More financial troubles for Air Tanzania

Complaints were received from travel agents in South Africa about the apparent nonchalant way how Air Tanzania’s (ATCL)

More financial troubles for Air Tanzania

Complaints were received from travel agents in South Africa about the apparent nonchalant way how Air Tanzania’s (ATCL)
top management is dealing with their claims for refunds. These claims originate from the time the airline was still flying to Johannesburg, then a bread-and-butter route for the Tanzanian national airline.

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When ATCL had to suspend their flights to South Africa in late 2008, agents and clients who had already paid for their tickets to fly for a holiday or on business to Dar es Salaam, were expecting a swift refund, as would be expected of a national airline, being a member of IATA (International Air Transport Association) at the time and under the usual BSP rules. Several years later, however, the claimants are still owed at least 3 million South African Rand, while the airline is using one excuse after the other to evade payment, if not weasel out of it altogether, given half a chance.

This deplorable situation also brought the Association of South African Travel Agents, in short ASATA, into the picture, as many of their members have complained to them and asked them to support their claims and use their influence to make ATCL pay up at last, in particular where payments via credit or debit cards were concerned. ASATA in turn did not make any friends among their membership when in a mid-February communication to members they basically washed their hands of the matter and recommended that claimants be directed to the Head of Revenue Accounting of Air Tanzania in Dar es Salaam, a near hopeless effort as it is in evidence for the past one-and-a-half years and perceived by those affected as a transparent effort to “fob them off,” as one source put it.

This matter is now going public, following some detailed investigations by this correspondent, and is expected to become a matter of national shame for Tanzania and more than likely another nail in the coffin of both airline and management responsible for this inexcusable situation, which threatens the very core of some agents in South Africa who depend financially to have these debts settled.

The government of Tanzania has in the past been bailing out ATCL from time to time, mostly with funding for pending salaries, aviation fuel, and ground handling charges, but only a week ago did this correspondent report that the Tanzania CAA is owed about a year’s worth of landing, navigation, and parking fees by the airline, impeding the work of the TCAA severely due to the lack of payment by ATCL. With their B737 recently involved in an accident in Mwanza (and to be written off), also reported immediately by this correspondent, another income earner is now missing for the airline and their financial situation is expected to deteriorate even further from here on. Unless that is, that either government once more bails them out with a major cash injection or directly pays creditors their long overdue funds, or a possible suitor, i.e. a strategic investor puts in major money, as has long been floated by the government in Tanzania to an increasingly doubtful public.

However, in the course of the investigation, it was also learned that the Chinese “Sonagol” consortium, which has for several years now considered acquiring a major stake in ATCL, is growing more and more distant and is apparently getting the proverbial cold feet, as they did not see an immediate and substantial return on their proposed investment vis-a-vis other deals they tried to secure from the Tanzanian government, such as mining rights, oil exploration rights, and other sweeteners.

To compound matters, a car deal struck by the management of ATCL soon after the divorce from South African Airways, is now also coming home to roost. A whole lot of 4×4 vehicles were purchased at the time from Dubai, some of them for senior staff under a favorable car purchase arrangement funded by the airline, while many of the other cars were meant for senior management as official cars, a perk common for state corporations and other big companies. A number of those cars ended up remaining in customs bond as the airline failed to raise the money to pay for duties and taxes, and it now appears according to a source in Dar es Salaam, that these vehicles will be swapped over to Galileo Tanzania, which will clear the duties, pay the taxes, and then use the vehicles under their ownership while reimbursing ATCL, less any other pending claims there may be between Galileo and ATCL.

Overall, the future of ATCL, once considered bright even in the face of growing competition, is now more doubtful than ever before, and as done in other African countries, the government will have to answer the key question soon: is there enough money available to turn the airline financially around and install sound and competent management, or if not, is it not better to pull the plug and end the misery once and for all? Should this happen, Precision Air will undoubtedly step up fast; bring forward aircraft deliveries; and add frequencies, capacity, and routes, while other privately-owned airlines may then also finally step into the breach and begin to offer services on domestic and regional routes. Fly 540 (Tanzania) certainly is a key contender for such an opening, and like Precision Air, they, too, would be swift to take advantage of the demise of the erstwhile national airline, now a mere shadow of its former self.