Air Zimbabwe proposes regional Southern Africa hub for Harare: part one – years of struggles


Summary

  • Air Zimbabwe has had financial problems for decades but is repositioning itself with a clean(ish) slate.
  • Its chairperson envisages, inter alia, the development of a regional hub at Harare Airport, embracing domestic, international and – eventually – intercontinental routes.
  • To get the development going a critical route to Johannesburg has been restored, and what international traffic flows there are through Harare will be east to south.
  • Air Zimbabwe’s passenger traffic growth inconsistent but averaging +3.5% over a decade.
  • Air Zimbabwe offers only a tiny proportion of the seats at Harare where foreign airlines dominate.

Air Zimbabwe chairperson sees Harare Airport as a future regional hub

The chairperson of Air Zimbabwe, Silvanos Gwarinda, an aviation specialist with the United Nations, recently outlined the new airline board’s plans for the company.

Among such necessities as: the reactivation of its IATA membership, the fact that several of its aircraft are not serviceable, fleet utilization is poor and incongruous to the mix, the realization that the airline has lost pilots to ‘global airlines’ and the huge gap in the provision of air cargo capacity between Zimbabwe and its trading partners – Dr Gwarinda made a surprising statement.

He ventured that Zimbabwe’s central location in the Southern African Development Community market (an intergovernmental organization with the goal of furthering regional socio-economic cooperation among 16 countries in southern Africa) positions Air Zimbabwe for hub and spoke operations based in Harare.

In other words – could Harare compete with airports such as Johannesburg and other hubs in the region?

On the surface it would appear to be an unlikely prospect, and much will depend – of course – on the recovery of Air Zimbabwe itself.

A litany of disaster after disaster

It is no secret that the state-owned airline has suffered financial problems for many years.

As long ago as 2004 Air Zimbabwe was suspended by IATA over unpaid debts, and ticket prices have all too often been influenced by skyrocketing hyperinflation of up to 1000% per annum, prompting the withdrawal of support by the Central Bank because the airline was in need of foreign currency to pay for fuel, spare parts, and catering.

Indeed, operations were canceled altogether in 2005 as there was no hard currency with which to buy fuel. In the course of six years between 1999 and 2005 passenger numbers fell from one million to 20,000.

In 2011 the airline was suspended from IATA’s international financial and reservation system over unpaid booking fees, and the government decided to absorb a USD140 million debt in order to make the company more attractive to foreign investors.

It never was.

Further disruption has been caused over the years by, inter alia, strikes over unpaid salaries. In 2012 the airline was grounded indefinitely.

subsequently it was replaced by another company, Air Zimbabwe Private Limited, the original one being disbanded while the government absorbed a USD150 million debt.

By 2017 the airline had again aassed debts of USD300 million and could no longer fly to many destinations for fear that debtors would impound its aircraft. With only three of its aircraft operational, Air Zimbabwe was put under administration in Oct-2018.

Put simply, it is a litany of disaster after disaster, the full length of the century to date.

It would not be unreasonable to argue that in the land reputed to be ‘the bread basket of Africa’ Air Zimbabwe has assumed the mantle of its basket case; except that the economy of the economy could be equally entire so impugned.

But much of the outstanding debt is settled and the airline can plan ahead

However, there has been an improvement of late, and much of it within the past six months.

Air Zimbabwe began working with the Ministry of Finance and Economic Development in Jul-2022 to try to provide a workable solution around the assumption of the debt. The government has provided funding to settle all verified claims for local liabilities, and discussions are continuing with foreign creditors regarding liabilities equivalent to USD31.5 million.

Also in Jul-2022 the airline’s administrators completed a six-year strategic business plan for the airline, to be implemented in two phases, which includes the following proposals:

  • Target the operation of profitable domestic and regional routes with smaller, more efficient aircraft, including serving Johannesburg in South Africa at least five times daily. (This route has always been a mainstay of the airline’s operations);
  • Develop Victoria Falls to support local tourism;
  • Expand runways at various regional airports to support the expansion of domestic tourist destinations;
  • Develop Harare airport as a hub over the first four years of the plan, to support regional and international travel. Resume long haul international services once the Harare hub is developed.

Air Zimbabwe’s administrators handed over management of the airline to an interim board in early Jul-2021 and a full board was appointed in Aug-2022.

Previously, in Nov-2021, the airline had appointed an acting CEO – Tafadzwa Zaza. He brings ingrained experience to the role, having worked for Air Zimbabwe for over 23 years and previously serving as head of marketing and ground operations.

There are signs of stability for Air Zimbabwe.

Critical connection to Johannesburg is restored

Zimbabwe’s Minister of Finance Mthuli Ncube commented last year on the relaunch of Air Zimbabwe’s Harare-Johannesburg service, saying that: “The airline is now solvent after government intervention and support”.

Mr Ncube said that the government had assumed all the airline’s debts at the time of USD379 million. The relaunch of Johannesburg service was enabled by “extinguishing the debt with South African authorities”.

National economy improving

And this coincided with a rebound in the country’s economy in 2021, driven by recovery of agriculture and industry and a relative stabilization of prices and exchange rates.

GDP is estimated to have grown by +5.8% in 2021, after contracting by -6.2% in 2020. The World Bank projected GDP to grow by +3.7% in 2022, in line with sub-Saharan Africa generally.

Harare’s airport – which is still perhaps surprisingly named after the former, and controversial, President Robert Mugabe – has never in recent times figured in the list of Africa’s busiest and most successful airports. In 2019 it handled around one million passengers – less than one twentieth of the total at Johannesburg’s OR Tambo airport.

It didn’t even make the Top 50 list for the continent.

Passenger traffic growth inconsistent but averaging +3.5% over a decade

Looking at passenger traffic growth over the past decade (meaning 2009-2019; no figures are available after Sep-2019), it has been of the stop-start tendency common to countries with severe economic problems, reaching +20% in two years but also falling -19.6%.

It must be said, though, that overall the trend has been upwards, with an average percentage growth level of +3.5% over the 11 years.

Air Zimbabwe offering a tiny proportion of the seats at Harare

In the week commencing 08-Aug-2022, 90% of seat capacity at Robert Mugabe airport is on international services, but Air Zimbabwe contributes an embarrassingly tiny proportion of international seats, at around 4%.

The airline fares better in the domestic arena, with 16.9% of seats, but even then it lags well behind the Zimbabwean subsidiary of the Tanzanian LCC fastjet (83.1%).

Indeed, overall, almost 80% of Harare airport’s seats are on foreign airlines.

It is not those airlines, though, that would enable the airport to become a regional hub. That job would fall in the long run to a reinvigorated Air Zimbabwe.

In part two of this report CAPA will explore: how the airline’s pprevious chairperson was attracted to UK and China routes, that domestic route consolidation and tourism will come first, Air Zimbabwe’s inactive fleet and renewal considerations, that future tourism growth will be predicated on the accessibility of nature’s wonders but also on political stability, and the factors required to deliver on the regional hub ambitions.

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