News Column

Which Way, for Air Namibia?

May 27, 2014

AIR Namibia will get N$1,8 billion over the next three years in government bailouts, money a lot of Namibians argue could be used in other productive areas of the economy rather than keeping the loss making airline afloat.

The airline is currently implementing its business plan, which was approved by the cabinet. There are reports of infighting between the board and the airline's managing director.

AIR Namibia adopted its current business plan at the end of 2011, which makes it approximately two and half years into this business plan. What would you say about the plan? Was it relevant, is it helping in attainment of the set objectives? Have the operational efficiencies cut Air Namibia's loss?

The fruits from the business plan initiatives and strategy implemented have started showing. We are now going for the third year and most of the planned initiatives which needed execution are already implemented. Most of our routes have grown from strength to strength, with revenue having increased, and operational results from the route profitability report having improved by a significant margin across the entire route network compared to previous year. We are still loss making but the losses have reduced significantly. The fleet modernisation project was successfull with the new fleet now in full operation.

On the implementation of the business plan, can you say Air Namibia is on track?

The airline business is a long term business. Decisions taken today take sometimes up to three years before results can show. Thus far we can comfortably give the airline a score of eight out of 10, considering that 80% of the main initiatives have been implemented successfully.

What are some of the major challenges that Air Namibia has encountered in the implementation of the business plan?

Air Namibia acknowledges the many challenges that the industry throws its way but it is determined to continue making strides, as it continues to contend with stagnant markets, increasing competition, effects of the global economic crisis, increasing governmental regulations with associated costs, and oil price uncertainty. These challenges are part and parcel of the business we are in, and we need to learn to navigate through them.

Business plans are normally based on assumptions about what the market will look like and what the market responce will be. From the Air Namibia experience, can you tell whether or not some of the recommended initiatives proved to be wrong and were aborted and cancelled, or were all assumptions positive and turned out to be ok, nothing was changed or cancelled?

Yes competitors reacted in one way or another when they saw what we were doing so that they protect their market share. The business plan had assumed a lot of flying (increased frequencies on some of the routes). The market or rather demand did not grow at the same pace in some of the instances so we had to cut down on some of the frequencies so that we match demand to capacity.

On some routes where we had to cut frequencies, demand has started picking up again and we also have responded by adding frequencies to increase capacity. The most notable routes referred to here where we recently increased frequency include Johannesburg and Ondangwa.

Other routes did not respond well so we had to suspend operations, for example Gaborone and now Accra. We had planned to launch flights to new markets such as Ondjiva in Southern Angola, unfortunately we are still battling with the Angolan authorities to grant us the required permits to start operations to this market. Infrastructure and logistics deployment in some of the airports is another area, but we are working closely with Namibia Airports Company in this regard to jointly ensure airports are aligned to support our operations optimally.

You recently cancelled the Accra route yet there are reports of introducing flights to China, are routes considered on business or political consideration?

Air Namibia like any other commercial airlines in the world operates through two or more channels to access its markets. We have the primary and secondary markets that we directly operate into using our own aircrafts and feeding points where we can access through partner airlines. The primary markets are our immediate operated sectors that the airlines would fly directly to and the secondary markets are the feeding points where Air Namibia would operate and generate revenue through a second or third carrier airline, which we have standing commercial agreements.

Therefore, the route to China would be operated through our partner airlines either Kenya Airways, Turkish Airline or Lufthansa. Accra will also continue to be served via airline partners such as Kenya Airways and South African Airways.

Are you going to continue flights to Lusaka and Harare?

Currently, we are experiencing a growth on these routes, and we are leaving passengers behind due to flights being full. So we will in the near future be increasing capacity on these routes, either by way of deploying larger aircraft or more flights per week.

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Source: AllAfrica

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