Concerns are mounting over the fate of a VT2 billion (US$16.5 million) deposit made by the Vanuatu Government in 2019 for Airbus aircraft that have yet to be delivered. The deal, intended to mark a bold expansion for the national carrier, has become the subject of renewed scrutiny amid uncertainty about its status and financial implications.
The order, announced on 26 February 2019, saw Air Vanuatu commit to four Airbus A220 aircraft—two A220-100s and two A220-300s—as part of a strategic fleet upgrade. It was a milestone agreement: Air Vanuatu became the first A220 customer in the Pacific and signalled its intention to modernise operations with fuel-efficient and environmentally aligned aircraft.
At the time, then-CEO Derek Nice described the A220 deal as an investment in the airline’s future competitiveness and sustainability. The agreement required Pre-Delivery Payments (PDPs), a standard practice in the aviation industry where manufacturers secure production slots in exchange for upfront funds. These payments can amount to as much as 30 percent of the total aircraft cost and are generally non-refundable without protective clauses.
Responding to media questions, Airbus declined to comment directly on the Vanuatu situation but confirmed that failure to complete purchase agreements typically results in forfeiture of such payments. “Any contractual default or failure to take delivery of an aircraft causes major costs and damages for the aircraft manufacturer,” a spokesperson said, adding that it is standard industry practice for PDPs to be retained in such cases.
With no aircraft delivered and speculation around possible external interference, questions persist over whether Vanuatu will recover its sizeable deposit. While the government maintains that the funds are secure and that discussions with Airbus are ongoing, industry observers warn that the loss of such a large sum would be one of the most significant financial setbacks in the country’s recent history.
As Vanuatu explores options to revive or renegotiate the deal, the case highlights the high stakes involved in aviation procurement and the importance of transparent and accountable governance in public-sector investments.
