Precision Air Services

RwandAir moves to expand its network as new aircraft join the fleet

RwandAir will focus on route and fleet expansion in 2013, launching direct services to Accra, Douala and Juba coinciding with the delivery of new Boeing 737-700 aircraft and the introduction of a revised schedule at its congested Kigali hub.

RwandAir has reportedly recorded strong growth in recent years, including a 67% increase in passenger numbers in 2012 and increasing revenue by 60% compared to 2011 without increasing capacity.

The state-owned carrier’s CEO John Mirenga said in Jan-2013 that he was "hopeful" the airline will be profitable by 2015, at which time Rwanda's Government may consider selling down part of its holding in the carrier to private investors with a view to a possible stock exchange listing by 2020.

Mr Mirenga expects the airline will handle about 600,000 passengers in 2013, a 50% increase on 2012. The carrier does not expect to increase revenue by the same margin due to the pressure on fares.

The airline said in Nov-2012 it plans to expand its fleet from seven to 17 aircraft over the next five years and commence services to Europe and China in 2015.

FastJet takes to the air, promising a modern pan-African network

Africa’s newest airline, FastJet, launched services on 29-Nov-2012 with two daily flights on two domestic routes in Tanzania, Dar es Salaam to Kilimanjaro and Mwanza, using three leased A319s. The launch was delayed by a month and the low-cost carrier has started on different routes than announced in Oct-2012, when Dar es Salaam-Nairobi was favoured, and on the opposite side of the continent than originally envisaged in Jun-2012, when Accra in Ghana was seen as the optimum starting hub over Tanzania.

FastJet will gradually spread its wings west and south across sub-Sahara Africa, rebranding the pan-African Fly540 operations which it acquired from African conglomerate Lonrho in Jun-2012 and transitioning the operation from the full service to LCC model. The carrier is relying on an average fare of USD70 to USD80, historically low by intra-Africa standards, to stimulate demand and encourage Africans to swap road travel for air travel, as has been the experience in other emerging markets such as Southeast Asia and Latin America.

Kenya Airways suggests merger with Ethiopian and South African as part of push for greater unity

African airlines are calling for greater unity among themselves to better compete against much bigger foreign airlines in their own skies and for African governments to liberalise the continent’s air space.

Kenya Airways believes a merger between itself, Ethiopian Airlines and South African Airways is necessary to create a single large carrier representing Africa and able to compete globally. And Africa’s numerous regional airlines are looking to these three big carriers to support their growth and improve the industry’s safety performance on the continent.

But first, protective governments need to be persuaded of the benefits of open skies, while smaller carriers fear for the futures if big carriers are given greater freedoms.

Simple ownership change to forgive USD150m of debt is not enough to place Air Zimbabwe back on track

Zimbabwe has forced the issue of rising debt at national carrier Air Zimbabwe by disbanding the airline, officially known as Air Zimbabwe Holdings, and re-launching it as Air Zimbabwe Private Limited. Local reports have put the carrier's debt at USD150 million, USD30 million of which is owed internationally, including in the US and China. The ownership structure of the new airline has not been disclosed, although the Government is reportedly trying to woo investors.

The move is not a cure-all. Before the new carrier can be taken seriously, it needs not only independent management but also structural changes within government to benefit the country and trickle down to the airline.

Precision’s IPO off to slow start but hopes remain high

Precision Air’s Initial Public Offering (IPO) is off to a slow start, hindered by reported delays in the distribution of application and prospectus forms, and a low initial turnout. Despite this, lead advisor for the issue, Orbit Securities, is confident interest will pick up and the planned TZS27 billion (USD16.5 million) will be raised. Orbit stated the listing price, which has attracted some criticism for being too high, is based on the carrier’s potential to grow and not on its past financial performance. A successful listing would reflect favourably on the airline's prospects and the wider Tanzanian economy.