How Ethiopian Airlines is greatest beneficiary from Zambia Airways Project

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THE two fire engines at Simon Mwansa Kapwepwe International Airport spilling water over the Ethiopian Airlines aircraft in a picturesque arc of mist that glowed in bright sunshine during the inaugural flight to Ndola
FILE: THE two fire engines at Simon Mwansa Kapwepwe International Airport spilling water over the Ethiopian Airlines aircraft in a picturesque arc of mist that glowed in bright sunshine during the inaugural flight to Ndola

By Kalima Nkonde

There has been so much debate about the merits and demerits of re-establishing the national airlines since the PF came into power in 2011.The majority of arguments supporting the national airline, have been sentimental, very superficial, uninformed and lacking support of empirical evidence given the many struggling national airlines.

Now that the Government has decided to partner with Ethiopian Airlines (ET as it is called in aviation circles), it is important that Zambians’ expectations from the deal are tone down so that they do no get disappointed as the Malawians have been, when the tangible benefits they would have expected, are not there in the foreseeable future but instead, the National airline would have built up a mountain of debt and become a strain on the national treasury due to losses like other National airlines and State Owned Enterprises.

Ethiopian airlines are currently the preferred partner by African countries. Malawi has a joint venture with ET, Ghana has shortlisted the airline for re-launch of national airlines. Nigeria started negotiations with ET to manage Arik Air but negotiations fell through due to negotiations being complicated. The Chief Executive of Ethiopian Airlines Tewolde Gebremariam said, “We decided to stop the negotiations due to financial and legal complications”.

The fallacy for the clamour to partner with ET by governments is the mistaken belief that since it is a government owned airline and it makes profit, then teaming up with Ethiopian airlines will replicate its success and make a national airline successful and profitable. This is based on lack of a deep understanding of ET’s business model.

Ethiopian airlines business Model

It is important for the reader to have some background to Ethiopian airlines and why African countries want to partner with it in re-establishing their national airlines. To begin with, the airline was founded in 1945 and started operations in 1946. According to the International Air Transportation Association (IATA), the global industry body, the state owned airline is ranked the largest airline in Africa in terms of Revenue and Profits.

What people do not know is that Ethiopian airline’s profitability does not emanate from the sales of passenger tickets only. Apart from its efficient cost cutting measures, aggressive marketing strategy, ET’s other major revenue contributors are the seven profit centres: Ethiopian Express & Ancillary Services, Ethiopian International Services, Ethiopian Cargo Services; Ethiopian MRO Services, Ethiopian Aviation Academy, ET In-flight Catering and Ethiopian Ground Services.

The airline is virtually self sufficient by having all services it needs in house while at the same providing services to other airlines to earn a lot of extra revenue and saving costs which is reflected in the bottom line. In addition, all the different Ethiopian Government administrations including the Dictatorship of Mengistu haile Mariam despite being 100% owners have never interfered in the running of the airline. The short of it is that ET’s business model is difficult to emulate by Zambia and other African Government and has been built over a period of 72 years!

Why ET is teaming up with Zambia

Zambians should be aware that the Joint Venture between Zambia and Ethiopian Airlines is not an accident or a coincidence from ET’s point of view. As far as they are concerned, it is part of their long term strategy for growth. The airline is merely implementing a 15-year Strategic Plan called Vision 2025 which it launched in 2010 after successfully completing an earlier strategic plan-Vision 2010 in which it met and exceeded all its stated goals. Under the Vision 2025, the airline anticipates increasing its fleet to 120, the number of destinations to 90, carrying more than 18 million passengers and 720,000 tonnes of cargo and with 17,000 employees. The existence of Vision 2025 was confirmed by Mr. Tewolde Gebremariam, Group CEO of Ethiopian Airlines.

“In line with our Vision 2025 multiple hubs strategy in Africa, we are very happy that the discussions with the Zambian government have been crowned with success. The launching of Zambia Airways will enable the travelling public in Zambia and the Southern African region to enjoy greater connectivity options, thereby facilitating the flow of investment, trade and tourism, and contributing to the socio-economic growth of the country and the region,” he said in a press release when acknowledging the Zambian deal.
There is no argument that Zambia Airways will be loss making for quite a long time to come and Transport and Communications Minister, Brian Mushimba did confirm that but argued that the intangible benefits will be immense. There is no doubt that Ethiopian Airlines also do know from their heart of hearts that Zambia airways will be loss making like any other national airlines at least in the first 5-10 years. The question is: what is ET’s motivation to go in a venture that will be making losses for the foreseeable future and not paying them dividends? The answer lies in the benefits that Ethiopian airlines will accrue through providing services to the airline which will increase the Holding Company’s revenue in Addis Ababa.

