Air Tanzania

Air Tanzania

File:ATCL Logo.PNG
IATA ICAO Callsign TC ATC TANZANIA
Founded	11 March 1977
Commenced operations	1 June 1977
AOC #	001
Hubs	Julius Nyerere International Airport
Fleet size	1
Destinations	5
Parent company	Government of Tanzania
Headquarters	ATC House, Dar es Salaam
Key people	Lusajo Lazaro (Ag. CEO)
Total equity	TZS 13,399.684 million
Website	airtanzania.co.tz

Air Tanzania Company Limited (ATCL) (commonly known as Air Tanzania) is the flag carrier airline of Tanzania based in Dar es Salaam with its main hub at Julius Nyerere International Airport. It was established in 1977 after the dissolution of East African Airways and has served a variety of domestic, regional, and intercontinental destinations. Its history, however, has been marked by an aborted privatisation, dysfunctional alliances, and a controversial aircraft leasing contract. Despite being the flag carrier, it flies only a few intermittent domestic routes that are dominated by its Tanzanian competitors.

History

Formation and initial years of service

File:ATC Logo.png

Logo of Air Tanzania Corporation

An ATC Fokker F27 at Moi Airport

The Air Tanzania Corporation (ATC) was established on 11 March 1977 after the breakup of East African Airways, which had previously served the region.

Initially, the airline leased one Douglas DC-9-32 (5Y-ALR) from Kenya Airways and one Boeing 707-331 (YN-BWL) from Aeronica. International and domestic flights were then upgraded by adding two Boeing 737-200s, four Fokker F27s, and four de Havilland Twin Otters.

In 1980-81, the airline operated international flights from Dar es Salaam to Athens, Antananarivo, Bujumbura, Cairo, Frankfurt, Kigali, London (Gatwick), Mahé, Maputo, Mauritius, Moroni, Mumbai, Muscat, and Rome. Domestic destinations served were Bukoba, Dodoma, Iringa, Kigoma, Kilimanjaro, Kilwa, Lindi, Mafia, Masasi, Mbeya, Mtwara, Musoma, Mwanza, Nachingwea, Njombe, Pemba, Songea, Tabora, and Zanzibar.

In May 1991, Air Tanzania began operating a Boeing 767-200ER that it leased from Ethiopian Airlines, but this aircraft proved to be too large and was returned to the lessor in February 1992. Regional services were reduced in this period and the Twin Otter was also disposed of.

Alliance Air

Alliance Air B747SP

In 1994, Air Tanzania joined with Uganda Airlines and South African Airways (SAA) to form Alliance Air. Air Tanzania had a 10 percent stake in the venture. Flights operated from Dar es Salaam to London–Heathrow via Entebbe on a Boeing 747SP initially, and then a smaller Boeing 767-200. This venture ceased operations in October 2000, after accumulating losses of about US$50 million.

The losses had been funded by Transnet, the parent company of SAA, through April 2000. When Transnet refused to continue funding the deficit, Air Tanzania accused SAA of using Alliance Air "as a Trojan Horse to take over national airlines in the region".

Privatization

A leased ATC B767 near Gatwick Airport in 1991. This aircraft subsequently crashed in 1996

Since its creation, Air Tanzania had been wholly owned by the Tanzanian government via the Air Tanzania Corporation (ATC). In February 2002, the government began the process of privatizing ATC through the Presidential Parastatal Sector Reform Commission. Advertisements were placed in the local, regional, and international media inviting potential bidders. The International Finance Corporation advised the government in this transaction.

The government had approved a transaction structure that included:

• Creation of a new company, Air Tanzania Company Limited, which would be incorporated as a limited liability company, under the Companies Act to take over the operating assets and specified rights and liabilities of ATC.
• A second new company Air Tanzania Holding Company would be created to take over the non-operating assets and all other liabilities of ATC.

Eight airlines submitted Expressions of Interest:

• Aero Asia International (Pakistan)
• Air Consult International (Ireland)
• Comair (South Africa)
• Gulf Air Falcon (United Arab Emirates)
• Kenya Airways
• Nationwide Airlines (South Africa)
• Precision Air (Tanzania)
• South African Airways

Of the eight, four airlines carried out due diligence – South African Airways, Kenya Airways, Comair, and Nationwide Airlines. By 19 September 2002, the bid deadline date, only SAA had submitted a bid. Kenya Airways and Nationwide Airlines had informed the government that they did not intend to submit bids.

Partnership with South African Airways

ATCL logo under SAA management

An ATCL B737 at OR Tambo International Airport

The Tanzanian government selected South African Airways (SAA) as the winning bidder. After signing an agreement with the government, SAA in December 2002 purchased a 49 percent stake in Air Tanzania Company Limited (ATCL) for USD 20 million. USD 10 million was the value of the government's shares and the remaining USD 10 million was for the Capital and Training Account for financing Air Tanzania's proposed business plan.

