11 Sep Mixed feelings over relaunch of Zambia Airways
By Jeff Kapembwa
Lusaka – There is debate among stakeholders over the planned re-launch of the country’s national carrier despite the government seeking to proceed with the project and maximise returns.
Minister of Communication and Transport, Mutotwe Kafywaya, said the delayed re-launch of the Zambia Airways, which went under in 1985 because of liquidity concerns, will be completed this year after formalising certifications to allow the airline take off.
Zambia has invested a staggering US$1 billion in refurbishing the airports and other related infrastructure ahead of the planned re-launch, which has since been shelved twice, April last year and January this year.
Plans are underway to operationalise the project as soon as certifications for the airline, a 55-46 joint venture with Ethiopian Airlines, are completed.
“We will operationalise the airline as soon as certifications are completed,” Kafwaya said. “We have invested over US$1 billion in refurbishing the airports and facilities to prepare for the re-launch.”
During Zambia’s first business summit in Livingstone recently, Kenya’s President Uhuru Kenyatta urged Zambia to actively consider relaunching Zambia Airways to foster increased bilateral trade between the two countries and prepare for competitiveness ahead of the African Continental Free Trade Area (AfCFTA).
Kenyatta noted that the revival will allow Zambia to compete favourably as a tourism destination and that it will further assist the Southern African state to increase its Gross Domestic Product through aeronautical and cargo transportation services which it lacked for want of a national carrier.
Economic diplomacy, the Kenyan leader noted, was now a priority for many countries worldwide and Zambia, like many African countries cannot afford to lag behind.
African countries are not in competition with each other and are only interested in strengthening connectivity across the continent hence the need for the re-start of the airline, without much delay.
“Economic diplomacy in Africa offers an opportunity to focus on the entire ecosystem for driving the prosperity agenda for our countries,” Kenyatta, who was a key note speaker, noted.
He extended “landing rights” for Zambia Airways to Nairobi when the launch is formalised, noting the action would further help in fulfilling Africa’s aspiration for all member states to remain competitive with the emerging of the AfCFTA launched in Niger last month.
Economic Association of Zambia president Lubinda Habazooka commended Zambia’s quest to revisit the airline amid global tourism competition and the country renowned a tourism destination, given its hospitality and tourism attraction but suggested the country undertakes the project alone than with a partner to maximise returns.
Zambia needs its own business model to suit the local environment unlike partnership with Ethiopian airline as it will make independent business decisions that will not conflict its partner, which already has its own model.
“For Zambia, there is need to go it solo. Ethiopian Airlines, yes, it’s a good airline but the quality of their planes and the whole business model might not be helpful to us,” Habazooka is cited by local media as saying.
He urged technocrats to revisit the joint business plan between the two countries, evaluate and see what could benefit Zambia in the medium and long term.
Ethiopian Airlines is on record as having a business model of their own, including opening new routes and acquiring new aircraft, which, if the merger was to come into force, might not auger well if not synchronised to satisfy both parties.
However, Centre for Trade Policy and Development, brushed aside the proposed “rebirth” of the national carrier and instead urged Zambia to prioritise debt servicing, noting the project would plunge the country into distress and lead to default when Euro bond and other debt repayments are due now and 2022.
In an open letter seen by The Southern Times, CTPD head researcher Bright Chizonde said the relaunch was not a priority over impending debt obligations as the country’s current financial and macroeconomic situation demands urgent attention.
Chizonde appreciated Zambia’s plans to revisit the airline relaunch but not at the expense of other competing needs.
“We have conducted comprehensive research on this matter and have concluded that the decision to re-launch Zambia Airways is not prudent due to Zambia’s current financial and macroeconomic situation,” he said.
He suggested the project be put on hold citing three reasons, including case studies on existing competitor airlines that have shown greater investment risks.
Zambia Airways would face a high risk of failure if it is launched using the proposed business model. Zambia had a relatively small population and economy and lacked strategic location for intercontinental flights.
South African Airways (SAA) has been constrained to a loss making position due to this lack of geographical advantage.
Even though Zambia was partnering with Ethiopian Airways, that airline too, was driven by a number of factors such as strategic location within the Horn of Africa and a comprehensive business model, some of which was impossible to replicate in the Zambian context.
Launching of Zambia Airways using the proposed business model would crowd out the private sector since Zambia Airways was envisaged to have domestic, regional and intercontinental flights, Chizonde said.
Zambia, should instead, seek to entice the private sector rather than interfering with the market through pursuing investments which could be taken up by the latter.
(Source: The southern Times)