an agreement work, only to have mauritius scoff at it."

What was the logic behind the resistance from Air Mauritius?

They thought that Mauritius serving as a hub to Africa would not work because there are already big boys like Ethiopian Airlines, Emirates and South African Airways already there. I agree with them completely, we cannot compete against these big boys. But that was not what the Corridor strategy was about. The Corridor was meant to develop the Singapore-Mauritius leg first.

So, it was a phased strategy?

Yes, that was the strategy. You build up the traffic between Mauritius and Singapore to five or six or seven flights a week; that's up to 2,000 passengers a week, and then sell the Mauritius-Africa leg of the Corridor to this segment if they want to travel onto Africa. This was also the strategy that Changi Airport was thinking about. So, this was not about competing with the big boys at all.

So, critics, both within and outside Air Mauritius, who point out that the Corridor did not work because there already were direct flights between Asia and Africa misunderstood the strategy?

Yes.

Within Air Mauritius they pointed to empty planes flying between Maputo and Mauritius as evidence that the strategy did not work. How do you respond to that?

The idea was that you build a critical mass on the Mauritius-Singapore route first, and then start offering flights into Africa. Once you have five or six flights a week between Mauritius and Singapore then it would also attract Africans wanting to travel to Asia. So, the question is, why open this Maputo destination less than two months after the first flight between Mauritius and Singapore? I was not invited to that launch, I learnt it from the press, nor were our partners in Changi made part of it. And then why just one flight a week? Who would book a four-hour flight to an African city where you would need to wait seven nights before getting a return flight?

Can you imagine a Singaporean businessman waiting five nights in Mauritius to go to Maputo for a week? It's not surprising that these flights were empty, nor was it surprising that eventually Air Mauritius scrapped the Maputo and Dar-es-Salaam routes. And on top of that, why use old A319s to launch a new service. The whole thing made no sense. As a businessman, I never would have done what Air Mauritius did, and it should never have been done that way.

You make it sound like Air Mauritius did it deliberately.

If it was not something deliberate, then it certainly looked like deliberately done to torpedo the Corridor. Maybe it was naivety. I am prepared to be generous and say it was just bad planning. They just looked at the Maputo and Dar-es-Salaam flights and used it to justify throwing the whole corridor overboard. But that is criticising the wrong animal.

As I have pointed out earlier, the MauritiusSingapore segment was working well and giving results. This cannot be disputed. What is more baffling is that the costs of this were not very gigantic as they have been made out to be. Any other additional costs, Changi was willing to make up for. Running a flight into Maputo costs what, Rs500,000 per flight? How many flights did they run? 10 or 15 just for a few months? And then use that to get rid of the whole project?

"My job at the PMO was to share a certain vision of a more diversified tourism sector and over the long term transform the country into a significant travel hub."

You argued that shortly after the MauritiusSingapore Corridor was launched in 2016, officials from Air Mauritius went to Singapore to try to get rid of it. Explain what happened there?

That came as a real surprise. When I learned that senior management of Air Mauritius were going to Changi Airport with a mission to terminate the Corridor agreement, I went with the then-Chairman Arjoon Suddhoo to Singapore to explain to the Singaporeans that the Corridor was a government project, and that Air Mauritius was just an implementing agency.

Megh Pillay was CEO at the time. But the government soon pushed him out a few months into his tenure. What was the attitude of Pillay's successor, Somas Appavou?

I asked Somas Appavou several times to meet and discuss the Corridor project, but my requests went unanswered. However, he initially looked like he believed in the project. More than once in the quarterly results of Air Mauritius, he said that the Corridor was producing results, and everything seemed to be going quite well with plans to extend it to Bangkok as well by 2018. But then it was dropped for some mysterious reason.

If the chairman of Air Mauritius went with you to try to rescue the project in 2016 and the CEO believed in it, then who in the airline was against it?

That's a good question and one that's difficult to answer. There are a number of possibilities, like others wit- hin the airline, its board, inside or outside the airline, but these would be speculation.

You recently said that we need to restart the Corridor project. But it seems government and Air Mauritius don't seem to agree with you. They are talking of going back to Kuala Lumpur.

That would be a big mistake. The previous management of Air Mauritius believed that Kuala Lumpur was a better option, but Kuala Lumpur has shown little interest in having a similar agreement with us that Changi had. It's like trying to get married to someone who is not interested in you! Changi Airport handled 65 million tourists a year before the pandemic, with Asia becoming one of the largest tourism market in the world when things return to normal, and inaugurating one of the most innovative terminals in the world. What happened with the Corridor was historic, with Changi trying to pursue a small player like Air Mauritius, willing to do everything to make such an agreement work, only to have Mauritius scoff at it. But whether it's Singapore or Kuala Lumpur, Air Mauritius will now face a problem with its leaner fleet. They cannot have less than three flights a week into Asia and expect it to be successful. I suspect that Air Mauritius will be trapped by its leaner fleet and face the intrinsic problems of a small airline.

So, you think it was a mistake for Air Mauritius to sell off four of its planes?

I really don't know what the rationale was. If there was something wrong with these planes, then it makes sense. But if they were operating normally, then it's a mistake. But cutting down its fleet, Air Mauritius is trapped into the intrinsic weakness of a small airline where it has no economies of scale. So that's a double-edged sword. If it wants to diversify, it will have to buy new aircraft.

Is that possible with just Rs2.5 billion from the government to help fund the airline going forward?

Is that enough? It may not be sufficient if the airline is not run competently.

Let's come to Asia now. You say it's too big a market to ignore. Haven't we already done this experiment with China when we saw tourist numbers grow for a time and then start to decline?

We know the reason for that. In 2015 we nearly reached the 100,000-mark for Chinese tourists and then lost significant momentum, losing half of that over the next five years while others like Maldives saw Chinese tourists grow to nearly 300,000 in 2019. Many of them fly to Singapore on a dual holiday plan. It was when China Southern Airlines pulled out of Mauritius because the government ceased giving it support. And then Air Asia pulled out after a few months because the Mauritian airport was deemed too expensive for them to fly to three times a week and the refusal of the authorities to give them incentives either. The rule here is to leave it to those who know best how to market the destination like we do with Air France, which promotes the destination within France. With due respect to those marketing Mauritius, are we good enough to market the destination in a sophisticated market like China? When we lost China Southern Airlines, we also lost one of the most effective sellers to outbound Chinese tourists. That's the reality.

But it wasn't just Asian airlines pulling out. In 2018, Air Mauritius also cut its routes to Chengdu, Wuhan and Guangzhou...

It may have been done for financial reasons, but it was a mistake on strategic grounds. We need a strategic alliance with a Chinese airline that understands that market best.

Isn't it unfair to ask Air Mauritius to do all this without government subsidies?

If there is coordination between all parties, including the government, it can be done. The Corridor itself is an example of how there has been a lack of coordination between the government, who owns the airline, and its management.

What do you make of the fact that Air Mauritius has now been incorporated within a larger structure, Airport Holdings Ltd, and run by a former PMO adviser without experience in running an airline?

I believe he should be given a chance and see whether competence will be shown over the coming months. Regarding putting Air Mauritius under a new structure can have pros and cons, on the one hand it can rationalise decision making with all the components of the company working in tandem, and the downside can be that it could become too heavy and bureaucratic. It all depends on competence, the way you manage it and the results that are delivered

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