eTN speaks with Chairman of Precisionair on air transport situation in Africa
TANZANIA (eTN) - While aviation and airline professionals are set for the seventh edition of the Routes Africa 2012 Forum in the mid-Indian Ocean islands of Seychelles, eTN spoke to Mr. Michael Shirima, the Chairman of Tanzania’s first and fast-growing airline, Precisionair, about the challenges and problems facing airlines in Africa. Tanzania is among African countries rich in tourism, minerals, fertile agricultural land, and wildlife. But despite all these riches, this African nation lacks a reliable airline.
About twenty years ago, Precisionair, Tanzania’s first privately-owned scheduled airline was established as a brain child of Mr. Michael Shirima, Tanzanian citizen and aviation expert. Since then, Precision Air has become one of among a very few African airlines established by an individual entrepreneur. From a mere scratch in the form of a crop pesticide spraying light aircraft to a tourist charter company, Precision Air has grown to a full-fledged airline, serving all key routes in Tanzania and neighboring East African states, looking further to extend its wings to the Southern African region and other parts of Africa.
In this eTN special, Executive Talk, Mr. Shirima talked to Apolinari Tairo, eTN Staff Writer in Tanzania, about the ups and downs of the airline industry in Africa in advance of the Routes Africa 2012 Forum.
eTN: Mr. Shirima, can you briefly tell us a short history ahead of establishing Precisionair, on how did it come to be from the start?
SHIRIMA: Precisionair was preceded by a crop-dusting company that was formed late in 1986. When persistent draught occurred in [the] early 1990s rendering crop dusting without enough work, an idea to establish a charter company was actualized, and hence, the formation of Precisionair.
This was financed by me from the proceeds of a coffee export business I had been engaged in since [the] early 1980s and partnering with a newly-formed Tanzania Venture Capital Fund at 66 percent and 33 percent, respectively. That fund was bought out by Kenya Airways in 2003.
eTN: What is the success story behind the airline (Precisionair)?
SHIRIMA: Faith, diligence, honesty, integrity, professionalism, perseverance, and experience. Deploying a management motivated by objectives, targets, and results. Formation of [a] team consisting of people selected carefully for no other reason but skills, experience, devotion, and ambition to succeed. People closely bonded as partners and friends. Employees were made to feel as partners without consideration of rank. So it is, people! People! People!
eTN: Aviation experts always say that the airline business is tough and complicated. How did you venture into this risky business?
SHIRIMA: Indeed, [the] air transport business is not for the faint hearted. There are so many things that can go wrong, [it is] highly capital intensive, [with] thin margins, expensive equipment, and unpredictable fuel prices. I ventured simply because of PASSION. Wealth creation was the least of my considerations, because I knew it to be remotely possible in this business contrary to public perception.
eTN: In response to the previous question, many African governments have failed to finance their national airlines. How did you manage to run Precision Air before its joint venture with Kenya Airways?
SHIRIMA: I have explained in the above question. Deploying a strong professional management team based on experience and [an] acceptable track record. No results, no job, was applied strictly.
eTN: The African continent is counted the poorest in air transport compared to other continents of the world. Why such a scenario?
SHIRIMA: Simply, poor management consisting of individuals selected for reasons other than those I have stated. But then Africa is poor and so that explains the rest.
eTN: Being a leading player in Tanzanian airspace, also as an aviation professional, what problems are currently facing airline operators in this country (Tanzania)?
SHIRIMA: Wanting infrastructure, ignorance of the business, high taxation and fees, together with a mindset of the establishment embracing anti-competitiveness in ground handling and other sectors, thus stopping more international airlines choosing Tanzania as a direct destination, because of [a] resultant high cost of operation. Our neighbors capitalize on that and succeed.
eTN: About tourism, how did Precisionair support in boosting Tanzania’s tourism through air connections?
SHIRIMA: Facilitating quick, comfortable, and reliable means of transport between tourist destinations at costs structured for the value of the money. We are almost approaching a figure of 1 million passengers per year and about 60 percent of those are tourists and foreigners.
eTN: What motives were behind your idea to go into a joint venture with Kenya Airways?
SHIRIMA: To share risks with a strategic partner and grow the airline to greater heights. There is no longer pride for sole ownership, as that deprives continuation, sustainability, and growth. Worldwide airlines are in joint ventures, partnerships, buyouts, and alliances. Those who stand alone do not exist anymore, and where they do, they are weak. I wanted Precisionair to continue to exist and be a world-recognized player.
eTN: The brotherly joint venture between Kenya Airways and Precisionair had brought very positive results in Tanzania’s airspace. Are you satisfied with this?
