Air Botswana privatisation � wise or bad move?
Correspondent | Friday April 28, 2017 15:23
It is therefore on the back of this that I must say my piece. Setswana sa re mmualebe……
The Government of Botswana has once more, sent out an expression of interest to privatise Air Botswana, the national airline. At the centre of this privatisation is the notion that the national airline has not been performing well and drains Government funds by being bailed out every financial year.
The fact that Air Botswana has been performing badly is not disputable by any means, neither too are the facts that have led to Air Botswana’s poor performance over a long while now. The Government of Botswana must honestly answer a host of questions and engage in some serious soul-searching, or thorough post mortem before handing the national airline to some profit-driven companies; with motives, agendas and mandates that may run parallel to Botswana as a country. Is Air Botswana’s privatisation, a wise or bad move? Is the Botswana government, and the citizens at large, aware of the long term implications of this move?
For example, let us assume that the buyer/s of Air Botswana find it tough going later, and opt to completely shut down; does the Government and the people of this country have any idea of the huge expenditure and expertise required to form another airline? The few above questions and so many more not mentioned, need to be honestly addressed. Privatising Air Botswana in haste will surely hurt the country later, if not now. Air Botswana by definition is a very small domestic airline/operator, with four turbo-propeller aircraft, no complex route structures and less than eight destinations.
Compare this with say, Ethiopian Airlines’ 85 aircraft and 85 destinations across five continents; Kenya Airways’ 34 aircraft and 62 destinations! These two airlines are not only major players in Africa, but the whole wide world and for the readers' interest they too, like Air Botswana, are owned by their respective Governments.
So now begs the question, what is so wrong at our beloved national airline? Like most airlines in Africa, Air Botswana has been hit by the same bad management curse that brought down the likes of Zambia Airways, Air Malawi, Air Zimbabwe, Air Gabon to mention but a few. The national airline has been plagued by very bad leadership for a long time and this has really been the status quo from as way back as the 1990s. Now, fast forward to current situation, where staff is demoralised, with executive team of below par divisional heads, headed by a General Manager with no idea whatsoever about aviation and supported by a less informed Board. The combination of all these can only result in what is witnessed now. A performance disaster! As pointed above, Air Botswana has been poorly run for many a years, resulting in great losses. Year in, year out, millions of State pulas were injected into Air Botswana. The Government has been aware of the root cause of this performance and in some way may have wittingly or unwittingly supported it. Aircraft like the BAe 146 –100, ATR 72-500 and most recently, the Avro RJ85 were purchased with no proper fleet acquisition plans. These aircraft did not fit the Air Botswana route network plans at all. The reader may ask, how then were these aircraft purchased? The recommendation to purchase them was done by the relevant General Managers, duly supported by the Board and the Ministry of Transport. No one is ever held accountable for the mess at Air Botswana!
Corporate governance at the national airline has been on decline through different management regimes and still without any consequences or accountability. Why does it appear like Air Botswana management regimes over the years, have been permanently allowed to act with such impunity? For any business to survive or thrive well, the fit for purpose tools/equipment and skilled workforce are mandatory. This analogy has not held true with, and in Air Botswana’s case. Some of the non-performance can be traced to bad aircraft purchase and operation strategies.
ATR 72-500 purchase
Air Botswana purchased two ATR 72-500 turbo props in 2007. These aircraft are underpowered to operate at airfields (Airports) with high elevation and high temperatures like ALL airfields in Air Botswana route network. This results in the aircraft pay load drastically being reduced, which necessitates offloading of some passengers and baggage. Worst yet, this type of aircraft has an extremely poor performance when flown on one engine in case of failure of the other engine.
BAe 146 – 100 and BAe
Avro RJ85 purchase
In the 1990s the BAe 146 – 100 was introduced to operate the Gaborone – Nairobi route as one of Air Botswana route, until they realised that it did not have the fuel range to achieve that. The airline was also shocked by the BAe 146’s high operating and maintenance costs.
As proof that lessons never seem to be learnt at Air Botswana, two additional second-hand BAe Avro RJ85 (later models of the BAe -146) were purchased in 2012. These operated for only two years and were then parked and abandoned….reason?
Yes, you might have guessed right, high operational and maintenance costs! These were just recently sold and for a song, I hear! Of importance also, the reader will be interested to know that by the time these Avro RJ85s were bought, BAe Systems, the manufacturer of these aircraft, had ceased building them years ago, and most airlines were disposing of them. How Air Botswana believed any good was to come from this kind of deal baffles the mind. The purchase of the two ATR 72-500 and BAe Avro RJ 85 was done defiantly against professional advice!