The experience of Malawi who entered in a similar deal in 2014 and was promised by ET that the airline will breakeven in two years but this has not happened gives credence to this belief. The Malawians are now questioning the deal as there are not seeing the benefits and arguing that only ET is benefiting.

Ethiopian airlines’ benefits from Zambia National airline

Ethiopian airlines’ benefits from the joint venture with Zambia lies in the possible services that Ethiopian Airlines will be providing Zambia Airways 2014, which in itself is not a bad thing especially if services will be discounted. In view of the benefits to the holding company, ET is unlikely to bother whether the airlines will be making profits or not as the Group as a whole will still be making profits. Below is the possible revenue generating benefits ET is likely to enjoy from the Joint venture.

First and foremost, Ethiopia airlines have been acquiring Aircraft from Boeing, Airbus and Bombardier and have excess capacity of airplanes without routes. In June 2017, Reuters reported that ET had placed an order of 10 737 Max 8 planes bringing the total on order to 30.It also signed a purchase agreement with Bombardier for five Q400 turboprop aircraft. There is no doubt that ET is likely to provide Zambia airways 2014 with either these models but more likely older models on either Wet lease (ACMI) or dry lease and thereby provide ET with millions of dollars in revenue through finance leases charges.

Secondly, Zambia Airways 2014 does not have any maintenance facilities and for the airline to get the Air Operator Certificate (AOC) from Civil Aviation Authority of Zambia (CAAZ) as required by ICAO (International Civil Aviation organisation), it will need to sign an agreement with an MRO (Maintenance Repair Organisation). ET has a world class maintenance facility which is accredited to the American Federal Aviation Administration to maintain American registered Aircraft. There is no doubt that Zambia Airways’ aircraft will be maintained at ET facility and thus earning them more revenue.

Thirdly, Zambia Airways 2014 is unlikely to have Zambians qualified as maintenance Technicians or Airline Captains on Boeing Aircraft, Airbus or Bombardier but ET has a Training school for pilots established in 1964 and an Aviation Maintenance Technician School established in 1967 which provide specialist training for both Ethiopian and foreign trainees. The new National Airline will have to send its trainees there and pay for such training and this will be additional revenue for ET.

Fourthly, ET has simulator facilities. Pilots are required to undergo refresher courses at regular intervals by passing a simulator course. It goes without saying that all pilots in the new Zambia Airways 2014 will have to undergo simulator training at ET facilities Addis Ababa generating more revenue for ET.

Fifthly, there is no shadow of doubt that the new Zambian airlines will sign a management Contract with Ethiopian airlines. Management fees will have to be paid to Ethiopian Airlines at regular intervals.

This airline project will be a net exporter of foreign exchange whether we like it or not as the above services run in millions of dollars and they will not be recovered from ticket sales or the imagined tourist arrivals.

Is Government K 400 million investment in National Airline prudent?

For the record, the Zambian government will have invested a minimum of $40 million in the Zambian Airways 2014 project by the end of 2018. This is so because Government paid airbus $10 million deposit for aircraft acquisition about two years ago and nobody seems to talk about. This is a well known fact by all in Zambia aviation circles. This means the $10 million already paid to Airbus and the projected $30 million from the 2018 budget will bring the total investment to $40 million or K400 million by end of 2018. The question is: Is this the most prudent way of using scarce tax payer’s money? What is the real motivation of people behind this project? It does not make economic sense to start a non- income generating luxury project at this stage when the country has billions in debt to service, struggling to pay farmers for maize and inputs, has cholera due water and sanitation issues, Universities closed due to unpaid allowances to students, delayed civil servants salaries due to huge wage bill and the list goes on and on!

It is clear from the analysis that the bulk of $30million dollar invested by Government in the first year will find its way to Addis Ababa through services provided and there will be nothing much to show for it in terms of tangible benefits to the majority of Zambians in Chibolya, chimwemwe, Mpatamatu, Kanyama, John Lengi, Mongu, Mansa, Chamboli,Maramba,Mpika, Solwezi, Monze, Petauke, Mwinilunga etc.

And going forward, since the government is the majority shareholder and given that the airline will be making losses in the foreseeable future, the Government will either pump in more tax payer money to keep it afloat or provide sovereign guarantee for Zambia airways 2014 loans like the governments in Botswana, South Africa, Namibia, Zimbabwe and others do for their national airlines which they are stuck with and want to get rid of. There is no shadow of doubt that the new airline will start building a mountain of debt within the first two years of operations.

Conclusion

There is no argument about the need for Zambia to promote the Aviation sector but the national airline Full Cost Carrier (FCC) business model is the wrong way to go about as it amounts to doing almost the same thing as before and expecting a different result. The proper solution and business model would have been found if private sector aviation experts were fully involved rather than ZAF, Party cadres, Civil servants and Politicians with little knowledge about the complexity of the aviation industry who drove the process to start national airline.

