Ben Micah, the country’s Public Enterprise and State Investment Minister, said the airline needed new shareholders to ensure it remained sufficiently viable and competitive to face similar challenges to those also beforeQantas and Virgin — with their recent announcements of losses — and other carriers.

The airline’s 31 planes fly to 25 domestic destinations and 10 international destinations in seven countries.

PNG’s road system remains limited, with Port Moresby still not connected to other major population centres — making air transport essential for national development.

Mr Micah said: “Preference will be given to our superannuation funds as founding investors.

“This will ensure the airline’s employees to have an indirect shareholding through their membership of such funds.”

Air Niugini will sell 50,000 seats at half price over the next year to increase loadings and boost public support for the part-privatisation.

Its domestic fares are among the most expensive in the world.

Mr Micah said: “Ensuring air travel is as affordable as possible is the responsibility of the whole industry” and not only Air Niugini — although it has a monopoly on scheduled flights on some routes.

He said the airline sale would provide “the benchmark, the blueprint, for future asset sales and public-private partnerships”.

But he stressed: “Not all state enterprises are suited to full or part sale. Those that are in the community service area generally need to remain in public hands.”

Those such as Air Niugini, however, “which operate in a competitive business environment and have significant capital requirements, do not need to be wholly ­

state-owned”.

The Asian Development Bank says in a new report that, while PNG’s state-owned enterprise assets grew at an average 21.8 per cent per year over the decade ending 2012, they only contributed 2.4 per cent to the country’s gross domestic product, “suggesting inefficient capital utilisation”.

It said: “Returns on assets and equity remain low.”

Air Niugini is one of the 

four largest SOEs, along with PNG Ports, PNG Power and Telikom.

The government, the bank said, had allowed its SOEs to reinvest most of their earnings rather than pay dividends.