Another airline out?

Another airline out?

  13 Jul 2018

Sea Passion Group wants out as it struggles with competition, China ban on Palau tours

The Sea Passion Group, the company that operates the Palau Pacific Airways and Sea Passion Hotel in Palau, issued a statement addressed to the Congress which revealed its plans to “indefinitely” suspend its Palau flights as the company struggles with its competitions and the drastic drop of Chinese tourists visiting the country.

The Sea Passion Group, which offers Hong Kong – Palau flights through its airline, is the second company that announced suspension of flights to Palau this year, following Delta Airlines’ exit on May 6.

Delta Airlines, which catered Narita, Japan to Palau flights, cited that its reason for pulling out its service in Palau, and also in Saipan, was due to “lower demand” in the Micronesian market.

“We would again like to express our apology to the people of Palau and let it be know[n], that it is with long deliberation, great sadness and heavy hearts as we announced our decision to suspend our flight operations indefinitely,” the statement read.

The Sea Passion Group explained through their statement that their company has always valued “fair and honest competition” but some competitors, who only operate during peak seasons, have driven down their prices to “unmaintainable levels simply to gain short term market share.”

“As the situation in China continues to deteriorate, the vicious market pricing by our competition has also made Palau a low-price destination and also extremely difficult to be competitive and hard to recover from,” the statement read.

The Sea Passion Group also pointed out that when they began their flight operations four years ago, the average market price per round-trip ticket was at $800 while the total number of passengers was 30,000. But this year, according to the statement, the price has dropped down to $300 along with the drop of the total number of passengers to 14,000 from January to July.

The Sea Passion Group expressed that they expect the reduce of Chinese tourist in Palau down to zero beginning July and August 2018, citing further that they have not received any booking until now for both their airline and hotel.

“Although our company has been exploring different marketing strategies and investing in other ways to promote Palau, our situation has become more and more difficult with China’s policy towards tourism in Palau and the continual drop in Chinese tourists in the future,” the statement read.

China had excluded Palau, along with Vatican, on their Chinese citizen’s travel list last year and travel agencies in China who were found to violate the tourism policy reported that they were fined. This is seen as an effort to place further pressure on Taiwan’s diplomatic allies which include Palau.

“The Chinese government made Palau an illegal tour destination possibly and most likely due to lack of diplomatic status,” The Sea Passion statement read, stating further that this was not a “severe problem” prior to 2017 but has become “very serious problem with the Chinese government seemingly putting an effort to slow or stop tourists going to Palau in 2017.”

The Sea Passion statement also revealed how stiff China is with the policy, citing that law enforcers both check online and offline tour services to make sure no one violates the policy.

In our previous report, Palau President Tommy Remengesau, Jr. reiterated that despite the country’s diplomatic ties with Taiwan, Palau does not look at the economy as a political issue.

Remengesau previously said that Palau wants to diversify its tourism market and not just limit it to few countries.

“I’ve said it many times and I’ll say it again, if it was our choice, we will recognize Taiwan and we will recognize Mainland China. We don’t have enemies, we are not here to choose who are our friends and who should not be our friend. This is a political decision for mainland China and Taiwan to pursue a One-China policy,” Remengesau was quoted in our previous report.

Chinese tourists topped the tourist arrival statistics in Palau since 2015. Tourism is one of Palau’s strong economic drivers. (Rhealyn C. Pojas)

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