East African Business Week (Kampala)
Israel Mbonea
8 June 2009
interview
For the past five years Swissport Tanzania Limited has registered positive trends in terms of production and operational volumes. The CEO Swissport Tanzania, GAUDENCE TEMU talked to our reporter ISRAEL MBONEA. Read on.
Could you tell us the performance of Swissport Tanzania Limited?
For the past five years the company has registered positive trends in terms of production and operational volumes, financial performance as well as capital investments.
Five years ago 16,310 flights were handled annually compared to close to 17,000 currently whereas passengers handled five years ago were 541,909 compared to over 812,100 as of today. Some 17,124 tonnes of cargo were handled annually five years ago compared to close to 23,000 tonnes handled currently.
Annual turnover has increased from about TShs11.7 billion to about TShs17 billion. Net profit has increased from TShs2.16 billion to about TShs3.28 billion as per 2008 audited accounts. It is however worth to mention here that net results for 2008 were slightly lower compared to the year 2007, whereby increased operating cost and underperformance of some airlines caused the decline.
It may be recalled that Swissport International of Switzerland took over majority company ownership in 2000.
Following the subsequent company's listing at the Dar es Salaam Stock Exchange in 2002, market capitalisation has grown from TShs19.08 billion in 2003 to over TShs26 billion.
After changing the company name from Dahaco Ltd to Swissport Tanzania Ltd in 2005 the company gained a global identity; increased its reputation while delivering services at the international standards set by Swissport International.
In the last five years, the company has managed to invest in several new ground support equipment and maintained a continuous refurbishment plan to bring the status of some of the old equipment to "technically new." Over TShs1 billion is set aside every year for GSE investments.
A cold storage facility at Julius Nyerere International Airport was set up. Much as it is of a smaller scale than that of Kilimanjaro International Airport it has acted as catalyst to shippers of perishable produce to whom JNIA is the closest or most convenient gateway for exports.
Swissport Tanzania Ltd forged ahead with deployment of technology, by upgrades of departure control systems from Legacy X.25 connectivity to IP VPNS networks.
We have now introduced self-service kiosks making us pioneers in this region. Although passengers shun away from using them, the same has been the case elsewhere in the world as new technologies emerge and it is our belief people will get used to them.
We have just acquired an ambulift, the first one in the country. This is quite an expensive piece of equipment but we have been obliged to deploy it in order to ensure that passengers with reduced mobility are treated consistently and to a high standard. We are aware that safety, confidence and dignity are issues of concern to this category of passengers and we are happy to have been able to purchase it.
We have continued to maintain our standards based on ISO9001:2000 since our certification seven years ago. This year we have been passed for the upgraded ISO9001:2008 which is a higher version of the Quality Management System (QMS).
Our cargo handling system has been upgraded to a great extent to meet customer requirements and we are currently in the process of automating cargo routines at Kilimanjaro International Airport as we plan to migrate into Swissport's own cargo system known as Cargo Spot.
What was the impact of past year's suspension of ATCL's services?
Indeed ATCL [Air Tanzania Company Limited] had an impact on almost all stakeholders in aviation, not just Swissport alone. Reduction in the number of landings by ATCL resulted into a revenue decline to almost all service providers including airport operators.
However, Air Tanzania Company Ltd is not the only airline that has had unexpected performance. Air India stopped its operations to Tanzania in August 2008; Zambian Airways stopped operations end of last year; and some few other airlines either reduced their frequency or opted for smaller aircraft. Based on the unforeseen airlines' performance, we had to look into our revenue budget and plan how we accommodate the deficit which in this case means cost leadership and contingency plans among other steps.
ATCL had debts with fuel providers. Do you have similar issues related to airlines you serve?
Of course, as agents we provide ground handling services to airlines which in turn pay us for the services they receive. Air Tanzania was not an exception. Swissport Tanzania and ATCL can look back to a long relationship whereby ATCL was a founder shareholder of Swissport Tanzania before the company's privatisation in 2000.
The airline, being a national carrier that has a great support from the Government and the public, we feel it is our responsibility to provide it with the required support as well. In that vein, we do agree with ATCL on payment terms from time to time in case there are any overdue payments. This has always been the case and at this moment we don't have any outstanding amounts as their bills are all cleared.
As a customer-oriented company, we usually follow the same pattern with all airlines. As long as we agree and each party honours the agreement, we continue working smoothly and amicably.
How are you handling the implications of the global financial crisis?
Basically we should talk about 2008 which has been a tough year for the global aviation industry. First, the industry in general was hit by a sharp increase in oil price, which reached a peak of $146 per barrel in July 2008. High oil prices had an impact on the ground-handling cost directly and also indirectly. Directly in the utilisation of ground support equipment most of which uses of diesel and indirectly through the airlines because as they look at reducing ground operation costs or reducing their frequency to align with real passenger number demands, there results less ground handling.
It was the same year 2008 when we had to adjust the minimum wages to comply to the statutory requirements as required by the government which saw aviation and mining industry at the highest level. As a responsible company we had to abide and raised minimum wages as required.
The high fuel price chapter was followed by the global financial crisis in September 2008, triggering a severe global recession that the industry had not seen in recent years. For the aviation industry, generally speaking, there is a slight decline in statistics compared to the same period last year but we need to monitor closely before concluding that the global recession has had a strong impact on aviation in Tanzania.
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