SHIRIMA: A partnership without challenges does not exist. I am happy both Kenya Airways and I have at all times addressed common challenges amicably as equal partners.
eTN: Air fares are counted to be much more higher in Tanzania and Africa, compared to what we see in other parts of the world. Why is this?
SHIRIMA: Inadequate infrastructure, high cost of operation because of remote placing from manufacturer of equipment. Fuel cost is a huge problem for al,l but more to Africa.
eTN: In response to the previous question, don’t you see that higher or expensive air fares prohibit development of the airline industry in Africa?
SHIRIMA: To a certain extent, yes. But there are solutions which have been advocated by many bodies, but especially the African Airline Association (AFRAA). Unfortunately, African countries are not heeding to the advice. The main theme of the solution is to cooperate.
eTN: The African continent’s sky is counted unsafe, while African registered airlines are regarded unsafe. What is your comment?
SHIRIMA: This is an unfair representation of the situation, because when accidents happen in one African country, they are bundled to the whole of Africa. There are many countries with impeccable records, but they are lumped together with those which are regularly the culprit.
eTN: We have seen many air accidents in the Democratic Republic of Congo (DRC) and recently, Nigeria. How are East African airlines preparing to avoid such calamities?
SHIRIMA: Accidents can occur anywhere, but East Africa cannot be compared with those countries as far as records indicate. Aviation is highly regulated and disciplined for purposes of safety. Constant training, awareness, and safety oversight is of prime priority. Airlines should be subjected to IOSA (IATA Operation Safety Audit), which is mandatory biannually for IATA members. Statistics have shown that occurrence of accidents to operators who undergo such [an] audit is less than those who do not.
eTN: What should African governments do to develop their countries’ airlines, both state owned and privately owned?
SHIRIMA: State-owned airlines is a dying concept, although some countries still embrace it for prestigious purposes at an exorbitant cost to the taxpayer. Ethiopian Airlines is the exception, but its chemistry is totally different. That airline does not get subvention from the government unlike all others. It has something to do with its history. But wiser governments have dropped state-owned airlines and alternatively taken a stake in private airlines. The Kenya government has only 23 percent ownership in Kenya Airways, which is making [an] astronomical rate of growth. Those are the facts on the ground.
eTN: Coming back to Tanzania – are you comfortable with your business back home, Tanzania?
SHIRIMA: I am not sure comfort exists in running an airline, or for that matter any business, because that means complacency. If that were to be, it is a sure way to diminish the status and value of the business. Working diligently for an airline is 24/7, and although that can be fulfilling, it is not comfort.
eTN: Where is the sky’s limit for Precisionair?
SHIRIMA: We say even “the sky is not the limit” for Precisionair. We have no limit, even an imaginary one like the sky.
eTN: We have been informed that Precisionair plans to extend its wings up to other states in Southern Africa. Will that be its sky’s limit?
eTN: I happened to fly by Precisionair to Nairobi, Kenya, on my way to Seychelles. Is the airline planning to fly directly from Tanzania to Seychelles and other holiday islands in the Indian Ocean?
SHIRIMA: Although nothing is excluded in our future plan, those areas will be flown to directly only at the appropriate time when a business case is researched and proven.
eTN: What are major challenges facing the airline industry in Africa?
SHIRIMA: Infrastructure, human resources, poor negotiation skills, capital, corruption, and a string of others. Being at a distance far from where aircraft and spare parts are made makes for a natural challenge for which perhaps group order would alleviate, but cooperation is difficult to forming among countries and airlines for some unknown reasons.
eTN: In his recent address to the delegates of the AfDB [African Development Bank] Annual Meeting in Arusha early this month, the Tanzanian President called for African governments to develop and encourage viable airlines. How would you assess the President’s call?
SHIRIMA: There are many problems in this sector, some of which I have already mentioned. The government could deploy a task force of experts consisting of local people and foreigners to study and give recommendations. Implementation of such recommendations should be steered by equally expert people who have proven track records and who should be selected by fulfilling specific conditions.
eTN: About the Routes Africa 2012 Forum: are you informed about this crucial aviation industry gathering? And are you going to the Seychelles to attend such a crucial airline forum?
SHIRIMA: I am personally not aware, but it is not surprising, because I am not involved in the day-to-day management of the airline. Most likely the management team is aware.
eTN: Any other comments from you?
SHIRIMA: The questions were exhaustive and very well formulated in such a way that within the limitation of time and space I have said quite a lot already.
eTN: Thank you, Mr. Shirima, for availing yourself to speak, also your good cooperation and quick response to eTN’s request to get your professional views on the air transport in Africa in this Executive Talk ahead of the Routes Africa 2012 Forum.