Zambia Airways relaunch should be shelved – CTPD
Government should shelve plans to relaunch the forthcoming Zambia Airways in 2019 because the chances of success are slim, the Centre for Trade Policy and Development (CTPD) has insisted.
According to research compiled by the CTPD’s lead researcher, Bright Chizonde, the much-anticipated national carrier, which is due to be introduced in the first quarter of 2019, is likely to fail on account of the non-favourable conditions Zambia finds itself in.
Chizonde outlined in a detailed analysis that out of 15 factors, only three are favourable towards making Zambia Airways a success.
He explained that the three factors favouring the national carrier were Zambia’s structure of the economy, with a massive service sector geared to support the airline; training facilities, offered by the Zambia Air Services Training Institute (ZASTI) and management and technical assistance as the new airline is poised to have a mixed board and management comprising of both Zambians and Ethiopians.
The comprehensive analysis, however, exposes 12 major factors that could lead to the national carrier’s failure to remain viable and sustainable, which include: Zambia’s size of the population, with a small middle-class; size of the economy, whose Gross Domestic Product (GDP) is less than US $30 billion, compared to Ethiopia’s US $81 billion, or South Africa’s US $349 billion; lack of airline autonomy given government’s 55 per cent stake; limited maintenance facilities; business model and limited market share.
Other factors Chizonde pointed out include: no private sector participation; government’s fiscal capacity to finance the ambitious joint venture and high cost of operations remained unfavourable, while poor financial management of public funds; the country’s strategic location and the profitability of the airline all remain inconclusive.
He, therefore, concluded that the grand plans to relaunch the national airline in 2019 should be shelved.
“Based on this and other forms of analysis employed in the study, CTPD concludes that the decision to relaunch Zambia Airways is not prudent due to the current macroeconomic situation. The Zambian government is seeking to pursue fiscal consolidation in order to reduce the accumulation of public debt and to achieve major macroeconomic goals,” stated Chizonde in a press release.
“Considering the slim chances of success, the high risk associated with aviation and the capital intensiveness of the industry, we are of the considered view that Zambia should shelve plans to relaunch a national airline as the venture may worsen Zambia’s economic challenges in trying to keep it afloat.”