The Zambian government\u2019s decision to engage Ethiopian Airlines to relaunch the national carrier will cost Zambia a cool US$700 000 (R11.25-million) a month in aircraft leasing charges, a well-placed government source has told the Makanday Centre for Investigative Journalism.<\/p>\n
The government is facing heavy criticism over the decision, with concerns focused on the business plan, which is a closely guarded secret.<\/p>\n
A senior member of the ruling Patriotic Front\u2019s (PF) central committee also questioned the role that President Edgar Lungu is playing in the project, saying it was pushed through without consulting the party\u2019s top structures.<\/p>\n
There are allegations that the Civil Aviation Authority (CAA) is coming under pressure from the government to issue an operator\u2019s certificate before legally required processes have been completed.<\/p>\n
A set of questions was sent to the president\u2019s office. No reply had been received at the time of writing.<\/p>\n
It is understood that an initial investment of US$30-million (R480-million) is required to launch the airline under a joint venture agreement that will see Zambia holding 55% through the country\u2019s Industrial Development Corporation (IDC) and Ethiopian Airways holding the balance of the shares.<\/p>\n
The new IDC-controlled company is called Zambia Airways (2014) Ltd. A well-placed source said its fleet would be provided by Ethiopian Airlines and leased for $700 000 a month.<\/p>\n
The figure does not include other expenses such as maintenance and insurance.<\/p>\n
It is not clear where the venture\u2019s start-up capital is to come from. Mutotwe Kafwaya, the minister of transport and communication, has not given a clear response on this question.<\/p>\n
Ethiopian Airlines has not responded to an emailed query about accusations it is selling the Zambian government a deal that is not in Zambia\u2019s interests.<\/p>\n
Former employees of Zambia Airways who formed an independent company called Zambian AirWorks believe that the best approach is a public-private partnership anchored on funding from private sources, either local or foreign.<\/p>\n
\u201cDuring the past 30 years most of the world, including Zambia, has learnt the folly of government-owned airlines,\u201d said Captain Alick Sakala, one of the company\u2019s founders.<\/p>\n
Addressing the parliamentary committee on transport in 2018, Sakala said: \u201cWe propose a private sector and market-driven airline. The IDC could play a part in sourcing investment either locally or [abroad].\u201d<\/p>\n
Sakala is not involved in the current IDC initiative.<\/p>\n
In 2016, at his first press conference as president, Edgar Lungu \u201cdeferred\u201d the formation of the airline \u201cuntil such a time as the economy is able to afford the high establishment costs\u201d.<\/p>\n
Economic indicators show that the country is in a worse state now.<\/p>\n
According to the African Development Bank, public debt has rapidly increased to 80% of GDP at the end of last year from 35% at the end of 2014. Rising inflation is expected to reach 9% in 2020-21, pushed by large exchange rate depreciations and food price increases.\u00a0<\/span><\/p>\n Zambia\u2019s rolling electricity blackouts, lasting up to 18 hours a day, are a further challenge to the project. The country is unable to import power to cushion the economy.<\/p>\n Another sign of the faltering economy is the government\u2019s failure to honour a contract with the Russian government for the supply of a Sukhoi Superjet 100 in the VIP version, reportedly for Lungu\u2019s use. The two countries also discussed the supply of four more of these aircraft.<\/p>\n Russia\u2019s industry and trade minister, Denis Manturov, was quoted as saying at the Russia-Africa Forum in October that the decision to cancel the deal \u201cwas because Zambia does not have enough funds to finance the contract\u201d.<\/p>\n The Centre for Trade Policy and Development, an economic think-tank, argues that using state funds to launch the airline will increase government\u2019s financial burdens.<\/p>\n Research by the centre contends that the agreement should be harmonised with Ethiopian Airlines Vision 2025 agenda, which would mean operating the airline as a regional carrier, at least in its early stages.<\/p>\n A senior member of the PF\u2019s central committee, who asked not to be named, complained that \u201cthe matter has never been discussed in the committee\u2019s meetings.\u201d He added: \u201cIt was on the agenda of one of our meetings in 2018 but the president merely informed us about the decision to partner with Ethiopia.\u201d<\/p>\n Asked another ruling party source: \u201cWhy is government insisting on spending taxpayer\u2019s money on the airline when there are private people who are willing to invest in it?\u201d<\/p>\n A source at the CAA complained that officials looking into certification were coming under pressure from government.<\/p>\n \u201cIt is our legal mandate to ensure that we do our professional work,\u201d said a source. \u201cBut there is pressure from some top government officials who want us to ignore certain procedures and hand out the certificate quickly.\u201d<\/p>\n Speaking recently on a local radio station, transport minister Kafwaya insisted that \u201cno money will come from the treasury\u201d.