It's been a turbulent start for African airlines in 2009, with two carriers grounded in the space of just a few weeks.
First to go was Air Tanzania in December 2008, after the Tanzanian Civil Aviation Authority (TCAA) withdrew its operating licence and grounded its fleet. Shortly afterwards the airline "resigned" its IATA membership, and the airline was removed from the BSP. Closer to home, Zambian Airways suspended all services on Saturday 10 January, citing high fuel costs and the need to restructure its operations.
"The increasingly difficult operating environment is now starting to take its toll on regional carriers," says Craig Thomas, chairman of the Board of Airline Representatives of South Africa (BARSA). "Coupled with softening demand and increasingly aggressive pricing from other carriers, many airlines have not been able to recover their losses and have run into a cash-flow crisis."
IATA spokesperson Lorne Riley says the airline association is "projecting airlines on the continent to lose $300-million in 2009" in what is being called "the toughest revenue environment we have seen in 50 years."
However, tumbling airlines are not simply an African problem.
"Thirty-five airlines were suspended from our financial systems because they went bust," says Ms Riley. "The situation may get worse before it gets better."
"This is a global phenomenon," agrees Mr Thomas. "However, airlines in Europe and North America are rapidly merging or creating alliances, reducing their overall risk exposure. This is not the case in Africa, where regulatory and bilateral restrictions prevent broader co-operation between airlines."
So what can agents do to protect themselves and their clients?
"First and foremost it's vital to book with an IATA member," says Robyn Christie, Chief Executive Officer of ASATA. "It's also important for agents to keep an ear to the ground and attend industry gatherings."
"Passengers should ensure that, wherever possible, they make use of comprehensive travel insurance which provides cover for cancellation or curtailment," says Mr Thomas.
"Also don't forget the safety net in airline bookings paid for by credit card," says Ms Christie. Clients who don't receive goods paid for by credit card can apply for a 'chargeback' refund through the bank which issued their card.
The effect of grounded airlines is also likely to be felt in the broader tourism industry. Josephine Mehl, executive director of the Tourism Council of Zambia, told AllAfrica News that the move will impact negatively on tourism development: "Zambian Airways significantly contributed to the opening up of tourism destinations as it linked Livingstone to Johannesburg, Harare and other cities."
"2009 is going to be a very tough year which will force airlines to focus on high-yield routes," says Mr Thomas. "African airlines will have to start broadening their co-operation with long-haul carriers and rapidly adopt advances in revenue management and profitability planning.
"While there will be victims who are not able to weather the storm, the airlines which are able to do so will no doubt emerge stronger than before," he says.
SIDEBAR: What went wrong?
Zambian Airways
In November 2008 Zambian Airways Chief Commercial Officer, Charlie Roberts told TIR that the airline owed money to the country’s National Airports Company Limited (NACL). Roberts refused to confirm the size of the debt, but some reports suggested it could be close to US$1.9-billion.
The airline also blamed the consistently high fuel price for its woes, saying that: "The current price of aviation fuel in Zambia is almost 100 percent higher when compared to other countries in the region such as Tanzania, Zimbabwe and South Africa."
Ronnie Shikapwasha, Chief spokesperson for the Zambian government, told the Lusaka Times that the government is waiting for a full report from Zambian Airways on the challenges that resulted into suspending the airline's operations.
"Refunds are in process for bookings made through the BSP," says Ms Christie from ASATA. "Luckily the damage was not too extensive, and most passengers were accommodated on other routes."
Air Tanzania
The airline had its wings clipped in December after the Tanzania Civil Aviation Authority (TCAA) discovered a litany of maintenance and operational shortcomings, including poor inspection of aircraft and a shortage of pilots and aircraft technicians.
Following the airline's suspension from the BSP, Kenya Airways announced it would not honour any passengers booked on Air Tanzania, including passengers that have tickets endorsed to KQ.
Reports suggest that the TCAA has since reinstated the airline's licence, although there is no indication when the airline will resume flights. The airline's head office was unavailable for comment at the time of going to press.
Virgin Nigeria
While Virgin Nigeria's regional routes are still flying, on January 27 the airline pulled its long-haul services to Johannesburg and London.
"The decision to suspend both services is to enable us to review our entire long haul operations including our product offerings on these routes," a statement from the airline said. "Once the long haul product review has been finalised, we are certain to return to the long haul routes."
"Passengers booked on these routes will either be re-routed on South African Airways or offered a refund," says Jilly Holley, Regional Manager African Outstations for Virgin Nigeria.
» This article was originally published in Travel Industry Review, February 2009
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