Opinion / Columnist
Can Zimbabwe do without its national flag career, Air Zimbabwe!
21 Sep 2011 at 02:26hrs | Views
Zimbabwe has set its eyes on hosting the United Nations World Tourism Organisation general assembly in 2013, in Victoria Falls. The assembly brings together delegates from 186 countries and that will be an ultimate endorsement for the brand, Zimbabwe a World of Wonders.
Like majestic eagles in celestial conquest, airlines will criss-cross our skies to bring the important delegates if the bid is won but a major question is that given the state of affairs at Air Zimbabwe, are we going to have our own national flag career flying with others?
At this point it is important to make it clear that there is vast difference between a national career or national airline on one side and a national flag career, on the other. A national career is an airline big enough to ply all national routes and base itself in a particular country. It is normally privately owned, i.e. by a company or by an individual.
A national flag career is a brand, portraying the image of the country, the dignity, the value, the ethos and the meaning of the country and normally has the country's national flag insignia printed on it. Its arrival at any international airport announces the arrival of the country and what it stands for. It is the pride of the nation.
Air Zimbabwe is the national flag career and when it flies past vast tracts of land, past boggy marshes, past picturesque snowy mountains and indeed past other countries' borders, it carries with it the Brand Zimbabwe. It is important to understand that a flag is national label, a national identity, it is national mark and a national signpost, whose colours and design announce a character and an image of the nation.
The world over, national flag careers are owned by the governments or the governments have shares, which bring us to our subject matter Air Zimbabwe.
In the tourism industry transport is a major enabler and air traffic is a critical enabler of tourism, which according to the United Nations World Tourism Organisation, slightly more than 51 percent of the international travellers arrived by air in 2010, while the remainder (49 percent) travelled over the surface.
This brings us to the question: Can Zimbabwe do without its national flag career, Air Zimbabwe?
The fact is that Air Zimbabwe is riddled by a multifarious array of problems but do we as a nation want to do without Air Zimbabwe. It is fact not fiction that Zimbabwe cannot do away with Air Zimbabwe without damaging its image, without bruising its ego and without pulling down its flag from the international skies and airports.
Air Zimbabwe is a 100 percent state owned enterprise which was established in 1980 following the attainment of Independence. As a national carrier the airline continues to enjoy relative protection from entrants of local players on the established domestic, regional and international routes.
It, however, faces stiff competition from regional competitors including South African Airways, Zambezi Airways, Ethiopian Airlines and Kenya Airways.
The national airline has a fleet size of eight aircraft- three Boeing 737-200, two Boeing 767-200 and three MA60s. As of January 2011, the average age of the aircraft was 22.4 years and subjected to a multifarious array of problems. In comparison, its major regional competitors such as SAA, Kenya Airways, Ethiopian Airlines and BA, Comair have young aircraft fleet sizes of at least 20 years. In its prime, Air Zimbabwe serviced domestic, regional and international routes.
On the domestic market it serviced Harare-Bulawayo and Harare-Victoria Falls routes. The balance of other domestic routes namely, Kariba, Hwange, Chiredzi, Masvingo, Mutare and Gweru are serviced by small operators who charter air services on needy basis.
Pertaining to the regional and international markets, Air Zimbabwe serviced Harare-Johannesburg, Harare-Lusaka, Harare-London, and Harare-Kuala Lumpur-Beijing. Routes from which the airline withdrew services earlier include Harare-Nairobi, Harare-Port Louis (Mauritius), Harare-Lilongwe- Dar es Salaam, Harare-Entebbe (Uganda)-Dubai, Harare-Luanda (Angola) and Harare-Gaborone. Air Zimbabwe has a staff compliment of 1 470 employees. This translates to a staff-aircraft ratio of 184:1. This is way above the norm of 80:1. In the case of the USA, the majority of the airlines have a staff-aircraft ratio less than 100:1. Abandoning Air
Zimbabwe because of its problems is akin to throwing the water and baby from the bucket. It is self-destructing and politically and morally wrong.
