Rivalry grows in aviation industry

Dar es Salaam. Airlines are bracing for competition.

The Tanzania Civil Aviation Authority (TCAA) has licensed 10 new airlines, bringing to 63 the total number of operators, up from 53 last year.

It comes hard on the heels of reports by Precision Air (PW) and Air Tanzania Company (ATCL) to increase their fleets, have more routes and frequencies.

“Clearly, space isn’t enough for all,” predicts Precision Air CEO Sauda Rajab. “Only the best will survive. We welcome companies which wish to codeshare with us so that we may be strong enough to survive in the world of competition.”

New operators will be J.M. Tours, Cropcair Aviation (T), Farmland Aviation, Skydive Zanzibar, Raven Air Aviation, Yellow Wings Air Services, Care Aviation and Tours, Kilimanjaro Sar Limited, Mahanaim Aviation and Logistics Services, and Safari Express Cargo.

“The authority has issued no objection certificates to 10 new entities after its 25th ordinary board meeting held on December 1 last year,” TCAA information officer Bestina Magutu said.

Out of 10 new operators, only Safari Express Cargo will be offering scheduled air services.

The remaining airlines fall under the charter service category.

Safari Express Cargo will be plying Nairobi-Dar-Nairobi, Nairobi-Mwanza-Nairobi, Nairobi-Mtwara-Nairobi, Nairobi-Musoma-Nairobi and Nairobi-Kilimanjaro-Nairobi routes.

The authority also renewed licences of 17 companies, according to Ms Magutu, adding that 28 firms had in December last year applied for renewals and new licences. Out of them 27 were approved.

Major players in the local aviation market have been Fastjet and Precision Air.

Last year, the government announced plans of buying four more aircraft for ATCL.

One will be purchased this year and the remaining three by next year to make the total number of planes to seven.

ATCL managing director Ladislaus Matindi told BusinessWeek that plans were afoot to purchase a 76-seater Q4 100 Bombardier in June to enable the airline to expand its operations to Dodoma, Tabora, Mpanda, Mtwara and Songea.

If all goes as planned, the airline will next year purchase a 260-seater Boeing 787 and two CS-300 Bombardier, with the capacity of 150 passengers.

The airline currently flies to Mwanza, Bukoba, Kilimanjaro, Zanzibar, Kigoma, Mbeya and the Comoros.

It plans to expand to Nairobi, Bujumbura, Entebbe, Lilongwe, Lusaka and Lubumbashi by next year.

“We have already done a market analysis for domestic and international markets. We hope that with new routes we will increase the number of passengers and flight frequencies,” noted Mr Matindi.

By August this year, it plans to double its weekly flight frequencies, up from 52 last year.

With expansion 500 jobs will be created by next year, according to Mr Matindi. Currently, it has 208 workers.

Precision Air has also announced plans to buy three more aircraft, bringing to nine the total number of planes to compete well.

Ms Rajab said a 48-seater ATR42 would be brought into the country by the end of the week.

The remaining two -- 48-seater ATR 42-600 – would arrive in Dar es Salaam by October.

“Moreover, we are at final stages of maintaining one of our aircraft, and hope that it will be operational this week,” she told BusinessWeek recently.

She said the company was seeking $8 million (Sh17.8 billion) from its own revenue streams for purchasing four engines for two aircraft.

If all goes as planned, the nine aircraft operation will enable PW carry between 400,000 and 500,000 passengers annually, according to her.

Last year the number of passengers stood at between 200,000 and 300,000.

“We remain focused on increasing the number of passengers, the plan which is backed by the plan of increasing the number of frequencies from 35 last year to 50 per day,” she said.

Responding on how they stay competitive with limited resources, Ms Rajab said the most important thing they could do is have a great customer experience.

“There is no better advertising than when people walk off an airplane and say ‘it’s great’,” she pointed out.

Operators see the trend as a development to the aviation sector rather that a threat.

“Having so many new airlines and aircraft is a boon to customers who benefit from wider choices now available,” noted ATCL acting commercial and business development director Edward Nkwabi.

“This is not a threat to us but a catalyst for more innovation to win the hearts and minds of customers…more airlines and more aircraft will drive growth of the sector.”

However, some industry experts foresee difficulties for local operators in case foreign rivals with substantial financial resources, high marketing skills, modern managerial techniques, advanced technology and superior services enter the market.

Many of those foreign airlines are powerful brands.

To win the competition, ATCL banks on investment in reservation and automatic systems in ticket booking and passenger and cargo handling.

Mr Nkwabi said ATCL had ordered a $67,000 (Sh147 million) reservation system from Turkey.

“We have signed a contract with an Istanbul-based Hitit Solution company to offer the service. We have also signed a contract with Nas-Dar Airco -- a ground handling company -- for passengers and cargo handling through an automatic system.”