The major impediments to the growth of the sector are the cost of doing business in the sector in comparison with neighbouring countries. The local and foreign airlines that have closed shop in Zambia have mainly done so on account of the cost of operating an airline in Zambia.

The cost of aviation fuel in Zambia is the highest in the region and fuel in one of the major components of operating an airline and it can make or break a carrier. The other major cost of a carrier in Zambia is government levies and taxes which are way too high. The cost of a domestic airline ticket is made of 25% taxes and levies. There are four types of taxes that passengers pay to fly domestically – departure tax, civil aviation tax, security tax and development tax and yet well run Airlines’ net profit margin world wide is about 5%. If one was to ads 35% income tax, it means government takes 60% of an airline’s cashflow. This is no way to develop the industry.

98 COMMENTS

  1. The idea must be to learn from them, the tools of the trade. We had our own airline. We failed to manage it. Now, let’s try not to be too egotistic.

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    • Nonsense. It’s the other way round. How Zambians are beneficiaries.

      What a lot of utter drivel this is.

      In summary ladies and gentlemen – there is a solution in the perceived method of Madness that you have all been fed.

      A mild bad deal is better than no deal! Agreed ?

      There you go. I have summarised what the author couldn’t say on any day of the week.

      I hold a PhD

      Thanks

      BB2014,2016

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    • Now I understand Mushota. S/he wants Zambia to fail because s/he gas never had any interest in a black African’s success. S/he saw PF as the means to that end and decided to cheer them all the way to the precipice. Zambian, ignore this hater.

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    • We will offer a real rebuttal later but from everything written the author misses one very critical point.

      Nothing in life is free and the cost of putting something in place for yourself worth living for is extremely high.

      For instance, when I moved to the US and decided to take one my second degree in accounting, it was costing me $20,000 a year in tuition as a foreign student that’s after getta half scholarship.

      All the way to graduate school I ended up paying over $100,000 of my own money before I could start earning $129,000 a year as an Executive at Citigroup in Dallas, Texas.

      What would have happened if all I looked at were my poor relatives in my village in Chief Lukwesa, Luapula and sent them all the money instead of putting myself in school?

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    • Doctors go to medical school in America and graduate with over $500,000 in doubt before they earn their first penny but within 2 or 3 years you see them in a Porsche or Lamborghini and you wonder.

      The problem with the average Zambian mentality is that, the so called elite went to school of GRZ bursaries (thanks to my parte UNIP and KK) and have no clue the real cost of an education and actual real issues of life.

      All the things the author refers to as net benefits to ET could be net benefits to Zambia, all Brian needs to ensure is as part of all the Service Agreements similar arrangements are mirrored in Zambia.

      Well written document I must add but it’s a biased forecast and thus leaves much to be intellectually desired … more later.

      Let’s proceed with Zambia Airways and 100…

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    • Continued …

      Let’s proceed with Zambia Airways and 100 years from now our legacy will speak for itself. This monolithic way of thinking is what FTJ and his cronies are denigrated for.

      We used to look at things, Plan for things not for our current generation but for generations to come. The next time I read something with someone talking about cholera and why we can do blah blah I will puke.

      Bottom line is if we pump in more money, we will get it bad someday. The Japanese built their country with a minimum 40 year outlook and from Hiroshima and Nagasaki in 1945 they pulled together borrowed where necessary and built an economy that by 1985 was the 2nd largest beating the entire Europe and Asia.

      They would not have made it if they listen to Kalima Nkonde here

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    • I am going to kill this autocorrect things … it keeps messing up my grammar.

      In 1.3 meant to say take on not “one” my second degree in accounting

      In 1.4 meant to say $500,000 in debt not in “doubt”

      There are more of these but I hope the message is gotten … it also showed getta instead of “getting a”

      I just can’t tell where this iPhone gets some of these words!!!

      Heaven help us all …

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    • As others have already said, nothing is for free. ET is not a charitable organisation. There must be a business case. 2nd, we don’t have capital & technical capabilities to restart QZ. ET does & that costs money. 3rd, few businesses generate profits in 1st 3 years. Let’s learn to be patient. 4th airline business in Zambia is worth $1.5b per annum. Why do we want to let foreign airlines get all this just because we have cholera? That’s retrospective thinking. 5th, Airline is like any infrastructure – you’re building roads in the air into your country. Profits to economy may also be indirect. 1 of the reasons SAA isn’t liquidated is that it participates in bringing 10m visitors to RSA per year with $$$ to spend! 6th, JV Agreement can be terminated any time if not working. 7th, let’s…

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    • Contd… 7th, let’s not be too negative & shallow in our thinking – there are many positives to having a well run national airline. Main goal is to efficiently bring in many people & goods. Other industries like tourism, transport, services, etc will benefit. Our goal should be to exceed 10m visitors to Zambia per year & not just sitting on our hands till all problems in country are solved! Its better to do something than nothing just because we have cholera. God Bless Zambia

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    • @ Ba Chosen One … mwalasa mukwai.

