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Second tier airlines are silent workhorses in tanzania

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by ByaseL, Mar 1, 2010.

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    ByaseL JF-Expert Member

    #1
    Mar 1, 2010
    Joined: Nov 22, 2007
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    Every time we talk about domestic airlines in Tanzania the mind frequently recalls Air Tanzania Company Limited (ATCL) and Precision Air. There are very few people in the streets out there who know or have heard about, for instance, Zan Air, Coastal Travel Air Services, Tanzanair , Tropical Air and not to mention the Johny-come-lately Air Zara, et cetera. Some of these like Tanzanair operate as charters while Zan Air, Uric Air and Coastal Travel Services mainly operate as scheduled airlines just like ATCL and Precision Air. For easy reference let us categorize Air Tanzania and Precision Air as “first tier” airlines and Zan Air and Tanzanair, et al as “second tier” airlines. There is no locally registered and active cargo airline in Tanzania at the moment so this treatise will not address this area.

    All locally registered airlines in the country fall under the same aeronautical jurisdiction in this case Tanzania Civil Aviation Authority (TCAA). However, there are some structural differences between first tier and second tier airlines.

    First, whereas first tier airlines are licensed to carry out scheduled international and domestic flight services as well as ad hoc charters services, second tier airlines are either restricted to domestic or charter services or both. The main reason for second tier airlines to be excluded from international flight services is because international scheduled services operate under what is known as Bilateral Air Services Agreements (BASAs) framework.

    Under the BASA arrangement countries agree on a modality how to operate air services between two parties. For instance, most of the BASAs especially in African countries allow double designation of airlines to operate scheduled air services between two contracting parties. Take for example, the BASA between Tanzania and Kenya. At the moment this BASA allows ATCL and Precision Air to operate scheduled air services to Kenya and vice versa while Kenya Airways and Fly540 are the only airlines allowed to operate scheduled air services from Kenya to Tanzania. In this case, therefore, a third airline wishing to operate scheduled air services between Kenya and Tanzania will require the review of the BASA between these two countries to accommodate multiple (more than two) designation. Some countries especially the United States of America and Europe have adopted a more liberal open skies policy. However, detailed insight of the BASA dynamics is beyond the scope of this discussion.

    Second, in most cases, first tier airlines tend to broaden their scope of business by trading internationally through joining the International Air Transport Association (IATA) and IATA Clearing House (ICH) while second tier airlines are inward focused in the business sense or tend to “zero-graze”, to use a recent catchphrase. By joining IATA and ICH first tier airlines are able to interline with other international airlines to share passengers and revenue which is not the case with second tier airlines.

    Third, because of their cost structures, second tier airlines tend to be relatively cheaper compared to first tier airlines. This is because of the relatively smaller aircraft (capacity wise) they operate, lean corporate structures with relatively lower overheads as well as lower sales, marketing and distribution costs. At the moment second tier airlines in Tanzania have limited domestic networks concentrating mainly their scheduled services from the commercial city of Dar Es Salaam to Zanzibar, Pemba Islands and Mafia. Uric Air is the only airline providing scheduled air services between Mwanza and Bukoba. However, charter airlines tend to cover the whole country depending on the demand for charter services.

    Finally, First tier airlines are quite visible in the sense that their products or services are displayed, distributed and sold primarily through well known international distribution computerized systems and can therefore be sold worldwide. For example, ATCL and Precision Air products are sold online through a network known as SITA Reservation System. This is a network which has been designed primarily to cater for airlines from developing countries because they cannot afford to develop their own in-house systems like major airlines do. Furthermore, first tier airlines in Tanzania are also subscribers to Global Distributions Systems (GDS) namely Galieo by Travelport and Amadeus. These are the systems that are normally used by travel agencies and tour operators basically to sell ATCL, Precision Air and other international airlines. Ticketing for ATCL and Precision Air has been made easy through e-ticketing technology which means that it is now possible to get your ticket online through the internet.

    Some second tier airlines such as Uric Air, Coastal Travel Air Services have improvised web based reservation systems but these are not as interactive and sophisticated as the GDS, otherwise the rest of second tier airlines are operating manual reservation and ticketing systems which means they have no visibility and exposure worldwide. Admittedly, it will take a bit of time for the second tier airlines to adopt let alone adapt to e-commerce because the resources required to go hi-tech can be prohibitive.

    Nevertheless, having said all this, second tier airlines are playing a very important role by not only complementing first tier airlines’ services but also providing flexible and relatively cost effective air services which has, to a great extent, boosted passenger traffic volumes in the country. In other words, second tier airlines though not quite conspicuous are silent, behind the scenes workhorses whose role must be appreciated and be given due recognition they rightly deserve.

    Finally, it is important to emphasize that second tier airlines need to be nurtured and supported so that they can also gradually grow into bigger airlines just like Precision Air Services’ rags to riches story. Precision Air started as a very small airline outfit both in size and scope but eventually has grown to become the biggest airline in the country to the extent of even leapfrogging ATCL on both aircraft and market share fronts. Let us hope that as the “cake” becomes bigger the likes of Coastal Travel Air Services, Zan Air, et cetera will one day mature into fully fledged first tier airlines to enhance aviation development in the country for the benefit of consumers.



    Byase Luteke



     
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