NATIONAL flag carrier, Air Zimbabwe needs an eye-watering US$1 billion to nurse itself to health by reclaiming its old routes, opening new ones, honouring its obligations and replenishing its fleet, it has been learnt.
The gigantic bill has cast doubts on whether the airline will be able to function as a fully-fledged commercial flight service in the short to medium term.
It is estimated that a huge chunk of the money – $700 million – is needed for the purchase of modern aircrafts that will endear it with travellers and cut its bill through efficiencies in fuel consumption.
About $300 million is needed to settle nagging debts made up of obligations resulting from navigation, landing, handling fees, fuel supplies, salary arrears and rentals.
Previously, Government considered taking over the airline’s $300 million toxic debt as a deliberate effort to clean the parastatal’s balance sheet and make it attractive to potential suitors.
Aviation experts believe that Air Zimbabwe needs to be re-modelled into a budget airline, mainly targeting local and regional routes as it can no longer compete with well-resourced international airlines that are now dominating its traditional routes.
Dubai-based Emirates recently announced that it will replace the Airbus A340-300 that is serving the Zambia-Zimbabwe route with a larger Boeing 777-300ER.
Chairperson of the Parliamentary Portfolio Committee on Transport and Infrastructural Development, Mr Dexter Nduna told The Sunday Mail Business last week that in the short term, the airline had to clear its obligations with international creditors, particularly for landing fees, in order to start plying lucrative routes such as the Harare-London route.
Air Zimbabwe abandoned the Harare-London route in January 2012 after its Boeing 767 was impounded at Gatwick Airport in London over a US$1,2 million debt with a United States parts supplier. The aircraft was held at the London airport for more than two weeks before it was released after payment of the debt.
Another aircraft was seized in December 2011 in Johannesburg over a separate unpaid bill resulting in the Harare-Johannesburg route being temporarily shelved. The route has since been resumed.
It has since been established that there are three writes of execution on Air Zimbabwe in London that make it impossible for the route to be resumed.
An estimated $10 million is needed to pay off creditors to clear the way for the lucrative route.
“Last year, we said Finance Minister (Patrick) Chinamasa should give Air Zimbabwe about $10 million to pay off foreign creditors, $6 million to open up new routes, $2,5 for aircraft refurbishment and $2,7 million for the International Air Transport Association (IATA) clearing house that has been outstanding in order to facilitate landing and taking off in foreign lands.
“He promised that he will give Air Zimbabwe that money. In my view, if that money was to be availed, and a number of other strategies such as opening the DRC, London and Beijing routes, that can make Air Zimbabwe viable again and help it come out of debt,” said Mr Nduna.
Stakeholders opine that Air Zimbabwe needs a strategic partner for leverage for it to roll out its ambitious plans. Government says it is already talking to potential partners.
Although the identity of the suitors have been kept under wraps, sources say they have been active engagements with Turkish Airways and Emirates.
There are real fears that the $1 billion bill presented by Air Zimbabwe bosses to the Parliamentary Portfolio Committee on Transport and Infrastructure Development might be a real turnoff for serious investors. Mr Nduna believes that the flag carrier needs to make baby steps first before launching itself onto the international market.
“The way forward for Air Zimbabwe is to start small and grow gradually. For instance, Air Zimbabwe can start leasing small aircraft which will criss-cross the domestic routes — ferrying tourists and businesspeople — while using its long-haul aircraft on international routes.
“Using humongous aircraft on domestic routes will not be helpful to Air Zimbabwe. The issue at the moment is to forget where we were and concentrate on where we are. That way we can revive the national airliner,” added Mr Nduna.
Air Zimbabwe acting chief executive, Mr Edmund Makona has in the past said they were amenable to leasing smaller aircraft for local routes, which would entail retiring or leasing its expensive and old 737-200 aircrafts, but it also plans to keep using the long range 767-200ER planes.
Fuel costs constitute between 36 and 40 percent of Air Zimbabwe’s operational expenses, hence the need to move over to smaller aircrafts that are more efficient.
But the licencing of Fastjet to ply the Harare-Johannesburg route — one of Air Zimbabwe’s critical success factors in the past — has set off alarm bells.
Not only is the national carrier losing business to the competitor, it is also losing manpower as “our pilots have gone to these emerging airlines”, according to Mr Nduna.
“All nations with a national carrier have done some sort of protectionism and we need to do the same by protecting our routes and manpower.
“Let us utilise what we have to get what we want. Of course I know that no airline in the world is making profit, probably apart from Ethiopian Airways in Africa because air transport is basically there to facilitate growth in other sectors such as tourism and Special Economic Zones and so forth but we want Air Zimbabwe to at least break-even or narrow its losses,” he explained.
The Harare-Johannesburg route was seen as a cash cow for Air Zimbabwe despite the fact that other airlines such as South Africa Airways, British Airways (through Comair) and SA Express run daily flights. Transport and Infrastructure Development Minister, Dr Joram Gumbo said while protectionism is necessary, Air Zimbabwe officials should work hard. He said Air Zimbabwe should strive to improve its services and not just clamour to be protected.
“Competition is good, people should fly any airline of their choice. As Government we protect our airline, we support it so that it remains in the air but we don’t block other airlines, that is what is called BASA (Bilateral Air Service Agreement) which allows other airlines to ply the routes they wish.
“We want many airlines, which is good for us. There is nothing wrong in that. Anyway, we ply the same route to Victoria Falls with them and at times we go to South Africa with virtually no passengers and you journalists complain that your aircraft did not have passengers.
“So protectionism is not good, protect by giving a person or company the right implements so that they are able to take care of themselves. That is the best protection.
“Air Zimbabwe is my airline, I will protect it but I also have the national interest to protect, I want to improve tourism in the country,” said Dr Gumbo.
Policy makers envisage that Zimbabwe can be an aviation “connecting hub” where long-haul flights service international destinations while budget airlines connect Harare to the region.
Dr Gumbo also indicated last week that there was need for Air Zimbabwe to establish new routes, particularly the Harare-London route, in order to re-establish a firm financial footing.
Government has had to turn down proposals from competing airlines such as Fastjet that wanted to partner Air Zimbabwe on the route.
“There is a route that is lucrative that I am aiming to revive, that is the Harare-London route.
“That one is not plied by many airlines and it is wanted by many players. I am inundated by many airlines wanting to get into the Harare-London route (but), that one I am still protecting,” said Dr Gumbo.
Historical links between Zimbabwe and Britain normally feed into the huge human traffic directly transiting between Harare and London.
Government is however pre-occupied with rehabilitating the aerodromes dotted around the country in order to make destinations of interest accessible.
Aerodromes in Gweru, Kariba, Mutare and Masvingo have been earmarked for major rehabilitation but funding still remains a challenge.
Buffalo Range airport terminal in Chiredzi has already been refurbished at a cost of $212 000 through a partnership involving the Civil Aviation Authority of Zimbabwe (CAAZ), Tongaat Hulett Zimbabwe and the Malilangwe Trust.
The refurbishment of the airport is expected to spark economic activity in the Lowveld as it becomes more convenient for more tourists and investors.
Said Dr Gumbo: “People must fly as is done in other countries. They just fly and park their small aircrafts when they arrive. Do that, let us change our mindset, let us fly.
“The tourism industry must be improved and encouraged in Zimbabwe through our own people.”
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