<\/p>\n \u201cThe IDC looks after parastatals, it\u2019s a quasi [quasi-government institution] so I don\u2019t know why that\u2019s not a good enough model,\u201d he said. \u201cIt\u2019s not drawing money from the treasury, so keep the treasury away from the conversation \u2026\u201d<\/p>\n Despite continuing uncertainties, the groundwork has mostly been done.<\/p>\n The board of Zambia Airways, led by former attorney-general Bonaventure Mutale, is in place.<\/p>\n The chief executive officer, Bruk Endeshaw-Abebe, was appointed early last year. Endershaw was Ethiopian Airlines, sales and services director for the southern region.<\/p>\n He was recently quoted in one of the local dailies saying Zambia Airways would operate eight aircraft \u2013 three Bombardier Q-400, two Boeing 737-800 and three Boeing 787-800 \u2013 suggesting that it plans to fly some long-haul routes.<\/p>\n However, former transport minister Brian Mushimba said in parliament in 2018 that the airline \u201cwill start with three planes that are going to service a few regional and domestic routes\u201d.<\/p>\n The IDC, the parent company did not respond to an emailed press query on the source of the airline\u2019s startup capital and who is paying Endeshaw\u2019s salary, which is rumoured to be gigantic despite the airline not yet being operational.<\/p>\n Endeshaw did not reply to phone calls aimed at soliciting his comment or a text message.<\/p>\n The airline is not yet listed among the portfolio of state-owned companies on the IDC website.<\/p>\n When the board appointed Endeshaw, it directed him to target the start of the airline for the third quarter of last year.<\/p>\n This requires clearance from the CAA, which has not yet issued the air operators\u2019 certification. Endeshaw was quoted in the local media as saying this \u201cis still in progress, therefore, it will take to air once the certificate is issued\u201d.<\/p>\n A source from the CAA said that officers looking into the certification were facing pressure from on high.<\/p>\n \u201cIt is our legal mandate to ensure that we do our professional work,\u201d said a source. \u201cBut there is pressure from some top government officials who want us to ignore certain procedures and hand the certificate quickly.\u201d<\/p>\n Mushimba, the former transport minister, did not specify the type of planes but added that at full capacity, the airline will employ about 500 people.<\/p>\n Sakala, from Zambian AirWorks, favours planes that have been operated in Zambia before as \u201cit will reduce the cost significantly\u201d.<\/p>\n He said Zambia Airways once operated Boeing and ATR aircraft, and the country still has expertise in maintaining and flying these planes.<\/p>\n \u201cThis makes it possible for the airline to put together a maintenance organisation,\u201d he said. \u201cIn addition, both pilots and maintenance engineers could be sourced from the diaspora where they relocated after the closure of the airline.\u201d<\/p>\n The national airline has been a flagship project for the ruling PF since it first formed a government in 2011.<\/p>\n The first technical committee appointed in 2013 to oversee the project worked with experts from the former Zambia Airways to draw up a business plan and make recommendations on which aircraft to purchase.<\/p>\n The committee recommended buying an ATR 42-600 for domestic routes which would then feed into the Boeing 737 700 or 800 for regional routes.<\/p>\n The idea then was to open the intercontinental route after two years of domestic and regional operation. The Boeing 777 Dreamliner was earmarked for intercontinental routes.<\/p>\n The government ignored the plan.<\/p>\n The project was plagued with challenges from the outset, ranging from where to source the planes to interference from government officials.<\/p>\n There have also been loud calls for the government to make public the findings of the liquidator\u2019s report on the old Zambia Airlines before another airline is launched. There are major questions over how the national carrier\u2019s assets were managed after it closed in 1994.<\/p>\n \u201cZA [Zambia Airlines] had assets in New York, London and many other places around the world,\u201d said one former employee. \u201cWe want to know what happened to them, because we are told that some senior government officials benefited.\u201d<\/p>\n Zambia has joined Malawi by buying into Ethiopian Airlines\u2019 strategy of expanding its base at Bole International Airport, Addis Abbaba, to include important geographical hubs.<\/p>\n In 2013, the airline acquired a 49% stake in newly founded Malawi Airlines, based in Lilongwe.<\/p>\n However, in 2017 Malawian MPs questioned the partnership between the airline and its Ethiopian counterpart, saying it was not beneficial to the country.<\/p>\n They demanded a report from President Peter Mutharika\u2019s government on how much Malawi had benefited from the partnership.<\/p>\n In 2010, Ethiopian Airlines helped to establish Asky Airlines in Lom\u00e9, Togo. Further investments were made in Ethiopian Mozambique Airlines and Tchadia Airlines in Chad.<\/p>\n Ethiopian Airlines drew up a 15-year strategic plan called \u201cVision 2025\u201d to make the airline the leading aviation group in Africa in eight areas: regional, international, freight, maintenance and repair operations, an aviation academy, onboard catering, ground operations and airport enterprise.<\/p>\n The targets are ambitious: by the year 2025 the airline plans to have an annual turnover of US$10-billion, a fleet of 120 aircraft and 90 international destinations.<\/p>\n