Tanzania has no plans of offering relief package for the aviation sector

Dar es Salaam. For now, the government of Tanzania has no plan to offer a special relief package for the aviation industry on the grounds that no one - including the govt. itself - was left unscathed by the effects of the coronavirus outbreak, The Citizen has learned.

This means that it has turned down pleas by aviation players who have been calling for aviation-specific atonement measures like tax relief, affordable loans - or a special fund to boost the aviation industry.

Speaking last week in an exclusive interview with The Citizen, government chief spokesman Hassan Abbasi, queried: “How can we offer a special relief package while everyone - including airlines, ground handlers and the government itself - were feeling the pinch of the pandemic? The government has so far done a significant job to rescue the aviation industry. Opening the country’s airspace is itself a huge step,” Dr Abbasi explained.

The Tanzania Civil Aviation Authority (TCAA) reopened the country’s airspace to both scheduled and non-scheduled international flights on May 18, 2020.

By the time Tanzania closed its airspace on April 11, 2020 in the wake of the Covid-19 outbreak, all airlines, except Ethiopian Airlines, had grounded operations.

“Now that we have opened our airspace business has resumed. Airlines are coming in,” said Dr Abbasi.

So far, 12 out of 19 airlines have resumed their flights into the country after the airlines have been grounded since March as the Covid-19 pandemic shut down nonessential travel, according to the Julius Nyerere International Airport (JNIA) Terminal III acting manager Barton Komba.

The airlines that have resumed flights are Uganda Airlines, Qatar Airways, Ethiopian Airlines, Emirates, Oman Air, Kenya Airways (KQ), RwandAir, KLM, Flydubai, Turkish Airlines, Swiss Air and Egypt Air. But aviation stakeholders said despite the airlines resuming their flights, they were operating at a limited capacity, a trend that calls for aviation-specific relief measures to help mitigate the impact of the pandemic on the aviation sector.

Recently, Precision Air managing director Patrick Mwanri said: “We are flying at a limited frequency. Our frequencies have been cut to one daily, down from seven daily.”

He said domestic travel is bouncing back quicker from the current crisis than international travel which is still impacted by factors such as border restrictions and quarantines in a number of countries. For international travel Precision Air, which is only flying to Nairobi, Kenya is operating at ten percent of the pre-Covid capacity.

When it comes to domestic operations, the airline is now operating at 50 percent of the pre-Covid-19 capacity, well above from ten percent between April and May.

In June last year, Precision Air corporate affairs and marketing manager Hillary Mremi called for deferring payment of landing, parking, departure and navigation charges levied on the sector.

Going by the Tanzania Airports Authority (TAA)’s figures, the landing charge per 1,000Kg aircraft at Dar es Salaam, Kilimanjaro, Zanzibar and Pemba airports is $5.

Parking charges for aircraft of up to 20,000Kg stand at Sh1,000 and $6 per 12 hours for airlines registered in Tanzania and foreign ones respectively. Departure taxes for domestic and international travellers are Sh13,000 and $49.

Stakeholders’ views

Mr Mremi was of the view that relief measures should also include a temporary loans and or a special fund for boosting the aviation industry. “Going back to normal operations will not be an easy task. We need the government’s support to address the financial impact,” Mr Mremi told The Citizen.

Air Tanzania Company Limited (ATCL) managing director Ladislaus Matindi said many countries were limiting a number of frequencies to two/three per week even if the capacity was higher than that.

“We expect a stimulus package to rescue the industry,” Mr Matindi was recently quoted by The Citizen as saying.

He said for the domestic market, somehow the market has normalised, with the national carrier operating at between 90 and 95 percent of its pre-Covid capacity.

At the peak of the pandemic - from March up to September 2020 - operations fell by 80 percent.

Dr Abbasi is optimistic that, along with opening skies, the monetary measures taken by the Bank of Tanzania (BoT) last May to offset the pandemic’s impact on the economy would boost recovery of the aviation industry.

The government spokesperson said the cut in the discount rate – the level of interest at which commercial banks borrow from the central bank – from seven to five percent will allow them (banks) to access cheaper loans hence signalling lower lending interest rates.

However, Nas-Dar Airco ground handling and cargo service provider’s head of corporate and government affairs, Evans Mlelwa, said it was inevitable for the monetary measures to be complemented by fiscal measures which include taxation and government spending.

“It is high time the government took measures very specific to the aviation industry,” he was quoted as saying.

Mr Mlelwa added that to reduce tax burden on the aviation sector, the government needed to expand the tax base and lower the rates to enhance compliance.

An aviation expert with 22-year experience, Jimray Nangawe, said it was obvious that opening up the country’s skies earlier meant a better chances to minimise the impact of the pandemic to the sector.

However, he said, to stimulate the market, authorities need to have a strategy to help the companies to remain operational. He called for incentives especially in taxes such as landing; parking and departure taxes so as to attract many carriers to come to Tanzania.

“Unless the government steps in, weak carriers would definitely go out of the markets, with those remaining afloat expecting to lower cost and fares to attract pax to fly.

However, in a medium term fares will rise to recoup investment and build muscle to handle any unforeseen situation.

As the Covid-19 bites, airports’ domestic revenues are projected to drop by 40 percent in the 2020/21 financial year compared to the preceding fiscal year, according to TAA.

During the 2019/20 financial year, TAA which manages and operates 58 airports collected Sh98.6 billion in revenue, said the authority’s director general, Mr Julius Ndyamukama. “The current business trend is not encouraging. We cannot hit the 2019/20 performance,” Mr Ndyamukama was last month quoted by The Citizen as saying.

“Revenue will go down as a significant drop in air passenger traffic is projected to be registered.”

Swissport Tanzania ground handling service provider - which handles 23 airlines - told this paper recently that there were good signs of business recovery this year.

The company’s CEO Mrisho Yassin said that, although they would not achieve what they wanted in terms of their business goals, they would record a reasonable growth compared with 2019. “As we speak today, the cargo business is fully recovered,” Mr Yassin told The Citizen last month by telephone.

For cargo business, Swissport since March to June in 2020 operated at 40 percent of its pre-Covid capacity, before hitting 80 percent from July to November.

He said the ground handling business is still recovering - and until last month, they had recovered 65 percent of the pre-Covid business.

Global situation  

The aviation industry was brought to a virtual halt in April following lockdowns imposed in many countries in the second-half of March 2020.

Going by the McKinsey Global Institute report, almost 60 percent of the global fleet was grounded in early April 2020.

The International Air Transport Association (Iata) warned that airlines are struggling to just stay in business - and that many will face bankruptcy as their small cash reserves run out in the next few months.

Director general and CEO of the global trade group representing the world’s airlines, Alexandre de Juniac, said governments and the industry must be coordinated with confidence-boosting measures.

“The industry’s re-start must be built with trust and collaboration. And it must be guided by the best science we have available,” he said.

TCAA’s Economic Regulation director, Daniel Malanga told The Citizen that during the stakeholders meeting held a fortnight ago in the city, they had agreed that all aviation stakeholders should have a strong business continuity plan.

Mr Malanga, who chaired the meeting, said effective business continuity strategies could safeguard passengers and the airports community; enable the delivery of services to customers, and sustain commercial revenue streams.

Going by Iata’s April 2020 forecasts, estimated global airline losses from the coronavirus pandemic stands at $314 billion.