As the strategic partner, SAA planned to create its East African hub in Dar es Salaam to form a "Golden Triangle" between southern, eastern, and western Africa. It also intended to replace ATCL's fleet with Boeing 737-800s, 737-200s, and 767-300s. It also planned to introduce regional routes, including routes to the Middle East and west Africa. The government was expected to sell 10 percent of its 51 percent stake to a private Tanzanian investor, thereby reducing the government's ownership to a non-controlling interest in ATCL.

The new Air Tanzania airline was launched on 31 March 2003, offering direct flights between Johannesburg and Dar Es Salaam, but also to Zanzibar and Kilimanjaro.

Air Tanzania recorded a pre-tax loss of almost USD 7.3 million in its first year following privatisation. The loss was attributed mainly to the inability to expand the network as quickly and extensively as originally planned. It had been hoped to launch services to Dubai, India, and Europe, but these were delayed as Air Tanzania had only Boeing 737-200s in its fleet. The development of Dar es Salaam as an East African hub for the SAA alliance had also not proceeded as quickly as planned.

Air Tanzania suspended on 31 January 2005 one of its few regional services, Dar es Salaam to Nairobi, following intense competition from Kenya Airways on the route. The airline, however, reaffirmed its intention to launch long-haul services within a year from Dar es Salaam to Dubai, London, Mumbai, and Muscat.

Dissolution of partnership

The Tanzanian government announced on 31 March 2006 that it would dispose of ATCL following four years of losses, which amounted to TZS 24.7 billion. The director- general of the Tanzania Civil Aviation Authority, Margaret Munyagi, said "Air Tanzania was in a worse state than before it was taken over by SAA." SAA, however, claimed the Tanzanian government was "not serious" for failing to release about USD 30 million, which was needed to implement Air Tanzania's business strategy to reverse continued losses.

On 7 September 2006, the Tanzanian government bought SAA's 49 percent stake in ATCL for USD 1 million, hence officially terminating its partnership with SAA. The venture collapsed due to the partners' different interests in the business.

2007 – present

After the partnership between Air Tanzania and South African Airways (SAA) was officially terminated, the government set aside TZS 13 billion for Air Tanzania to start using its own ticket stock (number 197) instead of the stock of SAA (number 083), changing revenue systems and fuel services, preparing e-ticketing and accounts systems, using a new trademark, and clearing outstanding debts. President Jakaya Kikwete appointed Mustafa Nyang'anyi, a veteran politician and diplomat Ambassador, as the board chairman, and former Parastatal Pensions Fund director general David Mattaka as managing director and chief executive officer.

From 1 July 2007, ATCL started using its own ticket stock. In mid-July, the airline started using electronic ticketing as required by the International Air Transport Association.

The Parliamentary Committee on Economic Infrastructure expressed its concern about no funds being set aside for ATCL. According to the opposition, the airline has debts amounting to USD 4 million due to SAA. A member of the National Assembly of Tanzania also asked the government to claim compensation from SAA for taking aircraft spare parts from the Air Tanzania hangar at the Kilimanjaro International Airport to South Africa.

In August 2007, Air Tanzania selected the Revenue Accounting Bureau Service offered by Mercator, the airline IT solutions provider of the Emirates Group. The airline was promised significant benefits. Revenue would be enhanced through accurate billing and verification, accounting costs would be lowered, productivity would be raised, and training costs would be eliminated.

Air Tanzania was relaunched in September 2007 after the dissolution of the partnership with SAA. The new brand represented the company's name, Mount Kilimanjaro and the airline's international destinations. The introduction of the airline's new logo bears the image of the imposing giraffe – Tanzania's national icon, to replace the South African Airways flag symbol.

On 1 October 2007, the revamped Air Tanzania made its inaugural flight on the Dar es Salaam to Mwanza via Kilimanjaro route.

In December 2008, the Tanzania Civil Aviation Authority (TCAA) withdrew Air Tanzania's Air Operator Certificate because the airline had failed to meet the standards of the International Civil Aviation Organization. Two weeks later, the International Air Transport Association banned the air carrier from all aviation transactions and informed all travel agencies and other aviation companies to stop all transactions with Air Tanzania pending further notice. The certificate was restored in January 2009, with both the TCAA and Air Tanzania claiming there had never been any doubt about the airworthiness of its aircraft.

In 2009, Air Tanzania flew 60,018 passengers, while Precision Air moved 583,000 passengers and Coastal Aviation 141,995 passengers.

