Air Tanzania Company Limited lacks efficient management

By Alawi Masare

BusinessWeek Reporter

One may think that state-owned Air Tanzania Company Limited (ATCL) has failed because governments have poor records of managing companies unlike private operators who strive to run businesses effectively and efficiently as the Precision Air has done.

ATCL has no flying aircraft. However, the Ethiopian Airlines, which is wholly owned by the government, is doing well.

Aviation stakeholders say the ownership of an airline has nothing to do with its performance. What count are the management and partnerships.

Speaking during a conference on the aviation and allied business leadership in Dar es Salaam recently, the stakeholders said the Ethiopian Airlines was a good example of the best management while the partnership between Precision Air (PW) and Kenya Airways (KQ) was an example of sustainable cooperation in Africa.

“We should learn from the Ethiopian Airline and the PW/KQ partnership,” said Mr Ibrahim Bairu, an aviation expert.  Mr Bairu, the chief executive officer of the Dar es Salaam-based Bairu Aviation Services, has worked in the aviation industry for over 40 years.

He bemoaned unprofessionalism for hampering the sector’s growth. The chief operations officer of the Ethiopian Airlines, Mr Mesfin Bekele, said the management was carried out in an open manner.

 

The recruitment is conducted without political interference.

 

Although the government wholly owns the airline, no subsidy is given to run it. What is done is leave professionals to operate it profitably.

The government only appoints the board of directors and gives the airline autonomy to recruit top managers including the chief executive officer. “The CEO can be recruited from within the airline management but if there is no qualified person we also go outside the airline and find someone who fits in that position as long as he/she meets qualities and can deliver what the airline wants,” said Mr Bekele.

The top official may stay in the office for even more than 10 years as long as he/she delivers. For example, he noted that in the last 40 years, Ethiopian Airlines had seven managing directors who stayed in the office for three to 10 years.  The recruitment for other staff is done through hiring university graduates who studied engineering, accounting, management and other fields. They are then trained to have relevant skills required by the airline in their respective disciplines.

“The graduates may be from any field but we have our management development training which equips them with relevant knowledge and skills,” he added.

“The quality of leadership determines either the success or failure of a business,” he said.

On the other hand, the Precision Air/Kenya Airways partnership was cited as a sustainable cooperation required among airlines on the continent.

The tie-up started in 2003 when Kenya Airways bought a 49 per cent stake from Precision Air under a local investor, Mr Michael Shirima, who still owns 51 per cent of the shares.

Precision Air has benefited from the deal through increased frequencies and aircraft. Both have a joint training programme.

Although the exit windows are there, Precision Air and Kenya Airways are not planning to do so. “We do not focus on divorce. Our marriage is for life,” joked Precision Air CEO and group managing director Alfonse Kioko.

He also reminded the stakeholders that PW would soon float an initial public offering (IPO) and invited them to buy shares.

Mr Kioko informed delegates that in 1987 Mr Shirima started a crop spraying company.

But when drought scorched crops in 1992, he transformed it into a schedule and charter air company the following year. It grew to become Precision Air, which now has 14 routes including those to the Comoros, Entebbe, Johannesburg, Mombasa and Nairobi.

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