At this stage it is critical to understand the problems bedevilling Air Zimbabwe. The worker/plane ratio, that is; the number of workers feeding on one plane is an amazing one plane to 183 workers. This is unbelievably high and there is serious need to downside or right-size. In fact the word is right-size.
This problem has gone on for a long time. In fact, every chief executive who has run Air Zimbabwe, except Tendai Mahachi, has sought to retrench or rather right-size but has failed because there are no funds for the packages. Nevertheless, it has to be done if the airline is to be salvaged.
The current Boeing planes are old at slightly more than 40 000 cycles out of the 66 000 cycles allowed for passenger planes but they can still fly at a much higher cost.
Legally, each of these planes must now fly with a quarter of their required spare parts readily available in the workshop and that is about US$1,6 million per plane which is not readily available, especially when the airline cannot even pay salaries and wages.
The other solution could be selling or leasing the planes to countries that have not ratified stringent AITA flight treaties like the DRC. Another solution would be converting the planes to cargo ones, while leasing passenger planes from other airlines and eventually buying our own.
Air Zimbabwe needs to come up with an equity partner if turning around the airline is not to remain a distant mirage. The partner could as well inherit the huge debt and quickly recoup, at a profit, his investment from flights because the business is there and the routes are plenty. To explain the brisk business, ask Kenyan and South African Airlines, who have increased not only their landing frequencies but the configuration of their passenger seats to meet demand. US$8 million has been lost to date in the crisis.
That these airlines are feeding on the carcass of Air Zimbabwe is a sad reality that should make this great country re-think about the desirability of putting Air Zimbabwe back on the rails. Can't a syndicate of businessmen in the tourism and hospitality industry put in place a rescue package for Air Zimbabwe? Can't Zimbabwean businessmen go into partnership with the national airline?
While these questions have been asked, there has been need to critically analyse the Air Zimbabwe business model that drove the airline to where it is and change it. I am convinced that with a pro-active business model air Zimbabwe can stand on its feet again.
Based on issues discussed above, it would be ideal for Air Zimbabwe to adopt a hybrid of turnaround and retreat strategies whose implementation should ideally be led by an independent advisor. Examples of local firms that might have the international experience to lead such processes include Ernest and Young, KPMG, Deloitte & Touché and Price Waterhouse and Coopers.
Debt Restructuring
With a crippling debt of over $100 million, it might be necessary for government to take over the debt or at least negotiate debt take-over by the potential strategic partner like was the case under the ESSAR deal. Debt restructuring will enable the airline to have a healthy balance sheet thereby enabling the company to be in a position to attract potential suitors.
Staff Right Sizing
With a staff compliment of 1470 employees and a staff-aircraft ratio of 184:1, Air Zimbabwe is clearly oversized staff-wise. Accordingly, there is a clear case for staff redundancy. However, in the process of doing so, there is need to safeguard potential loss of critical mass of skilled staff either through voluntary or non-voluntary retrenchment.
Recapitalisation
As the only shareholder, government needs to assist in financing the recapitalisation of the airline. Indications are that over US$500 million would be required to purchase six new aircraft (3 regional and 3 long haul). Financing could be done through a number of instruments including government bonds, concessionary loans from friendly countries and commercial loans, which can be secured perhaps through diamond and other mineral resource pledging.
Change of Management
There is need to review the current organisational structure as well as instill a new culture in the organisation which will not only build trust between management, staff and workers' unions but also encourage the entire organisation to give customer value priority attention. A service culture would help in positive positioning of the company on the market place.
Cost Management
Given the precarious cash flow situation at the company, which is compounded by the high debt equity ratio and high fuel and maintenance costs, it is imperative that a prudent and effective cost management system be put in place. Unnecessary costs should at all times be avoided and leakages for example through fuel procurement should be nipped in the bud.
