15 January 2013

Tanzania: ATCL Must Handle Business Deals With Much Care


REPORTS that an Omani investment consortium plans to inject 100 million US dollars (over 160bn/-) in the ailing Air Tanzania Company Limited (ATCL), though good news, should be handled cautiously.

This is not the first time that the national flag carrier has entered into a business marriage with foreign investors.Initial plans to privatise Air Tanzania Corporation (ATC) in 1998 and fully merge it into Alliance Air failed, with Alliance Air, which served Dar es Salaam, Kilimanjaro and London's Heathrow airports from Entebbe, winding up business in 1999 due to heavy debts.

The privatisation plans were thus cancelled, keeping the airline as a state-owned.The government began another process of privitising the national airline in February 2002 through inviting potential local and international bidders, with South African Airways (SAA) emerging victorious in the competition. SAA signed an agreement with the government in December 2002, paying 20 million US dollars to acquire 49 per cent stake in ATC.

As a strategic partner, SAA had to create its East African hub in Dar es Salaam and form a 'Golden Triangle' between Southern, Eastern and Western Africa. It had also to introduce regional routes to the Middle East and West Africa.Unfortunately, SAA never honoured the agreement, resulting into a divorce that left the local airline more crippled than it was before the marriage with the South Africans.

It's highly disturbing and shameful at times that the national flag carrier is struggling to stay afloat amid cut-throat competition, often playing second fiddle to the likes of Precision Air and newly introduced Fastjet.The country's efforts to promote tourism, economists warn, are almost wasted, with international flights that account for over 40 per cent of tourists' spending going to foreign airlines--KLM, British Airways, Qatar Airways, Ethiopian Airways and Kenyan Airways.

The investment announcement has come when the airline is down to its knees. Yet, the potential investor has expressed hopes and determination of turning around the fortunes of the airline.Although details about the nature of the partnership between ATCL and the Omani investment consortium remain scanty, public expectations are that if sealed, the airline's business deal will this time around work and revive the airline to its former heydays.

Let all homework and caution be taken and checks and balances effected though to ensure a fair and equitable deal. We should not rush into things.

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