The Wet lease strategy
Besides these bizarre aircraft purchases, Air Botswana management, for years has been fond of wet leasing unsuitable aircraft to deploy on their routes and at exorbitant rates. This extremely expensive practice is still prevalent at Air Botswana today. Aircraft wet leasing is a high expenditure exercise, that set-ups like Air Botswana should steer well clear off, more so that the flown revenue from these wet leased aircrafts more often than not fails to pay for their lease.
The wet leased aircraft ranged from obsolete machines such as the Dakota DC -3 (first flew in 1935), Hawker Siddeley HS 748 (first flew in 1960), Boeing 737–200 (first flew in 1967). They currently have on wet lease, a Bombardier CRJ 200 - a 50-seater jet, with a higher fuel consumption to the ATRs, which surely is not economical to operate on Air Botswana route network.
The readers may ask themselves then, just like me, on what basis does the Air Botswana board and management approve such controversial deals? Deals that do not make any business sense whatsoever, but instead keep digging the airline deeper and deeper into the red hole? And since the Ministry of transport, “the principal”, is not made out of aviation professionals- who then is their adviser? What is their motive? Air Botswana has the potential, and this is proven by the interest in the likes of Comair and some people in the country as the media published. Can a state-owned airline run efficiently and profitably? Yes it can, with good aircraft, sound and knowledgeable management.
Ethiopian Airlines has done it for years! Most airlines are state-owned and usually referred to as national or flag carriers. Their mandate is simple, to provide air connectivity within their respective States and across borders at reasonable fares. Their operation is to drive the country’s economy through supporting other industries. The airline is expected to achieve this by operating efficiently, to break even, NOT to make profit as some people may believe.
Let us touch on a few pointers regarding the few (media mentioned) potential bidders or those that showed interest in purchasing a stake in Air Botswana.
Comair, South Africa.
Batswana must be told truthfully what Comair SA is, a set up that seemingly is not happy or content with who they are, and instead operate under the full livery and colours of British Airways. Their aircraft are painted in the colours of British Airways, for marketing purposes, we are told.
Comair Air’s motive to buy Air Botswana may be far deeper than the Botswana government believe or know. My hunch tells me that they may simply be after Air Botswana’s Air Operating Certificate (AOC), which would allow them to attempt operation of certain routes from Gaborone.
These routes may not be in the best interest of Botswana as a country. History never lies- ask the Tanzanians, Swatis and Basotho what happened when they allowed the South Africans to infiltrate their national airlines? The question now is, should Batswana be all smiles to hand over their national airline to such an entity? I doubt!
We as a nation, have to retain some pride and national identity. Some things in life are worth much more than money!
Local Businessmen
I heard with dismay, the Honourable Minister of Transport in an interview, stating that certain businessmen had relevant experience to run/manage Air Botswana, apparently because they own and operate business jets. This is shocking, and it would be criminal for some us, with aviation knowledge and experience, to let this pass unchallenged. These businessmen do not own and operate any commercial airplane such as operated by any airline in the world.
They instead own small private business jet/s, (probably not even registered in Botswana). How can owning a private small single pilot business jet qualify one to run/operate an airline? The design and purposes are different. Yes, they are both aircraft, but that is as far as the similarities end.
Airline operation is much more complex. It is a public air transport that runs a regular schedule, for commercial purposes, whereas business jet ‘hops’ the owner between places to conduct their personal business. Both may be under the international Civil Aviation Organisation (ICAO), however the certification, and rules and regulations governing commercial airlines differ vastly. For an airline such as Air Botswana to function, it is necessary to have a fully-fledged Flight Operations department, Engineering division, Ground services division, Commercial and Marketing, Finance division and Legal division.
These departments each have reasonable numbers of staff, and all with department heads. The above listed airline divisions all play their crucial roles, in a complex system, albeit with different levels of importance. These divisions, which can be likened to “Mini” companies serving the parent company, all work in a complex system to efficiently and safely fly the passengers to their destinations.
These departments have to deal with on-time performance, passenger comfort, flight delays, inflight services, passenger safety, passenger complaints, lost baggage, flight rescheduling, schedule recovery, adherence with CAAB and ICAO rules and regulations regarding air public transport. And all this is done in the best interest of customer satisfaction. On the other hand, the business jet owner is only concerned about themselves, so basically none of what stated above applies to them.
