A local economic think tank says the decision to re-launch Zambia Airways is not prudent due to the current macroeconomic situation.
Ethiopian Airlines signed a shareholding agreement with Zambia’s main development agency to relaunch the southern African country’s flag carrier at an initial cost of US$30 million.
But the Center for Trade Policy and Development says Zambia should shelve plans to relaunch a national airline as the venture may worsen Zambia’s economic challenges in trying to keep it afloat.
CTPD Lead Researcher Bright Chizonde says with a government stake of 55 percent, the airline is not likely to be autonomous.
Mr. Chizonde is recommending a swap of stakes in order to enhance autonomy of the national airline.
He says Zambia Airways will most likely not be able to post profits within the first 3 years of operations as anticipated by the stakeholders.
“Zambia has limited maintenance facilities and will have to get the comprehensive service from Ethiopia or South Africa. With a mixed board and management comprising of both Zambians and Ethiopians, Zambia Airways is likely to have an improved management and technical assistance,” he said.
Mr. Chizonde said the plan to launch domestic flights, regional flights and intercontinental flights when the airline only has regional strategic location is likely to lead to losses.
He added that Zambia Airways is likely to have a small market share of the regional and intercontinental market due to market competition and that it is however likely to dominate the domestic market at the expense of private domestic airlines.
“Zambia has a lot of home work to do looking at recent track records such as the 2017 Auditor General’s report and the Financial Intelligence Trends Report. The launch of a national airline is likely to crowd-out the emerging private airlines with possibilities of some closing down operations. There has been limited consultations with the private sector in implementing this decision,” said Mr. Chizonde.
He is of the view that Government can finance the venture through borrowing or domestic resource mobilization adding that this is likely to lead to reduced expenditure towards social services or increase the debt burden on the Zambian tax payers, or both.
Mr. Chizonde stated that Zambia has a relatively high cost of aviation fuel and cost of doing business and is therefore likely to translate into a high cost of operation.

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