Aviation industry shrinks as financial crunch bites

Thursday November 15 2018

 

By Alex Malanga @ChiefMalanga amalanga@tz.nationmedia.com

Dar es Salaam. The aviation industry has slipped.

A report by the Tanzania Airports Authority (TAA) shows that during the past five years, the passengers’ annual growth rate stood at an average of three per cent, down from 10 per cent between 1999 and 2012.

Stakeholders attribute the trend to some government reforms, which affected people’s ability to afford air transport, the report shows.

That forced exporters to opt for marine transport as it is relatively cheap.

However, TAA finance and business director Pius Wankali hopes the purchase of four aircraft and leasing them to Air Tanzania Company Limited (ATCL) will improve the situation.

He is also optimistic that increased promotion of Tanzania as a tourist destination will attract more visitors while the government’s industrialisation plan will woo more investors. “The government’s commitment to invest in air transport augurs well for aviation.”

Aircraft movements

Last year’s total aircraft movements increased by 0.4 per cent to 146,241, thanks to ATCL’s introduction of new routes and increased frequencies for earlier destinations.

ATCL serves Dar es Salaam, Bukoba, Dodoma, Kigoma, Kilimanjaro, Mtwara, Mbeya, Mwanza, Songea, Tabora and Zanzibar.

It also flies to the Comoros as the only international route.

Domestic movements increased by 0.4 per cent last year while international movements decreased by 0.5 per cent.

Domestic movements accounted for 86 per cent, with international ones contributing the rest.

However, the amount of cargo handled decreased by 1.2 per cent to 20.39 million kilos compared with the previous year, according to the report.

The worst performance was recorded two years back when transported cargo dropped by 18 per cent to 20.64 million kilos from that in 2015, with aviation experts linking the trend to government’s cost-cutting measures. TAA director general Richard Mayongela was recently quoted by The Citizen as attributing the negative trend to the government’s directive to ban unnecessary foreign trips by public officials.

Swissport Tanzania chief executive officer Mrisho Yassin shares similar sentiments.

“Things have started going back to normal. The last year’s slight decrease sends a positive signal about the future of the industry,” notes Mr Yassin. According to the report, 89 per cent of cargo was handled internationally, while the rest was carried domestically.

Passenger traffic

In 2017, passenger traffic shrank by 0.5 per cent to 3.37 million compared with the preceding year.

That happened because international movements fell as one of the giant domestic airlines cut off routes from Dar to Johannesburg, Lusaka and Entebbe, citing unprofitability.

Tanzania Air Operators Association executive secretary Laurence Paul calls for regulators to diversify their sources of revenue from aeronautical revenue to non-aeronautical revenue to reduce the burden to air operators.

Last year, non-aeronautical revenue -- which include rental and concession, advertisement charges, airport parking and VIP services fees and miscellaneous receipts -- accounted for only 21.8 per cent of the Sh103.3 billion collected by TAA in the 2017/18 financial year.

The remaining percentage was contributed by aeronautical incomes, which include landing and parking fees, passenger service charges and security levy on air passengers.

“Non-aeronautical revenue should be entertained so that we can reduce the costs of air transport and eventually attract more passengers,” opines Mr Paul.

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