LAST month, Transport and Communications Minister Mutotwe Kafwaya announced that the already much-delayed launch of the national carrier, Zambia Airways, has been pushed back yet again because of the Coronavirus pandemic. Speaking in his constituency recently, Honourable Kafwaya said that the Covid-19 pandemic had affected business and the aviation industry had been badly affected. As a result, it was not an ideal time to launch the airline.
To us, this sounds like chances are further diminishing that the airline, which is a 55/45 per cent joint-venture between the Industrial Development Corporation (IDC) and Ethiopian Airlines, will ever take to the skies. It is becoming increasingly clear that reality is slowly dawning on government that they definitely chewed more than they could swallow on this investment.
But surprisingly, government doesn’t seem to realize that this same Covid-19 catastrophe presents them with a perfect chance to cancel the Shareholders’ Agreement with Ethiopian Airlines. They seem to downplay the fact that the effects of this pandemic are so far-reaching that they render the launch of a new airline financially unviable. Airlines world-over are announcing billions of dollars in losses, but our government strangely can’t see and concede that the industry dynamics have totally changed and there is no chance for new-borns to survive.
Let’s look back at how government has pushed back the launch of this defunct dream. The national carrier was expected to launch in October, 2018, only for it to be delayed until January, 2019. When that deadline was looming, the date was pushed back to April, 2019, before they resolved to again push back to third quarter of 2019. Even that deadline was subsequently missed because the aviation dynamics have remained unfavourable. In other words, there is no clear date now as to when the airline would be launched, bigger problems have arisen.
Now, Zambians must be reminded that the IDC paid about US $30 million for the establishment of Zambia Airways. As we speak, they have employed an Ethiopian Chief Executive Officer who lives in Addis Ababa, getting a hefty salary from an airline that hasn’t even taken off in Lusaka. This Ethiopian CEO is residing in Addis, and presiding over a Zambian company, based in Lusaka, earning money in dollars. The cabin crew for Zambia Airways has already been recruited and we saw just the other month that they were returning from training in Ethiopia, meaning they, too, are getting paid salaries from an airline that has no clear road-map as to when it will even be launched. IDC must explain this, why are they spending this kind of money on loss-making ventures?
Honourable Kafwaya must not even use the Covid-19 excuse for failing to launch this airline. The reality on the ground is that the aviation sector, even before Coronavirus, was already collapsing. In August, 2017, South Africa’s Treasury was considering a 13 billion Rand (US $972 million) bailout to keep South African Airways (SAA) in the air, as it battled liquidity challenges.
In 2016, our next-door Air Zimbabwe flew with only one passenger on a flight from Johannesburg to Victoria Falls. Nigel Short (@nigelshortchess), the world chess grandmaster, took pictures of himself on the plane and even Tweeted about his experience: “I am not saying they are losing money, but I was the sole passenger on the Air Zimbabwe 737 from Jo’burg-Victoria Falls.” Fact-checkers can attest to this fact.
The Minister of Transport and Communications cannot today come and say Covid-19 has made it difficult for government to launch the airline. There was not a time when the conditions were favourable for Zambia to establish a national airline. The truth is that the challenges that face South African Airways are the same that face almost any state-owned airline in poorer countries with a more populist economic bend. Whenever governments own airlines, the temptation to step in and overrule potentially unpopular, but necessary business decisions is simply too great. Isn’t it the Minister himself who was recently saying that sometimes ET arrives in Lusaka with one or two passengers? So, why are we going ahead with the Zambia Airways plan given this clear message from the airline market? Are they going to be sharing those five passengers? It’s not prudent that we are throwing around cash in such investments.
Last year, we tried to mention that don’t borrow money to buy planes and so forth, here it is. Zambia Airways has collapsed before it even takes off and millions of dollars have been paid. If this government insists on taking corruption to the sky through the launch of Zambia Airways, it must be known that the expenditure it will gobble will have a devastating effect on other income-generating parastatals, which will be milked to keep the airline afloat. We are told that Zambia Airways will incur US $700,000 a month in aircraft leasing charges which will be paid to Ethiopian Air. What’s the guarantee that the national carrier will even make half of that?
Surely, we are at pains to appreciate why Zambia needs a national carrier when the country is struggling to keep the locomotive industry afloat. Millions of Eurobond money has been pumped into the railway business, but what is there to point at as a milestone achievement in the sector? Nothing! But we still want to introduce a national carrier so that those in senior government positions and their families can abuse it, globetrotting in business class with their families. Shame!
12 responses
We will see what PF will sonta now.
