FLY ON THE WALL: Lessons on airline management
Efforts to revamp Air Tanzania Company Ltd (ATCL/TC) and Uganda Airlines (UA/QU) by the two countries’ governments could do with lessons from next-door Kenya Airways Ltd (KA/KQ).
The formerly profit-making airline is today struggling to remain afloat.
We may not all be experts in aviation matters. But then again, it does not require specialised aviation knowledge to know that KA shot itself in the foot when its owner/operators decided that the airline could do better in the absence of a viable competitor in the aviation business.
No wonder, then, that they pegged the airline ticket prices on the US dollar.
If you seek to turn-around a failing entity in the aviation business – such as ATCL and UA – you should first look at the history of Kenya Airways, focusing upon where and when it began to go wrong.
This also calls for the shareholders to re-think the strategy of pushing political interests rather than common or garden day-to-day business interests.
In fact, the Tanzania and Uganda governments – as shareholders in their respective national air carriers – need to take a closer look at how and why their Kenyan counterparts miserably fail to effectively revamp KQ.
It so happened that the KQ shareholders scoured the whole wide world in search of an investor in the airline. They finally settled on a Polish investor who was acclaimed to be a turn-around specialist – and paid mega bucks to bring the airline back to stability and profitability from the brink of collapse.
This never happened on terra firma.
What with one thing leading to another, the man finally confessed in a widely circulated interview with the Kenya-based Business Daily that he could do nothing about KA’s perilous state.
The only option, he said, was for the airline to take over operations of the country’s airports in a merger on a 30-year concession with the Kenya Airports Authority (KAA) – or perish!
By most standards, the fellow is yet to palpably turn around the failing fortunes of the thitherto long-standing success of Kenya Airways. Instead, he is heaping blame on the airline’s former bosses, who are believed to include a former senior manager of a major cement company in Tanzania!
According to a posting on the social media network Facebook by an aviation analyst named Dan Okwiri, there are very many options to look at in seeking to revive the fortunes of Kenya Airways.
In the event, I sincerely hope that – for the sake of Air Tanzania and Uganda Airlines – the top managements and boards of directors of both airlines are reading this in the hope that they will take the requisite measures to revamp the national air carriers.
For starters, they must rationally plan their flight routes networks.
Kenya Airways, for example, recently started a direct flight route to New York in the United States after years of planning. This new route – like so many other routes – needs to be rationalised to ensure that it does make money for the airline in particular, and the Kenyan Economy in general.
Other actions in the revamping stakes should include:
• Fleet and ownership rationalisation strategy.
• Productivity strategy, (benchmark productivity ratios with high performing Airlines – then cut out the flab to match industry standards).
• Asset utilisation strategy, (benchmark aircraft utilisation with high performers and bridge the gap).
• Distribution strategy and pricing strategy (cut costs, increase alliances and competitive fares in all distributions and reservations systems worldwide, including internet platforms).
• Cost reduction strategy. Cut out all shady contracts. Return all engineering work to KA home base, because outsourced engineering is invariably expensive. (For example: how is staff remuneration compared to Ethiopian Airlines?)
• Human Resource strategy. (Retrench bloated staff, and look at employee productivity ratios with high performing airlines).
• KA needs a new Board of Directors made up of people who are well-grounded in the aviation business.
• Review all job profiles and roles in the light of the business needs.
• As it happened in the 1990s turn-around strategy, there’s a need to relaunch/restructure KA. All employees should be terminated and their jobs advertised afresh, whereby they can reapply for their positions on a truly competitive basis.
