Air Zimbabwe proposes regional Southern Africa hub for Harare: part one – years of struggles
The state airline and national carrier of a country once regarded as 'the bread basket of Africa' became a basket case itself over the past decades. But it has shed of much of its debt now, and with new management at the helm Air Zimbabwe is at last looking to the future instead of over its shoulder.
Its new chairperson has ambitious plans - well, ambitious by its own standards, at least. One is, in conjunction with Harare Airport, to establish a regional hub and spoke operation for Southern Africa.
It helps that South African Airways, the dominant airline in the region, has also had a hard time of it lately. Also that tourists are increasingly attracted to nature - which is in abundance - over beaches.
But it will require progressive, modern thinking; certainly a new fleet (not necessarily a big one); carefully selected routes; well thought-out pricing strategies and some further cash injection to make what its chairperson calls 'a mammoth task' surmountable.
This is part one of a two-part report.
- Air Zimbabwe, the national carrier of Zimbabwe, is looking to reposition itself after years of financial problems.
- The airline's new chairperson plans to establish a regional hub and spoke operation at Harare Airport, in partnership with the airport authorities.
- Air Zimbabwe aims to focus on domestic and regional routes, with a particular emphasis on serving Johannesburg.
- The airline's passenger traffic has been inconsistent but has averaged a growth rate of 3.5% over the past decade.
- Air Zimbabwe currently offers a small proportion of the seats at Harare Airport, with foreign airlines dominating the market.
- The airline's plans for growth will require a new fleet, carefully selected routes, pricing strategies, and additional funding.
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 utilisation is poor and incongruous to the mix, the realisation 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 organisation 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 cancelled 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 amassed 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 entire economy of the economy could be equally 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 stabilisation 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.
(It has to be said that Zimbabwe is the most unpredictable country on Earth where its economy is concerned. A decade ago the rate of inflation reached 90 sextillion per cent. In the two years to May-2022 its national stock exchange index rose by 5600%).
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 O R 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.
Harare Robert Gabriel Mugabe International Airport: annual traffic, passenger numbers/growth, 2009-2019
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%.
Harare Robert Gabriel Mugabe International Airport: international seats by airline, week commencing 08-Aug-2022
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.