Tanzania’s aviation industry is on the verge of collapse, with the major airlines incurring huge losses that are threatening the sector’s survival.
However, aviation experts remain optimistic of promising future ahead, notwithstanding the rough weather that the airlines are sailing through.
Experts say the load factors in the industry are encouraging and all that the players need is to minimise expenses and boost cash inflows.
The loss making in last year and the first half of this year was global phenomenal, with even major airlines—Virgin Atlantic, British airways, United Air and Kenya Airways—recording profit declines or losses.
The Tanzania Civil Aviation Authority (TCAA) Director General, Mr Fadhil Manongi, says that despite Precision Air (PW) and FastJet posting heavy losses—to the tune of billions of shillings— the aviation industry is stable.
“There is nothing to worry about…we follow-up the sector closely and accordingly,” Mr Manongi told the Business Standard in an interview.
TCAA said they could not seat and watch the situation accelerating to worse. If the situation heads toward that direction, he said, “We know the best way of advising the government well in advance to reverse the trend.”
“(Nevertheless), we are hopeful (laid-down change in business plans) will turn around Precision Air,” the TCAA boss said. In airline businesses, it’s normal for an airline to change flight course after forensic studies of existing operation to determine the best way forward to minimize losses and maximize profits.
“After diagnosed their (PW) operation they realized that there are some equipment and routes that are not profitable.
The best way is to close them down and concentrate on profitable routes,” Mr Manongi said. On FastJet, however, the regulator said, “It’s a matter of time before they break even…so far they have no problem on load factor…the problem is on utilising their equipment at full capacity.”
Due to limited airport logistics and supporting infrastructures, airlines in the country are flying only in day time and in most cases merely seven hours, leaving the aircraft idle in the night.
And, the problem lies not only on lack of airports’ night navigations but also limited public transports and insecurity in most cities.
As a result, airlines fail todeploy effectively their equipment due to limited night logistics in and outside the airports, subjecting the airlines’ balance sheets to serious challenges.
“What FastJet needs is regional and international routes where they could deploy their equipment to cut down idle times spent on aprons,” Mr Manongi said.
TCAA Consumer Consultative Council Executive Secretary Hamza Johari said basically the sector operates as utility and was not meant to make profit rather to provide services. “It is very normal for airlines to make losses,” Mr Johari said, “But, the losses will not make the sector veers off the runway…we won’t reach to that level.”
Mr Johari said despite the losses, the prices remains stable, which is a good indication that the wobbling situation would be shouldered by the airlines and not passed over to customers.
He said the industry remains strong, with Air Tanzania Company Limited (ATCL) coming up with interesting strategy that would rejuvenate the sector.
In January, the chairman of Al Hayat Development and Investment Company, Sheikh Salim Al-Harthyan, announced plans for an Omani investment corporation to invest 100 million US dollars (over 160bn/-) in ATCL.
The money would be used to build an airline training centre and offices for Air Tanzania, buy aircraft and engage in other development activities that would begin before the end of 2013.
In the first six months of this year, FastJet, low-cost airline, recorded a whopping 13.3 million US dollars (over 20bn/-) loss from its Tanzania operations, casting a bleak future to an airline, which many thought would be their new saviour.
On the other hand, Tanzania’s biggest private airline— Precision Air—recorded the loss of 30.8bn/-, ahead of news that it faces a financial crisis and has asked the government for the bailout package of 52bn/-.
The last time the government owned ATCL reported loss was in 2004 and it was 7.7million US dollar (over 12bn/-). Financial and other figures for ATCL are not formally published on regular basis, and as at February 2012 their accounts for 2008, 2009 and 2010 were still under discussion with the auditors.
By ABDUEL ELINAZA, Tanzania Daily News