Business Process Improvement
Reservation, cargo tracking and check-in systems that the company is using may require upgrading if they are to enhance internal and external business processes. In addition, there is need for improvement of the procurement system and reduce inventory so as to cut on unnecessary costs.
Strategic Alliances
Nearly all of the airlines' regional competing airlines are in different forms of strategic alliance or belong to global alliance. For example, BA Comair and SAA are members of Skyworld and Star Alliance respectively, whilst Kenya Airways has a strategic alliance with KLM. Global alliances enable airlines to reach all corners of the world, a case being SAA which is now able to connect to more than 600 destinations in the world.
Hence there is a strong case for Air Zimbabwe courting potential strategic partners or joining global alliances once pertinent issues including debt restructuring and recapitalisation have been attended to first.
Privatisation
Given competing priorities and the budgetary constraints, government may not be in a position to meet the huge capital injection requirement for the airline.
Against this background it would be worthwhile to privatise the national carrier. To ensure that we get best value there is need to invite open tenders from interested local and international firms. In the process there is need to invite a transparent adjudication process so that only serious, cash rich and committed bidders are awarded the tender.
Rebranding
Having implemented the above-cited measures, there is need for the airline to develop a new value promise through rebranding. A rebranded Air Zimbabwe needs to rise to its value promise or brand equity if it has to reclaim its market share lost to competing regional airlines namely, SAA, Ethiopian Airlines, Kenya Airways and BA Comair.
Finally, marketing at Air Zimbabwe should be part of the national tourism strategy. Air Zimbabwe should not operate in isolation and should be assisted to climb out of its current problems by stakeholders, across Zimbabwe's broad spectrum. Questions on whether we are looking at having a profit making national airline or a break-even airline, should be central to every strategy we adopt as we forge ahead. We must have everyone ploughing back to Air Zimbabwe, because it is out national airline.
We should all try and put in place a management system that continuously aspires to benchmark its survival on performance, credibility, accuracy and reliability as viewed by the industry it serves. How would we feel to have other airlines ply our routes, while our own folds?
-------------
Walter Mzembi is the Minister of Tourism and Hospitality Industry and legislator for Masvingo South Constituency.
Like majestic eagles in celestial conquest, airlines will criss-cross our skies to bring the important delegates if the bid is won but a major question is that given the state of affairs at Air Zimbabwe, are we going to have our own national flag career flying with others?
At this point it is important to make it clear that there is vast difference between a national career or national airline on one side and a national flag career, on the other. A national career is an airline big enough to ply all national routes and base itself in a particular country. It is normally privately owned, i.e. by a company or by an individual.
A national flag career is a brand, portraying the image of the country, the dignity, the value, the ethos and the meaning of the country and normally has the country's national flag insignia printed on it. Its arrival at any international airport announces the arrival of the country and what it stands for. It is the pride of the nation.
Air Zimbabwe is the national flag career and when it flies past vast tracts of land, past boggy marshes, past picturesque snowy mountains and indeed past other countries' borders, it carries with it the Brand Zimbabwe. It is important to understand that a flag is national label, a national identity, it is national mark and a national signpost, whose colours and design announce a character and an image of the nation.
The world over, national flag careers are owned by the governments or the governments have shares, which bring us to our subject matter Air Zimbabwe.
In the tourism industry transport is a major enabler and air traffic is a critical enabler of tourism, which according to the United Nations World Tourism Organisation, slightly more than 51 percent of the international travellers arrived by air in 2010, while the remainder (49 percent) travelled over the surface.
This brings us to the question: Can Zimbabwe do without its national flag career, Air Zimbabwe?
The fact is that Air Zimbabwe is riddled by a multifarious array of problems but do we as a nation want to do without Air Zimbabwe. It is fact not fiction that Zimbabwe cannot do away with Air Zimbabwe without damaging its image, without bruising its ego and without pulling down its flag from the international skies and airports.
