Ageing infrastructure drives costs up

Fiji Airports is facing rising maintenance costs as ageing infrastructure continues to put pressure on its operating expenses.

Presenting the company’s 2023–2024 Annual Report to the Standing Committee on Social Affairs, Financial Analyst Sowani Yaca says operating and maintenance costs increased by 28.4 percent compared with 2023.

Yaca says ageing infrastructure is the main reason for the increase, with Fiji Airports planning capital works to reduce maintenance costs in the future.

He adds that maintenance costs account for 12 percent of revenue, while staff costs rose by 25.8 percent due to job evaluations and efforts to retain skilled workers.

“Number one is we did a job evaluation exercise in 2024 because at Fiji Airports we have highly specialized skilled workers that require licensing. To retain them, it’s very hard because we are losing them to our competitors, such as Australia and New Zealand. It’s also driven by headcount. Then we have contracts and consultancy, which have increased by 15.9 percent, and five percent of our revenue.”

Yaca says some services, including security and sanitation, are outsourced to local companies, providing business opportunities while supporting airport operations.

Standing Committee member Ketan Lal has raised questions about the increase in insurance costs.

“What explains the increase in insurance costs from $3.3 million to $4.6 million? Did this arise from higher premiums, additional coverage, asset revaluation, or claims experience?”

In response, Yaca says the company revalued all its assets, including its runway, terminal, and other buildings, which were valued at $800 million at the time.

Fiji Airports says planned capital works are expected to help reduce maintenance pressures as it manages rising operational costs.