The domestic air market in Vanuatu is reeling from the fall-out at Air Vanuatu, which has also stranded international passengers.

On 9 May 2024, Morgan Kelly, Justin Walsh and Andrew Hanson of Ernst and Young Australia (EY Australia) were appointed Voluntary Liquidators of Air Vanuatu (Operations) Limited (In Liquidation), by a Special Resolution of Shareholders made under section 14 of the Companies Act No 03 of 2013.

The liquidators are now in control of the business and will conduct safety and maintenance checks before the resumption of normal operations.

They intend to resume normal trading as soon as possible while considering all opportunities to place the carrier on a stronger footing.

The existing management team will remain in place and will work closely with the Liquidators through this process.

All flights have now been grounded with immediate effect. The airline also controls all the domestic routes in Vanuatu, according to RNZ Pacific correspondent Len Garae.

"Even domestic passengers who have been booked to fly out of Port Vila and those in the islands waiting to enter Port Vila as well as Lugainville and Tanna, which are regular flights to these destinations, and now there are none," he said.

The airline provided connections to Vanuatu's most celebrated destinations Port Vila, Espiritu Santo, and Tanna Island are regularly frequented, and it also offered connections to other domestic destinations.

Garae said two private domestic airlines also provide services, as well as inter-island ships, but they won't be able to meet local demands.

"There's a lot of anger in the country regarding Air Vanuatu, and people believe the government is not doing enough to inform locals." he said.

Garae said the financial issues now facing in the airline are not new.

"We know that in the last few years, it was the Vanuatu National Provident Fund that probed the airline from its financial challenges but eventually last year [2023] the CEO at the time decided to say no we are not going to give you any more money."

He said problems continued to be felt by the airline and now it has reached a stage where it has stopped operation.

In its financial report for 2022, the Fund noted that it had various active commercial loans in 2022, including to Air Vanuatu (Operations) Limited which was $849,819,000 Vanuatu Vatu (about US$7,134,185.95).

Fiji Airways

Fijian nationals stranded in Port Vila - with a ticket for stricken Air Vanuatu, purchased on or before 9 May - can jump on a flight free of charge, Fiji Airways said.

The offer is available until 24 May, the airline said.

Fiji Airways has increased capacity between Nadi and Port Vila with larger planes flying the route several days this month.

Managing director Andre Viljoen said the airline is doing all it can to assist customers affected by the grounding of Air Vanuatu.

Fiji Airways is also working on measures to assist non-Fiji citizens - who are holding Air Vanuatu tickets issued on or prior to 9 May - to get a discount.