Air Zimbabwe is a 100 percent state owned enterprise which was established in 1980 following the attainment of Independence. As a national carrier the airline continues to enjoy relative protection from entrants of local players on the established domestic, regional and international routes.
It, however, faces stiff competition from regional competitors including South African Airways, Zambezi Airways, Ethiopian Airlines and Kenya Airways.
The national airline has a fleet size of eight aircraft- three Boeing 737-200, two Boeing 767-200 and three MA60s. As of January 2011, the average age of the aircraft was 22.4 years and subjected to a multifarious array of problems. In comparison, its major regional competitors such as SAA, Kenya Airways, Ethiopian Airlines and BA, Comair have young aircraft fleet sizes of at least 20 years. In its prime, Air Zimbabwe serviced domestic, regional and international routes.
On the domestic market it serviced Harare-Bulawayo and Harare-Victoria Falls routes. The balance of other domestic routes namely, Kariba, Hwange, Chiredzi, Masvingo, Mutare and Gweru are serviced by small operators who charter air services on needy basis.
Pertaining to the regional and international markets, Air Zimbabwe serviced Harare-Johannesburg, Harare-Lusaka, Harare-London, and Harare-Kuala Lumpur-Beijing. Routes from which the airline withdrew services earlier include Harare-Nairobi, Harare-Port Louis (Mauritius), Harare-Lilongwe- Dar es Salaam, Harare-Entebbe (Uganda)-Dubai, Harare-Luanda (Angola) and Harare-Gaborone. Air Zimbabwe has a staff compliment of 1 470 employees. This translates to a staff-aircraft ratio of 184:1. This is way above the norm of 80:1. In the case of the USA, the majority of the airlines have a staff-aircraft ratio less than 100:1. Abandoning Air
Zimbabwe because of its problems is akin to throwing the water and baby from the bucket. It is self-destructing and politically and morally wrong.
At this stage it is critical to understand the problems bedevilling Air Zimbabwe. The worker/plane ratio, that is; the number of workers feeding on one plane is an amazing one plane to 183 workers. This is unbelievably high and there is serious need to downside or right-size. In fact the word is right-size.
This problem has gone on for a long time. In fact, every chief executive who has run Air Zimbabwe, except Tendai Mahachi, has sought to retrench or rather right-size but has failed because there are no funds for the packages. Nevertheless, it has to be done if the airline is to be salvaged.
The current Boeing planes are old at slightly more than 40 000 cycles out of the 66 000 cycles allowed for passenger planes but they can still fly at a much higher cost.
Legally, each of these planes must now fly with a quarter of their required spare parts readily available in the workshop and that is about US$1,6 million per plane which is not readily available, especially when the airline cannot even pay salaries and wages.
The other solution could be selling or leasing the planes to countries that have not ratified stringent AITA flight treaties like the DRC. Another solution would be converting the planes to cargo ones, while leasing passenger planes from other airlines and eventually buying our own.
Air Zimbabwe needs to come up with an equity partner if turning around the airline is not to remain a distant mirage. The partner could as well inherit the huge debt and quickly recoup, at a profit, his investment from flights because the business is there and the routes are plenty. To explain the brisk business, ask Kenyan and South African Airlines, who have increased not only their landing frequencies but the configuration of their passenger seats to meet demand. US$8 million has been lost to date in the crisis.
That these airlines are feeding on the carcass of Air Zimbabwe is a sad reality that should make this great country re-think about the desirability of putting Air Zimbabwe back on the rails. Can't a syndicate of businessmen in the tourism and hospitality industry put in place a rescue package for Air Zimbabwe? Can't Zimbabwean businessmen go into partnership with the national airline?
While these questions have been asked, there has been need to critically analyse the Air Zimbabwe business model that drove the airline to where it is and change it. I am convinced that with a pro-active business model air Zimbabwe can stand on its feet again.
