Ethiopian Airlines will be the real beneficiary of Zambia Airways – Chibamba

Economist Chibamba Kanyama says although the establishment of a national airline will boost tourist arrivals into the country, keeping Zambia Airways afloat will be difficult because government, which normally doesn’t pay on time, will likely be the primary client.

Chibamba has since advised government to thoroughly consult technocrats about the viability of its decision to re-introduce a national airline before venturing into the announced partnership with Ethiopian Airlines.

And Kanyama says the real beneficiary of Zambia Airways will be Ethiopian Airlines.

In a statement to News Diggers, Kanyama observed that Zambia Airways would have a significant positive impact on the country’s economy if government prepares adequately on how to deal with several problems that brought down the national airlines.

“The decision by government to re-introduce Zambia Airways is likely to have a significant impact on the economy, particularly towards the tourism sector. A national airline offers better linkages to the tourism sector than privately owned airlines. Growth in Zambia’s tourism sector has in the past years been below target for a myriad of problems, among them the lack of a reliable and cost-efficient airline. The partnership with the most experienced and profitable Ethiopian Airline should in the medium to long run support the government revenues through dividend payments,” Kanyama stated.

“However, there is need for enhanced transparency about the nature of this investment, the investment model, the details about this partnership so that taxpayers are assured the airline will not be a burden to the country in the long run. National Airlines are difficult to run especially under circumstances of foreign exchange volatilities, undefined route-networks and dependence on government for passenger support,” Chibamba said.

“One of the reasons Zambia Airways collapsed was because government was the airline’s primary client and government rarely pays on time. It would be in the interest of the nation for the responsible ministry to avail the strategic plan establishing the Zambia Airways so that there is collective input by experienced aviation experts on the feasibility of the project and how it can work in this highly competitive industry laden with humongous operational and administrative costs.”

Kanyama implored government to have deeper involvement in the airline to ensure that the overall benefits of the investment goes beyond dividend payments but also employs Zambian citizens in all areas of the airline.

“We must understand that Ethiopian Airlines is going into this partnership with a highly focused strategy in support of its 2025 strategy to take over African skies. In fact, the real beneficiary of this partnership is Ethiopian Airlines and the CEO, Tewolde Gebremariam, validated my concerns when he featured on BBC a few days ago,” Kanyama observed.

“Looks to me the revamping of the airline was incubated by Ethiopian Airways who see it as part of their expansion strategy. In the past four years, the airline has been developing its Hubs across the continent. Its current focus is developing the Southern African Hub after failing to have a huge impact with Air Malawi. Zambia offers Ethiopian Airlines the best opportunity for a regional Hub owing to its centrality, construction of a state-of-the- art airport in Lusaka and another in Ndola. In other words, we should not go into this to merely benefit the other partner as a win-win,” he stated.

And Kanyama urged government to thoroughly consult technocrats about the viability of airline business even as it partners with the most profitable airline on the continent.

“Government should also be thoroughly briefed by technocrats about the viability of this business even if its in partnership with the most profitable airline on the continent. Ethiopian Airlines makes an average US$170 million profit per annum from its global fleet. It, therefore, means, Zambia Airways’ average profitability should be in the range of US$5- $10 million per annum and dividends have to be split 45/55. So, the return on investment of US$30 million may be longer than envisaged, possibly five – ten years at current overall growth rate of Ethiopian Airways,” stated Kanyama.

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