The Center for Trade Policy and Development (CTPD) says it is extremely difficult to make profits in the aviation sector with African airlines expected to make a combined loss of about US$100 million in 2018.
The center says this is also coupled with slow economic growth in Southern Africa limiting passenger demand increases to 2-3% per year, below the 5% threshold needed to support a new entrant such as Zambian Airways.
CTPD Researcher Bright Chizonde says his organization therefore considers the move towards re-launching Zambia Airways at this present time a gamble that the country can ill afford.
Mr. Chizonde says Zambia should not forget that Zambia Airways previously went under due to a number of reasons, particularly due to lack of regional demand and financial mismanagement.
“There are those who believe that Zambia just needs a national airline for national and economic pride. Well, the current fiscal position of the nation does not allow for a massive experiment in the risky aviation industry at the expense of tax payers. Zambia is grappling with rapidly increasing debt, now about US$16 billion, and is currently implementing austerity measures,” he said.
Mr. Chizonde says South Africa is a classic example of the tax-revenue demands of running a national airline and the pitfalls to avoid.
He states that Zambia needs to consider whether it wants to end up increasing its current stock of public debt all in the name of national pride and whether the so-called economic benefits of re-launching the airline would outweigh these likely costs.
“CTPD conducted a study focusing on Zambia’s plans to relaunch a National Airline and unveiled a number of lessons from other countries like South Africa, Malawi and Ethiopia on the potential risks and success prospects of running a national airline. In light of Zambia, through the Industrial Development Corporation and the Ministry of Transport and Communication, proceeding to establish a Board of Directors, appointing a Chief Executive Officer (CEO) and postponing the launch of Zambia Airways, yet again, to the third-quarter of 2019, it is important to consider how other African countries have fared in the aviation industry,” he said.
“South African Airways (SAA) is one of the Largest Airlines in Africa with about 50 aircrafts, including the Airbus A319, A320, A340 and Boeing 737 airplanes. SAA was established in 1934 and in terms of operations the airline has been making losses since 2011, with losses amounting to US$127million in 2016 and US$475million in 2017. Consequently, SAA has been bailed out by its government to the tune of US$1.2 billion in 2018 alone and it has been estimated that the airline will need a further US$1.8 billion to remain operational till 2021 when it is expected to breakeven. Would this be a path Zambia would want to take? What are the reasons behind these losses and what can Zambia learn from them,”
Mr. Chizonde says there is need to have measures that assures that there will be prudent use of resources that are channeled towards the airline.

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