      These are the proper counter arguments we have been looking for as the smart people of the Zambian Enterprise.

      Let’s roll …

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    • Here he comes with a swagger of a pimp spewing make-believe claptrap and mumbo jumbo as usual..the fontini he is seems to think he is the only one who has self funded his tuition fees ignorant to the fact that there are people out here whom had to work two – three jobs just to do that. You honestly think having a National Airline is priority..really laughable!!

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    • Jay Jay ,this BR Mumba impostor and fake airline specialist is a failed Kalingalinga university dropout.

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    • ET is in business, good business by the way – with planes and routes and making money. Zambia has no national airline. ET can do without the ZA deal, so why would they get into business with ZA to share the spoils equally?

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    • The only relief you can have is a technical and management skills transfer arrangement tied down to a period after which ET totally hands over to ZA

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    • Wanu Ngwee – the airline sector is a very competitive sector where you have to sweat to record a profit…if you have a foooool come knocking on your door willing to give you $30million just to paint your aircraft with his country’s flag so he can brag whilst you maintain your normal routes to his place would you turn him down?

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    • @B R Mumba Sr, unfortunately your level of thinking is so shallow and does not reflect that of a graduate from an American University. I can understand why you are still at a meagre $129 000pa….What Kalima has written is exactly what will happen..to add to that the CEO and all senior executives at the new Zambians Airways…and I won’t be surprised if Mumba cannot figure out where these will come from. This was from the Minister’s mouth…Zambians will mop floors at Zambian Airways

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    • @Jay Jay … continue with your insults my friend none of that stuff really sticks with some of us. We are building this thing called Zambia Airways with or without you.

      Am done with wasting time on Maggots like you. My time is Money so let’s just compare net worths next time around.

      @Obatala or whatever you call yourself. Very typical elite ignoramus behavior. For your own information, that $129,000 per year was 18 years ago I left Citigroup almost 10 years ago to start my own companies.

      Right now I can actually give the entire norminal capital requisition for this project to GRZ if I wanted without touching 1% of my net worth. So shut up and only talk about me with real facts you penniless maggot.

      You have no proper comprehension of facts let alone debate etiquette that’s…

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    • Continued …

      You have no proper comprehension of facts let alone debate etiquette that’s why to rush to attack personality instead of facts.

      Unlike you I actually congratulated the author for actually putting it together in a well researched manner howbeit his flawed and biased approach.

      You’re used to seeing fake wealth and you think that’s all there’s to resource management. Your exposed minds are your greatest limitations yet, advanced of yourselves you think.

      Pathetic losers, you are!!!

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    • The Claptrap that comes out of this Mushota b… is as piffle as is it is nauseating. I normally don’t respond to you because I believe you are deliberately playing a game of being offensive or creating the persona of a controversial persion to try to raise your low esteem. I am not going to.ask about Nick who seems to your own badge of success. If you were smart, you would have torn down the points raised and offered alternatives and made a justification of your own views, but alas like the pumped little pig with poor applied lipstick on you, the pig still comes out.

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    • @Mzambia wa fimo fimo … yaba oh yaba. Ati Ba kolwe ba sekana ifipato. Ati University Dropout, go check figures for yourself.

      Find out the rigorous Citigroup hiring requirements for executives where I worked. Despite leaving early I was fully vested and actually pensioned with Citigroup, call and verify records independently.

      Now, let’s even imagine for a second I was a dropout even though I am not … ask Bill Gates, talk to Elon Musk! These are billionaire dropouts unlike you always asking if your next tank of fuel will be on which credit card.

      Just exposes your limited capacity every time you post here. By now we actually know which of you are direct opposites of what you purport here at LT

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    • @Ba Nubian Princess … it’s a well written document and well put. I enjoyed reading it in it’s entirety even though it’s a biased piece.

      A forced argument is what it and it lacks merit because it fails to explain long term goals and objectives from the Zambian side.

      For instance, all other revenue streams ET has are not unique and monopolistic and despite barrier to entry, ET actually gives QZ maximum leverage through this JV.

      The author purposefully did not allude to such just so he can make the case against QZ … that’s critical analysis using intellectual honesty the way we American trained experts are trained to think.

      This article is not shallow but lacks balance.

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    • @ BR MUMBA SR AND THE CHOSEN ONE
      If I understand the article, the writer has qualified why it is not economically sensible to start a National air line now which will be loss making for 5 to 10 years when there are other investments you can do which can bring immediate benefits to the country like investing in tourism. We can start the Airline after we put our house in order. What we are saying is that there is nothing wrong to start an Airline but it is not the priority now. I rest my case.

