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Contributor: James Ogunleye
Whither African Airlines?

Last December Phillipe Leroy, General Manager of Intercontinental, Lusaka's premier hotel, was having his dinner when he switched on the television. On the box was Zambia's vice-president, Godfrey Miyanda. "More political garbage," Leroy grunted to himself and continued with his meal. But he was wrong. The vice-president was broadcasting a serious matter. He was announcing the closing down of Zambia Airways, the country's national carrier. Hotel boss Leroy lost his appetite. He buried his head in his arms and feared for the fortunes of his business.

The devastating effect of the liquidation of the airline on other sectors of the economy became evident, barely a month after the speech. In the line of fire is the tourism industry, where Leroy is a key operator. "Business is very bad for us," he said ruefully last month, "(because) we have no guests." He is right. Room occupancy in hotels in Lusaka, Zambia's capital, has dropped to a very low level: from 50 per cent in December 1994 to under 20 per cent by last month (February).

The lamentable story of Zambia Airways is a reflection of the problems within the country itself: it is also a victim of the precarious state of the domestic economy. Two years before the liquidation, for instance, the airline had an accumulated loss of $37 million excluding a contract and penalty charge of $25 million on an aircraft order that has now been cancelled.

But the first ominous sign came a year ago when the International Air Transport Association (IATA) suspended the airline over some $5 million arrears. This came at the same time that the World Aviation Bureau (WAB) advised the Zambian government that the airline was "beyond resuscitation," because of a $12 million debt. Few people in government were keen to take any notice. But then the government was helpless. Apart from having its own financial crisis to contend with, the President, Frederic Chiluba, employed a strict policy of not bailing out distressed parastatals with public funds. So, the airline had to be committed to the earth.

The liquidation of Zambia Airways has increased speculation among aviation experts in Africa as to which of the other ailing airlines on the continent will follow. It is a legitimate question. African airlines are beset by similar problems, one of which is undercapitalisation. Apart from Air Afrique with a capitalisation of CFA20 billion ($35m), virtually all African airlines are cash-strapped - with little or no money to fall back on during hard times. There is an obvious reason for this. Airlines on the continent are public-owned, and virtually all these countries are living from hand to mouth. The result is that state parastatals (including airlines) are underfunded - with dire implications for their cash flow.

This underfunding is bad enough, but official maladministration is even worse. Unbridled corruption is rampant in many African airlines. In Nigeria, flagrant mismanagement of assets of the state-owned Nigeria Airways has been elevated to an art form. The national carrier, known locally as the Flying Elephant, is so corruption-ridden that it does not even publish audited accounts. The last time it did so was in 1973 - yes, 1973 - when many Black Perspective readers had not been born

The gross mismanagement of many African airlines is such that passengers' needs rank low on the managers' priority scale. Passengers routinely complain of abrupt and unexplained cancellations without apology or compensation. Delays and rowdy scenes at luggage check-ins are the order of the day. Example: Last December, during a visit to Nigeria, this writer was having a chat with an acquaintance when a scuffle broke out amongst passengers, touts and officials at the Nigeria Airways luggage check-in point, a few yards away. Dear reader, I had to duck to avoid a punch aimed in the direction of my front teeth! It wasn't funny.

Another concern of aviation observers on the continent is the quality of engineers and crew flying many of the aircraft. This, coupled with inadequate maintenance of the mostly ageing stock sometimes has disastrous consequences. In 1993, in the thick of African winners' cup competition, the entire Zambian football team was sent to an early grave after a plane crash that observers believe could have been prevented had the aircraft been properly maintained.

Not all African airlines are moribund, however. Some are still being run profitably. One of them is Air Afrique, owned by eleven Francophone African countries. The airline with a capitalisation of CFA20 billion turned in a tidy CFA336 million ($662,000) profit in the ten months to October 1994, compared with the 1993 deficit of CFA7.6 billion ($14m). To underline the investors' confidence in Air Afrique, DHL International, a leading courier company, announced the acquisition of 3 per cent equity stake in the airline. Now, confident Air Afrique chairman Yves Roland-Billecart believes the CFA8.5 billion ($15.7m) needed to complete the airline's recapitalisation is within reach.

Another African airline that is making waves is Air Zimbabwe. Although it is state-owned and still weighed down by debt, the airline's return to profit in the financial year 1994 is seen by observers as a sign of its future viability.

The icing on the cake for African airlines - especially the efficient ones - comes from the returns on cargo service. According the latest report from the Geneva-based Airports Council International (ACI), Africa, of the six ACI regions recorded the biggest increase in cargo traffic in 1994, a 21.3 per cent surge over the 1993 figures. This is despite the fact that overall passengers' traffic slumped 4.2 per cent during the same period.

To ensure that African airlines take their rightful place in the civil aviation world, it is time for African governments to get to grips with the grave reality of the situation. Firstly, there is an urgent need for recapitalisation of these airlines, to enable them solve their debt problem. Nigeria Airways, for instance, has total debts in the region of _7 billion. One consequence of this is that Air Nigeria, a supposed off-shoot of the national carrier has to remain on the drawing board even though the Military Government gave its nod to the latter as far back as 1993.

Privatisation is another way forward. But privatisation packages can only be attractive to private investors if the African governments agree to write off the debts and effect management restructuring of their corporations. Less political interference and better management with financial accountability will go a long way to convince investors that African airlines mean business.

Are the African governments ready for this? Most observers do not think so. In the aftermath of the Zambia Airways' liquidation, for example, the Zambian government set up a committee to examine the viability of a new airline. The calibre of the people on the committee does not impress the locals. According to N. Mwikisa, a leading economist and university lecturer, the team is made up of "bureaucrats who have little or no understanding of the intricacies of setting up an airline, let alone making it operational efficiently and profitably." "You can't expect anything from this lot." he quipped.

Whither African airlines? Heaven only knows.
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