in Air Transport / Features

Reborn free...

Posted 5 March 2018 · Add Comment

Air Tanzania is going through a dramatic rebirth, reinventing itself with a new fleet and a business-focused culture. Victoria Moores caught up with the airline’s CEO and managing director, Ladislaus Matindi, to hear about the rapid transformation.

Henry Ford once said: “Failure is the opportunity to begin again more intelligently.” This is precisely the reinvention that Air Tanzania is pursuing under the leadership of CEO and managing director, Ladislaus Matindi.
When Matindi was asked to come in and run Air Tanzania in 2016, the airline had just one aircraft – an old and unreliable Bombardier Q300 – and a mountain of debt. “I won’t disclose how much the debt was, but it was huge enough to make me think twice about accepting the job,” Matindi said.
The airline had made losses year after year and was in bad shape, but when John Magufuli took office as president of Tanzania in late 2015, he decided enough was enough. The government started investing in Air Tanzania again, wrote off the airline’s debts and brought Matindi in as CEO in October 2016.
“It was like starting a clean airline, putting a new one in the old boots,” Matindi said. “Reborn, that is the word. We have new management, new investment, everything is new.”
When Matindi took office, the terms and conditions were two-way. “I gave them conditions,” he said. “I told them that if you liberalise the airspace, open up and make sure there is no government interference, I will make money. The most important message is, ‘let’s make this airline run as a business first’. This is a new, commercial airline, not a government department.”
To understand where the airline is now involves going back to its roots.
Dar es Salaam-based Air Tanzania was created in 1977, after East African Airways – the joint carrier of Kenya, Tanzania and Uganda – was dissolved. Air Tanzania went on to build up a variety of domestic, regional and intercontinental destinations and, in 2002, South African Airways (SAA) took a 49% stake alongside the Tanzanian Government’s 51% shareholding. That partnership was dissolved after just four years, in the face of mounting debts.
“We didn’t see why we should continue the marriage [with SAA]. It wasn’t working. Then we lived in anticipation of finding another strategic investor, but we were too cautious after the failed marriage, trying to make sure we didn’t make the same mistake again,” Matindi said.
Instead of waiting on a new spouse, Tanzania decided to invest in a single life for Air Tanzania. The government is now committed to reviving the airline in its own right, under a five-year strategic plan aimed at giving Air Tanzania the capacity to compete.
During the African Airlines Association (AFRAA) annual general assembly (AGA), former Ethiopian Airlines CEO, Girma Wake, said African airlines have a habit of using their business plan as a decoration for their office wall, rather than as a working blueprint. Air Tanzania’s strategy is no office ornament. Matindi described Air Tanzania’s business plan as a talking paper. “It speaks to us and tells us what to implement and achieve,” he said.
The government is 100% serious about getting the airline back on track and the business plan has spoken. Within two years, Air Tanzania will transition from a single geriatric Q300, to proudly flying a brand-new fleet of three Q400s, two CSeries CS300s and up to two Boeing 787s.
As of November 2017, Air Tanzania was still flying the elderly Q300, but two new Q400s had already arrived. When the third and final Q400 comes – it is expected imminently – Matindi will make a call on whether to retire the Q300. “It is getting old. In fact, it is old,” he says, laughing, “and the operating costs are high. We kept it, because we only had two other aircraft and we thought the schedule needed back-up. We will evaluate it once the third Q400 arrives, based on our schedules and our plan.”
Before Matindi joined in 2016, Air Tanzania flew to just four domestic destinations – Kigoma, Kilimanjaro, Mwanza and Zanzibar – and one international route, Hahaya in the Comoros. This has rapidly grown to 11, with the addition of domestic flights to Bukoba, Dodoma, Tabora, Mbeya, Mtwara and Songea.
Within 10 months, passenger numbers more than doubled from around 40,000 in October 2016 to more than 103,000 as of July 2017. Matindi said Air Tanzania’s domestic market share has shot up from 4% to around 23% within that 10 months, gaining a foothold against local rivals Fastjet and Precision Air.
By the close of 2018, Matindi was hoping to add three to five more destinations, extending Air Tanzania’s network to include routes to Burundi, Kenya, Rwanda and Uganda.
“We have to get used to international competition. We are now confined to the domestic environment, but our people only have a short time until July, when we start getting our international fleet. Long-haul and intercontinental flights need a new way of thinking and doing business. We have to expand our wings beyond the traditional markets that we have been operating in,” Matindi said.
In June 2018, the airline will receive two CS300s and a 787. Work is already under way to firm up Air Tanzania’s option on a second 787.
The CS300s will be used to open five or six international destinations, targeting Air Tanzania’s traditional markets of Ghana, Nigeria, Senegal, Johannesburg (South Africa), Zambia and Zimbabwe, as well as one or two Middle East destinations. Meanwhile, the 787s will be deployed on intercontinental routes to China and India, followed by Europe in a second phase.
“We still have some work going on, but it is much more about our market-entry strategy, fine-tuning what we have already agreed so that, when we start, the possibility of failure is minimal,” he said.
But how will Air Tanzania fill the aircraft? “Our business plan tells us what to do. We have theories about how we will fill them. We know it is not an easy plan and strategy, but we adopted it knowing we have that capacity. Tanzania is a country with enormous tourism potential – if we work hard and have a good plan, that number will be within reach without any problem.”
One part of that strategy involves partnerships and traffic feed, although Air Tanzania needs to prepare itself for that level of corporate dating. In the first quarter of 2018, the airline is aiming to go through an IOSA audit to make it a more attractive match, before the larger aircraft start arriving. “Today, an airline can’t do without those commercial arrangements. It is a must to have greater outreach to lower operating costs,” Matindi said.
Air Tanzania’s greatest challenge has been the shift from the old mind-set and patterns of behaviour to a new way of doing business. “They say a culture change takes a minimum of three years, but I can see our people understand that this is a new airline, a new philosophy.”
Likewise, the government has a completely new approach. Matindi said Air Tanzania used to be “a tool for generating debts”, but Tanzania’s new president insists that the airline must be run as a business. Nobody has the right to interfere with the running of Air Tanzania – not even his wife.
“This gave a very strong message, which was confidence-building for me,” Matindi said. “I have bad memories of how we failed. I know how good projects, like Air Afrique, went down. They didn’t fail because of the competition, they failed for man-made reasons. You can facilitate an airline to be inefficient, not to be efficient.”
And, while Air Tanzania is still loss-making, the draft numbers for the latest financial year are on the right track.
“It is still a work in progress. We have achieved a lot, but things won’t change overnight. We have given ourselves five years minimum to break even, because when you invest in six or seven aircraft, it’s not easy to get the money back within a short time. The most important thing is the trend towards our business performance milestones; it’s very important that they’re not delayed. I don’t want to see us going back where we have come from,” Matindi said.
 

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