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    • It pains me to see our country being auctioned to foreigners by the Malawian Yao, Lungu.

      – ZNBC auctioned to tu ma Cho-cho-Lee, (Govt defaulted on loan)
      – RATSA & Toll-gates auctioned to Lebanese
      – NRDC auctioned to tu ma Cho-cho-Lee
      – Zambia Airways auctioned to ma Ethiopians
      – KKIA soon to be auctioned to tu ma Cho-cho-Lee (Govt has already defaulted on loan)
      – Luburma Market auctioned to tu ma Cho-cho-Lee
      – Lusaka City Market auctioned to tu ma Cho-cho-Lee
      – Victoria Falls Curio Market auctioned to tu ma Cho-cho-Lee
      – Chimbokaila Prison auctioned to tu ma Cho-cho-Lee
      – Huge tracts of Prime land auctioned to tu ma Cho-cho-Lee
      – Mukula Trees auctioned to tu ma Cho-cho-Lee

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    • @MWAKALE … I understood that premise but it’s still a flawed and biased one. There’s no better time for the smart people of the Zambian Enterprise to take advantage of an opportunity like this than now.

      As for waiting before you realize profits after some time, who doesn’t do that? This is a natural phenomenon!!! For instance, your parents did everything they could from your birth knowing it would take at least 16 years of investing into your education before they could see you as a viable prospect.

      That’s 12 years just to reach the twelve grade and another 4 years of university before your own personal earning potential could actualize. How much more QZ? What if your parents said, your education is not a priority right now because 16 years for real viability is too long?

      Same…

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    • Continued…

      Same thing here, there will always be other priorities and competing alternatives, but appropriate resources evenly for proper objectivity. You don’t pit one over another, you multiple task.

      I rest my case …

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  2. Yesterday I bought tickets for Ethiopian airways flight from dar es salaam to Lusaka via Lilongwe,
    Took them to Julius nyerere airport
    Only to board a malawi airways plane what am trying to say is it won’t be known as zambia airways it will be called Ethiopian airways despite having the zambian colors

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    • No one is interested in your pathetic sad tale.

      I hope you have a good flight though. Keep it to yourself next time.

      God bless you.

      Thanks

      BB2014,2016

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    • And this Lazy thing in State House will be going round the country saying he brought back Zambian Airways not knowing that the only thing Zambian is the coat of paint on the aircraft’s tail fin.

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  3. Kalima is an educated fool. The government has taken the right decision. Ethiopian Airlines Is one the most experienced air lines in the world, Zambia has an opportunity to learn from the best for posterity.

    These upnd people know that once this airline is airborne, it will be another plus for PF and ECL.

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    • The only comment coming from an obviously unschooled political cadre. Sometimes it’s better to read through the article and the comments to determine whether the ideas match your brain size or not. shut up for now. wa umfwa

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  4. The article above clearly makes the case against the JV national airline with both qualitative and quantitative data. Can the proponents of the project make a similar case? Lets not hear the same old stories about indirect benefits and sentimentalism. Prove to us with figures that the airline project makes sense before we sink a further USD30m. It is not too late to pull out! I for one would like to know why the JV with Arik (Nigeria) did noy work out. Might just give Zambia some insights on how to safe guard Zambia’s interests in this deal!!

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    • You are asking too much from the proponents especially when they are guided by nostalgia and false pride. They always bring in the issue of increase in tourism and benefits to local sectors…my question to them is why are you not making in roads now; when other countries are doing well without national airlines.

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  5. I don’t oppose in relaunching a national airline but for Zed it’s just too early. Expectations are very very high whilst the sure thing is how quick it will start biting the Zambian government ********. It’s gonna sting.

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    • We Zambians never learn from mistakes …simply look at the last elections which was marred with irregularities, governance issues, tender issues etc has any of stakeholders tried to amend these issues? Come 2021 it will be the same rubbish again printing ballot papers in Malaysia as Govt Printers is ill equipped, compromised ECZ directors etc.

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  6. Ethiopian Airlines has the money, the expertise and the know how. Other than corruption, what else is Zambia bringing to the table?

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    • They have money to spend wisely on growth not money to splash around they leave that to foooools like the PF …that’s why they avoid a head on price war with the likes of Emirates and Ethiad Airlines.

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    • Are you sure this government has the interest of this country at heart several years down the road? Give us an example of such a visionary act.

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    • All these dull PF cadres have no clue that Ethiopian Airlines is going to take Zambia for a ride and they will make money, with Zambian taxpayers footing the bill!

      The only REAL reason I can see for this is that PF is looking for another way to STEAL!

      It make NO BUSINESS SENSE AT ALL!

