Competition beckons at JNIA groundhandling

Dar es Salaam. The competition in the groundhandling business at Julius Nyerere International Airport (JNIA) is now gaining momentum after Celebi Tanzania officially kicked off its operations at the airport last month.

The competition is also intensified by the National Aviation Services (Nas)’s parent company’s acquisition of Menzies, one of the oldest ground handlers in the world.

In July last year, the boards of Agility Public Warehousing Company, Nas’ parent company and John Menzies PLC reached an agreement on the terms of a recommended cash offer to acquire 100 percent of the ordinary shares in Menzies.

According to a statement availed to The Citizen by Nas-Dar Airco, a Nas subsidiary, the 571 million pound deal was completed in September 2022 on a fully diluted basis, while the 763 million pound deal was completed on an enterprise value basis.

The ground handling sub-business at JNIA is predominated by Swissport Tanzania, which handles 24 airlines; Nas-Dar Airco, which serves eight airlines; and Celebi Tanzania, which offers services to Flydubai and ad hoc charter.

With a new deal, Nas-Dar Airco, which has lost Flydubai to Celebi Tanzania, will have its feet strong enough to pose stiff competition to its competitors.

The company is expected to leverage the merger between Nas and Menzies at the local level in terms of improved technology, global exposure, a modernised system and expanding markets.

Again, with the entry of Celebi into the market, the battle for customers will be tougher.

Mr Gaudence Temu, the board director of Celebi Tanzania, which last month started to handle its first airline customer, Flydubai, told The Citizen on Friday last week that given the small market size, the battle will be no walk in the park.

“Competition will be stiff, but we are ready for it,” he said, while banking his hopes on the delivery of standard services that meet customers’ demands.

Mr Temu went on to say: “For us to make it, we will keep on investing in equipment and human capital.”

He said the competition, on the other hand, will culminate in the improvement of services as every groundhandler will be trying to win the hearts of customers.

Mrisho Yassin, Chief Executive Officer of Swissport Tanzania, told The Citizen by phone last Friday that competition is not a threat to them.

“We have been the market leader for a long time now, so to us, healthy competition is not a threat at all,” said Mr Yassin.

However, he said, competition in a small market was not something to encourage.

“If competition in the current market size is encouraged, none of the existing ground handlers will grow because the market is not growing either,” warned Mr Yassin.

He warned, “We will continue to compete for the few clients and so lower our contribution to the government’s revenue.”

He said due to price distortion, Swissport’s tax contribution to the government dwindled from Sh18 billion in 2015 to Sh5 billion in 2021.

Nas-Dar Airco head of corporate affairs Evans Mlelwa told this paper on Friday last week that with the competition at new heights, the prospects will not be positive due to the small market size. “We will have to battle hard and this will lead to price cuts to attract more customers,” said Mr Mlelwa.

“That is why our position has always been for the regulator (Tanzania Civil Aviation Authority-TCAA) to set a minimum rate to charge airlines.”

Their proposal for the price cap was turned down by the regulator in June last year.

TCAA director general Hamza Johari told The Citizen last June that the regulator would not set up the price cap but would instead keep monitoring the market to ensure a level playing field as per the Civil Aviation Act.

Nas-Dar Airco also called on the TCAA to work closely with the Tanzania Airports Authority (TAA) in creating an enabling business environment that would attract more airlines.

In a swift rejoinder, TAA director general Mussa Mbura said to attract more airlines, the authority and the government at large had in place incentive packages and improved safety, security and systems.

He said in what could be described as the fruits of President Samia Suluhu Hassan’s economic diplomacy agenda, three airlines namely Saudia-the flag carrier of Saudi Arabia, Air France and Air Cargo of South Africa, are set to start flying to Tanzania this financial year.

“Saudia and Air France are expected to start direct flights to Tanzania in March and May respectively,” he recounted, adding: “On the Air Cargo, talks on routing are in progress.”

He urged groundhandlers to complement the government’s efforts by offering good services that will attract more airline customers.

Efforts to reach TCAA’s Johari for comment proved futile.