Airlines expect to do brisk business after tough year

Dar es Salaam. Airlines expect a brisk business this year.

Together with the International Air Transport Association (Iata) growth forecast and Tanzania’s possible economic expansion, they hope to post substantial gains.

However, recent World Bank projected growth rates of 6.6 per cent in 2017 and 6.8 per cent in 2018, down from 7.1 per cent may make their goals elusive.

Last month, the International Monetary Fund (IMF) also warned that Tanzania’s economic growth was showing signs of slowing down due to decreased government spending as well as lower-than-expected tax revenue collection.

It also noted weak private sector credit growth and increased nonperforming

Iata reports show that while African airlines generally continue to make loss, passenger demand continues to be healthy and demand side growth of around eight per cent is expected in 2018.

“Our business was good last year, and growth is likely to be stronger in 2018,” noted Air Tanzania Company Limited (ATCL) managing director Ladislaus Matindi.

He said in the second half of this year financial year, ATCL surpassed its target of serving 110,000 domestic passengers.

“So far we have surpassed the target by almost 100 per cent. This is a good indication and we hope by the end of this financial year in June, we will be above the target by far.”

ATCL has two aircraft, and expects three more this year.

It also hopes that its launch of the Zanzibar-Comoro route will attract more customers.

The company will improve service quality and provide them at affordable prices.

Plans are underway to launch Airtel Money and CRDB payment services for customers as the company uses M-Pesa services in payments.

After receiving all of its aircraft this year, ATCL expects to open new routes to Kenya, Uganda, Burundi, Rwanda, Zambia and DRC.

It also eyes Far East, Middle East, Europe, South Africa and West Africa markets. It is also plans to increase its frequency on its Mbeya, Dodoma and Mwanza routes.

“Tanzania’s economic figures are very impressive. This will leverage on new business opportunities and hence more money in circulation,” Mr Matindi said.

Precision Air’s plans for 2018

“We won’t have new routes but we’ll increase frequencies,” Precision Air corporate affairs manager Hillary Mremi noted.

Plans are afoot to increase frequencies to Kahama and Entebbe from three days to daily and four to five days per week respectively.

“This financial year will end with the same figures of 408,807 of passengers, recorded in the previous financial year that ended in March 2017,” he said.

“We are optimistic with economic trend and Iata’s forecast. We have all what it takes to perform well.”

He also hopes that the signing of a Bilateral Air Services Agreement between Tanzania and India held last year has huge potential. Precision Air opened a number of new routes last year. They include Dar-Kahama, Dar- Seronera (Serengeti), Dar-Zanzibar-Arusha and Dar- Entebbe.

From its hub in Dar es Salaam, Precision Air flies to Arusha, Kilimanjaro, Mwanza, Bukoba, Musoma, Kigoma, Tabora, Kahama, Mtwara, Zanzibar, Seronera, Nairobi and Entebbe. Mr Mremi speaks of numerous charges as restrictive to growth.

They include those for landing, parking, passenger services, departure and navigation. Others are an 18 per cent VAT on leasing aircraft as well as spare parts, fuel and expert training

“It is not much of a surprise that those costs are surging hence eating into earnings,” he lamented.

“In a broader sense, greater stability, the recent upward trend for commodity prices and healthy forecast continental growth bode well for future demand stimulation,” Fastjet airlines marketing and communications general manager Hein Kaiser told BusinessWeek.

“Fastjet expects to perform well during 2018 as we not only build our fleet in Tanzania but also our network. Plans are afoot to increase our fleet and roll out new routes.”

At present Fastjet has two Embraer E190 aircraft in Tanzania, two Embraer E145 aircraft in Zimbabwe and another E145 in Mozambique.

Year 2017 was good

He said 2017 was good for Fastjet in the sense that the implementation of fleet changeover programme, network reconfiguration and rebuilding phase came to fruition. During 2017’s implementation of our stabilisation plan, Fastjet suspended loss-making routes that were carrying limited numbers of passengers on an inefficient aircraft size.

The airline reconfigured its fleet composition to match aircraft gauge to market demands and accordingly adjusted the schedule.

The move was necessary to position Fastjet for growth in 2018 and beyond.

“The past year has been a very positive one for us as we launched a new market in Mozambique, increased frequencies on some of our trunk routes in Zimbabwe and continued to build the airline following the successful implementation of our stabilisation plan,” he noted.