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  7. I will repeat, Hon Mushimba will not only reap a bad legacy in his retirement as Mr Failure, but he will have left Zambia in a huge debt. By the way is the deal with IMF possible with this? What about the EU and other western donors to Zambia, will they continue pouring money into Dr Chilufya’s health initiatives like malaria, cancer, malnutrition, drugs, rural health centres etc etc if their partner Zambia is engaging such ventures? And Hon Mushimba says we will start with domestic, I thought Proflight and Mahogany airlines are actualy in stiff competition to even fill up there planes?
    Now I am not saying that h.h and his upndee.s can offer a better idea, the underfive stopped thinking economics or national strategy the moment he succeeded Mazoka, his agenda is all clan based…

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  8. Now don’t get me wrong ba upn.d, I am not saying that h.h and his upndee.s can offer a better idea, the underfive stopped thinking economics or national strategy the moment he succeeded Mazoka, his agenda is all clan based disguised as opposition politics. Waste of time, he will not even make it to the ballot in 2021 the boy has already given up, just looking for a respectable exit.

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  9. The point id Ethiopian Airlines started in 1945, Zambia Airways will start in 2014. Like them, we shall also succeed after 72 years. The important thing is to make the first step like the Chinese would say. And we need to start with an experienced air line Eyhiopia because you are looking human life. You want to carry 200 passengers using a crew without flight experience. God forbid. Its not like a passenger bus where you ecpect survivors. Give our Zambian pilots chance to learn from their Eyhiopian collegues.

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    • Who told you Zambian Pilots will be flying those aircrafts? You know absolutely nothing of this deal and merely wishful thinking …are you not ashamed to call something that is not even yours a national airline? If you know the history of aviation you will know that history has nothing to do with it – its a profit and loss dog eat dog sector; there are companies that had a history of a 100 years and are no more.

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  10. Obviously Ethiopia was not expected to give everything to Zambia on a silver platter. It’s a starting point where we can eventually evolve into a perfect airline. Rather than just talking and doing nothing about it….the bemba people say shimucita panono apokele mwikalafye umukashi.

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    • We need to go in as ‘INTERNS’ so that over the next 10 or so years, we’re able to fly on our own. Let’s do this countrymen!

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  11. LAST TIME I CHECKED ..A LOT UPND CHARACTERS HAD ALREADY FORWARDED THEIR APPLICATIONS FOR EMPLOYMENT…………….

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    • Why are fixated with petty politics keep your silly political parties out of this …are UPND not taxpayers – its this shallow thinking that is ingrained in your daft politicans who go around the country saying they will develop so and so province even if they voted for this party. This is why you can not think critically.
      Wake up from your docility and folly!!

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  12. In the words of American Real Estate Mogul, turned politician, “What do you have to lose?” What has Zambia got to lose?

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    • You will lose millions of dollars that should have been used for front line services and education – you have schools closing because of poor sanitary conditions. Here you are ignorantly fooolishly quoting an Estate Mogul

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    • @ 11.1 Jay Jay

      Jay Jay, those millions of dollars you are talking about, if left in PF’s pockets, will vanish and disappear the way the $17 billion did. Within days, those millions will be in some offshore account somewhere in Bahamas. The same millions, if left in the hands of Ethiopian Airlines, will still be a bird in hand tomorrow, something we could still count on as ours. An asset is an asset. Anywhere in the world, money is a liquid asset; in the pockets of PF, it is paraffin! It burns, evaporates and vanishes.

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    • Jay Jay, gambling at a casino is not the metaphor I would use for an investment in aviation.

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    • @ 11.5 Jay Jay:

      There is a cloud of corruption hovering over South Africa – not an ideal barometer to use for predicting the weather in the airline industry. For similar concerns, I would not look at Angola and Nigeria either.

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    • Mange ta Munya Upa – SAL has always been spoon fed and kept afloat by the RSA govt way before Zuma came to power, that loss-making airline should have been liquidated a long time ago!!

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  13. After the deal has already been signed and business operation not even started, here comes another prophet of doom.

    Why not just wait and see what happens? There is a fair share for Zambia. We don’t even need to emulate ET business model because we are able to find our own business model to meet the specific demands of our national airline. All we need is total committment and optimism as we look forward to shape our own future.

    Too bad for the critics who think they know it all better – they’ll have a hard job trying to come in terms with the positive numbers on the balance sheet!

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    • After the deal has been signed here comes the prophet of doom? You have been on here long enough to note that there have been alot of people who have been against this from day one in 2012. You seem to assume this country has $40 million to experiment with…

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    • Blind optimism Nine Chale.If you’re so knowledgeable and better why haven’t you sprang out far in front …like being the Bill Gates ,Richard Branson or Aliko Dangote of Zambia?

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    • @Mzambia wa Zamani, the banks must have called Bill Gates a blind optimist too when they turned down his request for a loan to start a computer manufacturing company. I may not end up in the same league but I believe we are all potential contributors to development of our very own products and services “Made in Zambia”.