One of the important features of an airline, if not the most, is the condition of the aircraft, both exterior and interior. The current aircraft in the Air Botswana's fleet have aged. Like any other machine, the ageing factor not only affects appeal to the traveller, equipment optimisation is reduced, operating costs sky rocket, and above all, reliability is impaired.
Aircraft by nature are very expensive assets to purchase and operate. This is the quagmire that Air Botswana management and the Government of Botswana find hard to navigate.
The solution, just like many airlines of the world is to DRY LEASE aircraft and not purchase them. Dry leasing is an act of leasing an aircraft without all the operating crew, which therefore entails the lessor to utilise their own air crew to operate the aircraft and use their engineers to carry out maintenance duties.
What aircraft type should the Airline consider, acquire and fly? Air Botswana is a small domestic airline, which is suitable for a country of only two million inhabitants. The route network and passenger numbers can ideally be supported by use of turbo-propeller type of aircraft. There are only two turbo-prop manufacturers, who can supply this size aircraft for the likes of Air Botswana and a comparison of the two.
Avions de Transport Regional - ATR with its ATR 42–600 and ATR 72–600 aircraft
Even though the ATR 42 was a good and reliable aircraft, it became a bit small as passenger figures increased over the years and could not allow for much growth. The ATR 72 on the other hand, is not at all suitable for Botswana’s environment. We tried it and it failed dismally. It just simply cannot handle the high airfields elevation and high temperatures.
Bombardier - Dash 8–Q 400
With the challenges faced by ATR 72’s, the only other viable option for consideration is the Bombardier Q400, which is a capable machine to operate with full loads in and out of any airfield in Botswana, neighbouring countries. It flies at almost jet speeds. It also has the lowest fuel consumption per passenger of any turbo-prop in the industry. Leasing only three brand new Bombardier aircraft will be sufficient to cover the whole Air Botswana route network. With dry leasing, the Government will not be required to come up with millions to purchase new aircraft. I am aware that there is a school of thought that reckons Air Botswana has an advantage by keeping to ATR. The main reason furnished being that the company as a whole is used to the aircraft. This is such a simplistic view of this particular subject.
These people forget, or are oblivious of the fact that the ATR, as an aircraft, was introduced into Air Botswana to replace another type of aircraft, the Fokker 27. Aircraft deals today, including dry lease, will provide for the training of essential staff i.e. pilots, cabin crew, aircraft engineers, ground handling staff, as part of the package. Air Botswana should not get stuck or remain very loyal to a type that does not serve it well. This is partly the problem, route network-wise, why the airline has been struggling. World airlines out there, including the majors, do change from one aircraft type to another, precisely for the same reason/s stated above. Change can be a very good thing ….
On a parting note, I sincerely believe that Air Botswana can be resuscitated without spending too much money. In the very least, it would be prudent, to first turn Air Botswana around, so that its true value will be realised when it is privatised, provided privatisation is the absolute remedy. Privatising any entity when it is at its lowest financial performance is so counterproductive.
The solution is very simple, and has always been. Air Botswana desperately needs restructuring- a good and aviation experienced General Manager, capable and knowledgeable heads of department and an enlightened Board of directors to efficiently guide. And with the general staff, only retain the right numbers purely based on operational requirement and performance. The over-simplification of roles has to stop. Experts, or at least trained personnel, must be engaged at all times in running such organisations. This will at least begin to address some of the blatant bad decisions in both strategies and the choice of aircrafts used. The General Manager must be capable of driving the airline's key departments of Flight Operations, Engineering and Ground Services to operate at their optimal performance. An individual who can curb the huge wastage from departments such as catering. An analytical mind to guide and influence, route choice and strategy, route network performance based on equipment type, equipment optimisation, break even passenger schedule strategy. A General Manager willing and prepared to engage the Botswana government to desist from allowing Ministers, all Government officials, Parastatal heads and their staff, all Government-owned and funded institutions and all businesses that are heavily supported by the Government to stop flying Air Botswana’s competitors where Air Botswana is available ( … and of course such a demand must come with a safe, efficient, reliable Air Botswana with competitive air fares).
Someone with the ability to take the national airline to the people, with a strategy to at least make domestic flying affordable to Batswana middle income families. An individual with the knowledge and expertise to make sure that Air Botswana is up to date with the commercial airline business trend, to get the coordination, efficiency and harmony between the key departments.
These are a few examples where the national airline is seriously lacking and lagging miles behind the competition. It is possible to save and retain our beloved national airline in the hands of Batswana.
Captain Kethotswe Dick Mulalu