Tanzania's plane buying spree explained

Dar es Salaam. The government said yesterday that it will continue investing in the state-owned Air Tanzania Company Limited (ATCL) despite its loss-making nature.

Transport minister Prof Makame Mbarawa said there was more to the airline business than just profitability.

This comes as the government is today expected to receive a Boeing 737 Max 9 plane that will bring the total number of ATCL’s fleet to 14.

Speaking in Dar es Salaam yesterday, Prof Mbarawa, said the industry has been known to be unprofitable but noted that the huge investments made were dedicated to giving muscle to the local airline to compete with well-established international airlines for the more lucrative international routes.

“The margins from the air transport sector cannot be measured directly, some benefits are incurred indirectly in linked sectors such as hospitality, which we are doing well so far,” he said.

He said the incoming Boeing 737 Max 9 is part of a larger expansion plan that includes the addition of a Boeing 787-8 Dreamliner, a Boeing 767-300F, and two DHC 8 Q400s.

The additional aircraft will significantly aid Air Tanzania’s expansion ambitions and help position Tanzania as a major transport and logistics hub in East Africa.

Since its revamping programme in October 2016, ATCL has acquired 13 aircraft, including one cargo plane, with a network of 14 domestic destinations, 8 regional destinations, and 2 intercontinental destinations providing transportation of passengers, cargo, and parcel services.

However, the airline has a history of unimpressive finances, with a Sh35.2 billion loss reported by the Controller and Auditor General’s report for 2021–2022.

“With the new plane, the ATCL airline will be able to increase five new domestic destinations in Pemba, Tanga, Mafia, Nachingwea, and Musoma,” said Prof Mbarawa.

A senior official from the Ministry of Transport, Mr Biseko Chiganga, further highlighted that the expansion of the ATCL fleet is significant for making international arrangements with well-established airlines.

This includes code sharing, a marketing arrangement in which an airline places its designator code on a flight operated by another airline and sells tickets for that flight.

“You cannot enter into such agreements with other international airlines if you don’t have the muscle. There are others, like interline agreements and alliances,” said Mr Biseko.

Interline agreements are inter-airline contracts that are used to coordinate and handle passengers or baggage between two or more airlines.

An airline alliance is a partnership between two or more airlines to expand routes, share resources, and establish a seamless travel experience for international passengers who get access to multiple destinations and more convenient airway connections. Mr Chiganga said.

“We are adding planes to give our airline muscle to compete and qualify for such beneficial arrangements.” Considering losses caused by flight delays contributed significantly to their annual losses, by 25 percent, ATCL had promised to further improve its service delivery initiatives.