Press reports in July 2010 indicated that Air Tanzania was in serious discussions with Air Zimbabwe to establish extensive and substantive management collaborative arrangements. Both airlines were reported to be in search of strategic partners to shore up their operations, which had been in decline over the past decade.

Air Tanzania was effectively grounded in March 2011 after its sole remaining operational aircraft, a Bombardier Q300, was sent to South Africa for heavy maintenance. Air Tanzania resumed flying in November 2011 following the return of the aircraft. The maintenance cost USD 1 million, but other accumulated expenses brought the total bill to USD 3 million, which the Tanzanian government paid in September 2011.

News media reported in November 2011 that Air Tanzania had leased a Fokker 28 aircraft from JetLink Express on a standby basis in case its only operational airplane is incapacitated. More aircraft would be procured over the next several months and years, according to the airline's business plan shared with the media.

On 21 November 2011, Air Tanzania began negotiations with Export Development Canada (EDC) to explore how EDC could assist the airline to acquire more aircraft from Bombardier, a Canadian airplane manufacturer. Under its five-year plan, the airline planned to increase its fleet size to nine aircraft.

AeroVista leased a Boeing 737-500 to Air Tanzania on 29 March 2012 to enhance the airline's service delivery in the short-term. In early August 2012, Air Tanzania suspended the contract with AeroVista and returned the aircraft. The only other aircraft in the fleet, a Bombardier Q300, was stored for maintenance, which caused the airline to suspend operations and rebook passengers to other carriers.

Air Tanzania returned to the skies on 12 October 2012 with a 32-year old Boeing 737-236. The aircraft, ZS-SVV, is being leased for three months from Star Air Cargo in South Africa. ZS-SVV arrived in Dar es Salaam on 11 October 2012 in Air Tanzania livery and started operations the following day as flight TC108 to Mwanza.

Air Tanzania restarted operations to Kigoma on 10 January by using its Bombardier Q300 (5H-MWF). The airline has plans to begin operating flights to Arusha, Songwe, Zanzibar, and Mwanza.

In January, the chairman of Al Hayat Development and Investment Company, Sheikh Salim Al-Harthyan, announced plans for an Omani investment corporation to invest USD 100 million in Air Tanzania. The money would be used to build an airline training centre and offices for Air Tanzania, buy aircraft, and engage in other development activities that would begin before the end of 2013.

On 8 February, Air Tanzania restarted operations to Mtwara by using its Bombardier Q300 (5H-MWF).

Corporate affairs

Ownership

Air Tanzania is wholly owned by the Government of Tanzania. As of 30 June 2011, its share capital was about TZS 13.4 billion.

Business trends

Financial and other figures for Air Tanzania are not formally published on a regular basis, and (as at February 2012) their accounts for 2008, 2009 and 2010 are still "in discussion with the auditors". Based on various press reports, government documents and statements by officials, recent trends are:

	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012
Turnover (TZS b)	39.6
Turnover (US$ m)	37.7
Pre tax Profits/Losses (TZS b)	−8.7	−9.3
Net Profits/Losses (US$ m)	−7.3	−7.7
Number of employees						300+
Number of passengers (000s)			267	246	295	207	60
Passenger load factor (%)
Number of aircraft	2	2	2	2	2	2	1			2
Notes/sources

Destinations

As of June 2013, Air Tanzania serves the following airports:

Codeshare agreements

In May 2008, Air Tanzania signed a codeshare agreement with Air Uganda on the Entebbe–Dar es Salaam route. As of June 2013, however, the agreement does not appear to be active.

Interline agreements

Air Tanzania has an interline agreement with RwandAir.

Future plans

The airline has plans to add new flights to Arusha, Mbeya–Songwe, Mwanza, and Zanzibar after its acquisition of a new aircraft later in 2013.

Fleet

The damaged Boeing 737 (5H-MVZ)

As of June 2013, the Air Tanzania fleet includes the following aircraft:

Air Tanzania Fleet

Aircraft	In Service	Orders	Passengers	Notes
Bombardier Dash 8	1	–	50
Total	1

Accidents and incidents

• 1 March 2010: An Air Tanzania Boeing 737-200 (5H-MVZ) skidded off a wet runway while attempting to land at Mwanza Airport. Its nose wheel collapsed and its hull and righthand engine were damaged, but no injuries were reported. The aircraft proved too expensive to repair and is stored in Mwanza pending resolution of a claim with the airline's insurer.

• 8 April 2012: An Air Tanzania de Havilland Canada DHC-8-311Q (5H-MWG) crashed while trying to take-off at Kigoma airport. No one was injured, but the aircraft was irreparably damaged.

External links

• Official website
• Air Tanzania fleet
• Air Tanzania history