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  14. Ofcourse the greatest beneficiary will be ET.
    GRZ could have invested in Mahogany Airlines (there’s still time), Mahogany would actually be the biggest regional airline, imagine a flight to every capital city once or twice week in Southern, Central and East Africa. This would really create the jobs and the much needed national pride.

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    • Investing or “incentifying” in these little airlines like Proflight and Mahongany with prop planes who are flying to Solwezi, Chipata and Mfuwe weekly would have been ideal…with or without National Airline Zambia will still be serviced by international carriers why some daft Politician would risk $40 million is beggars belief.

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  15. Zambia Airways is a failed venture even right before take off from the tarmac.Don’t let fake specialists like BR Mumba mislead you.

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  16. What the writer fails to note is that this partnership is made up of investments by both parties, where each has something to lose should the investments not materialize.

    The Zambian government is not giving the new airline away, it is bringing in a strategic partner that has had good success in the continent, giving them the ability to manage the company in the way that they know best. Partnering with Ethiopian gives the new airline inroads in terms of staffed stations, know how on operating in difficult African environments, and true, the technical and maintenance expertise that Ethiopian provides.

    The writer fails to understand that with any investment, Ethiopian also wants to get a share out of it. It also wants to benefit from its investments. It’s not doing charity work for…

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    • Please tell us what EA is putting on the table apart from assets they already have invested towards their growth plans…have you really read the whole article??

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    • I read the whole article. The facts about Ethiopian in the article were copy and pastes from its own press releases. Go research on Ethiopian yourself to get unbiased knowledge. Also, the article conveniently fails to report on ASKY, a huge success story in West Africa that Ethiopian has a huge part on. The writer of the article prefers the status quo, a shackled zambian government and people that rely on foreign airlines. 50% of an investment is better than 0. Not all investments guarantee money, but the business case is there to try and make this work. Business 101.

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    • @Ten, The writer actually shows how ET will make its money thru other services apart from tickets – unlike Zambia.

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  17. I’m one of the opponents of this venture for other reasons and a few mentioned by the author. However, I can’t help but to think this okie’s analysis is one sided. In particular, the analysis on the services part is portrayed in a negative line when it can be positive for a startup business.
    As a startup, you don’t need to provide all services in-house on the onset. That can spell disaster from the high cost of running a business, aka, operating costs. You need to weigh the pros and cons of outsourcing compared with doing it yourself. If it makes sense to let ET or any other airline services company provide the services on ZA’s behalf, by all means nothing wrong with that. The assumption that ET will therefore benefit from providing services is misplaced unless we have service…

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  18. …. The assumption that ET will therefore benefit from providing services is misplaced unless we have service provision exclusivity which I don’t believe any thinking government or company would do without performing due diligence vigorously.
    In terms of funding, the Zed government does not need be the only shareholder. They can offload some shares to the public, introduce employee share schemes or invite other investors to reduce the investment risk of running the airline single handedly. Therefore tax players money may not be the only source of for Capex.
    Comparing Malawi to Zed is also not on point. The author is assuming Zed entered into the same kind of bad deal as Malawi. However, we don’t know that. That is why in my last comment on the airline issue, my concern was on…

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  19. …. That is why in my last comment on the airline issue, my concern was on failure by our Government in encouraging shareholder buy-in through public participation in scrutinizing the terms and conditions of the deal. Without background knowledge to that piece of information, it’s impossible to determine who is getting the better end of the stick between ZA and ET.

    Chipimo 2021.

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  20. Excellent analysis.

    What is interesting is to see educated bloggers supporting ECL and PF’s corrupt ventures.

    Ati Zambian Airways – what a nightmare??

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  21. Graduate with $500,000 debt and then drive a Porsche? Yes doable after arranging a payment plan at a personal level based on a particular income threshold!! Why gamble public funds on behalf of the masses at the expense of other social issues that need immediate attention?

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  22. i love LT everyone here is a success always blowing our own horns,from PHD holders to high street bankers and fortune 500 entrepreneurs,i bet even Amos and Kaiza are here but dont have the balls like Gen Miyanda to use their own names…

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    • How about yourself since you have big knocker of a bull we take it your name is ERB…If you want peoples names go to Facebook!!

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  23. Unbelievable we have Zambians who have no balls at all.
    There is no business without risk.
    As long as our risk is well calculated,we need to give it our best shot as a country .
    Forget the cowards who like doing everything that is comfortable.
    Our country needs to make mistakes and learn.
    It needs boldness.
    We have many well educated Zambians all over the world but up to today we don’t have a single billionaire.We need to be adventurous.
    When LPM said he was going to build a stadium in Ndola,the same cowards were busy calling him names and claiming it was a useless investment.They said we needed to build schools and hospitals.
    Today we are all enjoying the ‘nolstagia’ at Levy.
    Muchinje ba mambala imwe…

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    • Do you even know the story about that stadium? And Who built it? Today that stadium can not even be maintained

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  24. The article asserts, just because ET owns the assets it is to deploy, as 45% of the venture, it’s of no value! For one, ET isn’t profitable by keeping excess capacity idle. Secondly, the JV is getting value for money: for 55% of the cost, it is getting top notch managers, pilots, state of the art equipment and service from world class repair shop. I am sure the terms are favorable to Zambia, else, 30 million doesn’t even buy one 55% of a used, serviceable, airliner!