This is very interesting and keenly following to see where it leads.Ask Malawian Airlines and just see if Malawi as a Government or country and its citizens have benefited from a similar venture.
It’s a terrible and thr worst busienss venture.
Now the scapegoat is the Coronavirus. The Kwacha started declining very fast in 2018 by 2019 October but was almost K16 to the dollar, but you still shamelessly say it’s the pandemic that caused the weakening of the Kwacha. Now after pouring in millions of dollars to a venture you have no clue how it operates, though you’ve seen vivid examples from giants like SAA failing you still think it is feasible. But now after realizing that this is not feasible, you want to blame it on the pandemic. How foolish do you think Zambians are? This just reveals the selfish and corrupt motives of the leadership.
Now the scapegoat is the Coronavirus. The Kwacha started declining very fast in 2018 by 2019 October it was almost K16 to the dollar, but you still shamelessly say it’s the pandemic that caused the weakening of the Kwacha. Now after pouring in millions of dollars to a venture you have no clue of how it operates, though you’ve seen vivid examples from giants like SAA failing you still think it is feasible. But now after realizing that this is not feasible, you want to blame it on the pandemic. How foolish do you think Zambians are? This just reveals the selfish and corrupt motives of the leadership.
How can you Africans let alone some of you Zambians ever hope to achieve anything if all you thrive on is negativity. How can you not surely see the importance of any airline for a landlocked country like yours. What a pity. Do you know that the only independent port of entry you have is your airport? Until you learn to promote yourselves and avoid this PHD syndrome you will always be at the tail end of every thing. Why do you think somebody has to fail first before you can succeed? Do you really think Emirates, Kenya Airways, Ethiopian Airlines, South African Airways, RwandAir, etc, fly in to Lusaka and Ndola for free? What a hopeless bunch of people who can detest progress in such a way.
This is not an article more a rant/personal opinion. Please tell us simply will Zambia airways STILL launch on future? And what routes it will be taking. This reads like a personal blog not informative at all.
I’d like to believe that the author of this article is politically motived to downplay the government.
– Zambian Airways hasn’t been launched due to the launch of the new terminal in Lusaka and the feasibility tests of potential routes and networks.
– The funds expected of any international airline to operate with more than 7 destinations is atleast £1.1million per month, Zambian airways has found a much affordable and realistic goal.
– South African airways has not made a profit since the hosted the 2010 world cup. The government of South Africa has supported the airline in a bid to bolster investment but demand from those routes such as London, New York and Perth require massive demand to be profitable, hence the collapse of South African airways is inevitable whilst Air Zimbabwe in 2017 was plagued by sanctions from countless countries.
To the author of this article, I am not a politician and do support you on the Government investing in other essential industries however, diversification of the economy is key to growth. We have been affected by falling copper prices which has resulted in the dollar more than doubling in 10 years. We as a country rather than dividing ourselves on what the Government does should show support not as a political aligned individual but as Zambian citizens. Something you should urge your fellow Zambians to do.
Just last month Boeing, the biggest aircraft manufacturer in the USA needed more than $60 billion from the government to avoid bankruptcy, United airlines, Delta and American airlines are all cutting staff and airline routes. They are changing their business models NOT running away from their business because the same type of businesses have failed in other countries. The US government is spending billions to keep both small and big businesses from closing down. European governments are doing the same. MY POINT IS: it’s the duty of every government to ensure that businesses don’t collapse otherwise where will the government collect taxes from????
I understand that Zambia Airways hasn’t even started operations, but this should not deter us from finding ways to operate the airline profitably. I see this as a GREAT OPPORTUNITY because alot of African airlines will shut down. This will provide a big market for any airline that will prepare itself now.
We just need to go back to the drawing board and come up with a new strategy. I agree that let’s cancel the current contract and prepare a new one where it’s a win – win for every party. Or cancel it completely so that we give ourselves time to come up with a new strategy /business model that will work post pandemic. Mind you in the next few months there will be alot of qualified airline professionals from around the world looking for a job, so we are not stuck. There is no need to give up. In any business / industry, those who remain resilient always succeed.
It’s just the name “Malawian” that we have benefitted, some stupid pride. I have not read any sign of pride on the faces of most Malawians. The Airline registration is still ET. Perhaps the only clever thing that happened, if I recall very well, is that no public funds were pumped into the airline joint venture .
Foolish thinking this defunct pf government
To cancel the deal,kkkkkkkkkk when someone oredy chewed the cash for the deal,thats a joke.those are the repucations.
Time to rethink.
IDC and the 30 million already paid out? Why, who to, and what for.