Based on issues discussed above, it would be ideal for Air Zimbabwe to adopt a hybrid of turnaround and retreat strategies whose implementation should ideally be led by an independent advisor. Examples of local firms that might have the international experience to lead such processes include Ernest and Young, KPMG, Deloitte & Touché and Price Waterhouse and Coopers.
Debt Restructuring
With a crippling debt of over $100 million, it might be necessary for government to take over the debt or at least negotiate debt take-over by the potential strategic partner like was the case under the ESSAR deal. Debt restructuring will enable the airline to have a healthy balance sheet thereby enabling the company to be in a position to attract potential suitors.
Staff Right Sizing
With a staff compliment of 1470 employees and a staff-aircraft ratio of 184:1, Air Zimbabwe is clearly oversized staff-wise. Accordingly, there is a clear case for staff redundancy. However, in the process of doing so, there is need to safeguard potential loss of critical mass of skilled staff either through voluntary or non-voluntary retrenchment.
Recapitalisation
As the only shareholder, government needs to assist in financing the recapitalisation of the airline. Indications are that over US$500 million would be required to purchase six new aircraft (3 regional and 3 long haul). Financing could be done through a number of instruments including government bonds, concessionary loans from friendly countries and commercial loans, which can be secured perhaps through diamond and other mineral resource pledging.
Change of Management
There is need to review the current organisational structure as well as instill a new culture in the organisation which will not only build trust between management, staff and workers' unions but also encourage the entire organisation to give customer value priority attention. A service culture would help in positive positioning of the company on the market place.
Cost Management
Given the precarious cash flow situation at the company, which is compounded by the high debt equity ratio and high fuel and maintenance costs, it is imperative that a prudent and effective cost management system be put in place. Unnecessary costs should at all times be avoided and leakages for example through fuel procurement should be nipped in the bud.
Business Process Improvement
Reservation, cargo tracking and check-in systems that the company is using may require upgrading if they are to enhance internal and external business processes. In addition, there is need for improvement of the procurement system and reduce inventory so as to cut on unnecessary costs.
Strategic Alliances
Nearly all of the airlines' regional competing airlines are in different forms of strategic alliance or belong to global alliance. For example, BA Comair and SAA are members of Skyworld and Star Alliance respectively, whilst Kenya Airways has a strategic alliance with KLM. Global alliances enable airlines to reach all corners of the world, a case being SAA which is now able to connect to more than 600 destinations in the world.
Hence there is a strong case for Air Zimbabwe courting potential strategic partners or joining global alliances once pertinent issues including debt restructuring and recapitalisation have been attended to first.
Privatisation
Given competing priorities and the budgetary constraints, government may not be in a position to meet the huge capital injection requirement for the airline.
Against this background it would be worthwhile to privatise the national carrier. To ensure that we get best value there is need to invite open tenders from interested local and international firms. In the process there is need to invite a transparent adjudication process so that only serious, cash rich and committed bidders are awarded the tender.
Rebranding
Having implemented the above-cited measures, there is need for the airline to develop a new value promise through rebranding. A rebranded Air Zimbabwe needs to rise to its value promise or brand equity if it has to reclaim its market share lost to competing regional airlines namely, SAA, Ethiopian Airlines, Kenya Airways and BA Comair.
Finally, marketing at Air Zimbabwe should be part of the national tourism strategy. Air Zimbabwe should not operate in isolation and should be assisted to climb out of its current problems by stakeholders, across Zimbabwe's broad spectrum. Questions on whether we are looking at having a profit making national airline or a break-even airline, should be central to every strategy we adopt as we forge ahead. We must have everyone ploughing back to Air Zimbabwe, because it is out national airline.
We should all try and put in place a management system that continuously aspires to benchmark its survival on performance, credibility, accuracy and reliability as viewed by the industry it serves. How would we feel to have other airlines ply our routes, while our own folds?
-------------
Walter Mzembi is the Minister of Tourism and Hospitality Industry and legislator for Masvingo South Constituency.
Source - Walter Mzembi
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