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  25. Great & insightful article. Sadly, most people in Zambia have brains no more, just like their leaders, including those who claim to have PHD’s (from the university of zimbabwe maybe, where Grace Mugabe got one without being a student)

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  26. Dear Author, ….. Which airlines are losing benefits from this deal? It seems you are paid to do any thing at your a capacity to create public outcry to derail the agreement. Zero indication that you are to the national interest of Zambia. I am sure, you would not have written as much if the deal was with non-African airline or your paymasters’ airlines. Very sad 🙁

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  27. ET is probably the best Airline Zambia would have partnered with in the region. However, the question is; is there a feasibility study that has been conducted by an “independent” aviation consultancy firm with a complete Financial/Economic model of the project? If yes, can a summary Financial model be shared with the public. If no, how then was the decision to set up the airline arrived at? I hope there is a financial model on which the decision was based and please let it be shared.

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  28. There are no losers and there are no winners in a functional Zambia Airways. We are all winners! The old Zambia Airways worked very efficiently until the economy collapsed. Why did the economy collapse? Economic historians are still debating the issue. Some argue that external factors from Western countries were responsible for the economic collapse. Yet others argue that poor government policies were responsible for the economic collapse. Now that the economy is breathing, new Zambia Airways will be run profitably by able and experience technocrats. Criticism if free but profit is costly. Nothing ventured, nothing gained.

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  29. This is a very good typical example why things in our parliament things/decisions don’t take off always academic girl fights and insults…its sad!!! and for you who call themselves Christians please watch your tongue …….we clearly fail to maturely and not intellectually which I dont see to discuss an article..imagine we were all in a bar….we will come out swollen other blooding….Zambia is our mother country help discuss matters concerning it as some of us learn alot from such blog platforms chat….concern Zedian

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  30. The article is nicely composed but having a well researched article without the people say on the subject still fails in its intention…collective bargaining system is unfortunately democratic way to drive a country eg Prof Chibwe brought a brilliant idea of changing the rail system but it failed, Zambians at larger saw it as NOT a priority not necessary that it was a bad idea…so such debates open good thinking realigning intellectual knowledge with resource prioritization so to speak Ba Mange

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  31. Mr.Kalima Nkonde wrote an article on the possible/pending ET and Zambia Airways business partnership.That was Mr.Nkonde’s OPINION.It will be more civilised and profitable to other readers for subsequent contributors to this article to voice their OPINION FOR or AGAINST the subject of that opinion than to attack or insult the opinion of a contributor to the subject at hand.Can we,with civility,contribute positively and AVOID insulting those that give their genuine opinions?..that is if you understand the subject being discussed….[ airline operating costs for example etc etc….please

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  32. Please shut up! Go to H and make one airline with him so that you too can be a beneficiary! Zambia needs to start from somewhere. UPND is boring!

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  33. The article lacks or did not establish any stronger point regarding alternatives. Secondly, adverse opinion on Zambians’ payments for pilots training, Airlines service are something that we cannot avoid whatever model of the business Zambina apply. So seams biased opinion and suffered short of strong points of reason against the agreement.

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    • True….Zambezi airways on many times got impounded in SA on inspection failure for maintain and fuel…lol

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  34. Whereas the article does give an insight of the Ethiopian Business model it does not give a corresponding Zambia Airways (QZ) 2014 model, hence the assertion that it is biased.
    The author should allude to facts such as the IRR, NPV and Payback period for the ET/QZ venture for us to determine whether it should be a priority or not to go ahead with the venture.
    With the defunct airline, the tourists used to come to Zambia directly and there was a flourishing agriflora business with the Scandinavian countries albeit at a smaller scale. THESE ARE NOT IMAGINED.
    World institutions such as the World Economic Forum, the World Bank and the Africa Development Bank (AfDB) have called for economies such as ours to diversify from copper as it is a wasting asset.
    What better time is there to…

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    • …invest in relevant infrastructure to grow the industry and our economy than now especially that there is a mentor (ET) to guide us navigate the pitfalls of the industry?
      Lack or inadequate infrastructure, disease and red tape bureaucracy have been cited as factors that have led to stagnation of the tourism industry and associated businesses. Must I add, IGNORANCE as exhibited by some bloggers who cant deliberate issues as civilized people!

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