Maravi

Govt should give Zambian Airways a long-term bond – expert

Govt should give Zambian Airways a long-term bond – expert
Written by Joan Chirwa and Allan Mulenga
Tuesday, January 13, 2009 9:43:55 AM

GOVERNMENT should give Zambian Airways a long-term bond or buy equity in the airline to maintain confidence in the local economy, a financial market expert has advised.
And Zambia Tourism Board (ZTB) chairman Errol Hickey yesterday said the suspension of operations by Zambian Airways is a hard blow to the tourism sector.

But transport and communications minister Dora Siliya yesterday stated that Zambian Airways’ suspension of operations would not negatively impact the tourism industry as other operators would absorb the demand.

Miles Sampa yesterday disclosed that the suspension of operations by Zambian Airways could have a serious effect on investor confidence and ultimately affect the performance of the local currency.

Sampa, who is former president of the Financial Markets Association of Zambia, said the government could, for strategic reasons, offer a long-term bond to save the local airline from collapsing.

"Government should come in and bail them [Zambian Airways] out. It is very possible that government can give Zambian Airways a long-term bond or buy equity in the airline for strategic reasons. We need to keep it for strategic reasons and to maintain confidence in the Zambian economy. In an economy where we have seen mines closing, we can't afford to have airlines closing, because it will erode confidence. This situation could go on to even impact the exchange rate because the confidence is eroded. This will start deterring other investors who wanted to come."

Sampa said the argument that a private company could fend for itself did not hold owing to the current global situation.

"Even champions of free market economies like US are bailing out banks. The jump in oil prices was too high, most companies need to be cushioned. In the case of US automobile industry, billions of dollars have been put in, and yet those are private companies, but that was done just for strategic reasons. In the UK, it is obvious that British Airways will be bailed out should they have any financial difficulties because it is the symbol of the UK," said Sampa. "Zimbabwe has maintained Air Zimbabwe for strategic reasons, and it is still flying in the region. And if Zambian Airways cannot operate, Zambia will be the only country in the region without a flag carrier. It's not too late, government should be seen to come in and bail out strategic companies. This situation will affect a lot of people, especially SMEs, most of whom were flying to Johannesburg to buy goods and coming back in one day."

And Hickey, in an interview, said the suspension of operations by Zambian Airways would have a negative effect on the country's tourism potential, saying the travel expenses for tourists were likely to increase.

"It is a sad situation because Zambian Airways is the only airline we had as a country. It is a very serious blow to the tourism industry," he said. "The fact that Zambian Airways used to connect to South Africa and operate in a number of areas locally at a cheaper cost made tourists rely on its services."

Hickey observed that Zambian Airways' suspension of operations would excite stiff competition among the few small airline operators, thereby pushing up air travel costs.

"Here we are thinking of Zambian Airways which used to charge between US $450 and US $500 to South Africa," he said.

Hickey said the development would hinder the proposed government's exploitation of tourism potential in Northern and Luapula provinces.

"Right now the government is talking of opening up the tourism potential in Northern and Luapula provinces, but I feel the suspension of the airline will adversely affect the development," he said.

Hickey urged the government to quickly embark on a countrywide road rehabilitation programme to rescue the tourism sector.

But Siliya, in a press release, stated that as much as government regretted the suspension of operations by Zambian Airways, other operators would fill the gap created in the tourism industry.

“I have received a deluge of inquiries from the public concerning the suspension of operations by Zambian Airways. Zambian Airways has been issued with an Air Service Permit as a scheduled operator. This permit has not been suspended, revoked or varied. Regrettably, government has not received any official notification or reasons for the suspension of operations other than those from the press reports,” Siliya stated. “The domestic and international routes serviced by Zambian Airways include Ndola, Livingstone, Solwezi and Johannesburg and Dar es Salaam respectively.”

She stated that government was currently making efforts to get in touch with embassies in South Africa and Tanzania to ascertain the number of Zambians who were stranded in the two countries, holding Zambian Airways tickets.

“Further, the government is making efforts to contact shareholders of Zambian Airways with a view to establishing what efforts they are making or plans they have in fulfilling their IATA [International Air Transport Association] and Air Service Permit obligations to convey passengers holding their tickets, in order to ameliorate the affected passengers’ plight.”

Labels: DORA SILIYA, ERROL HICKEY, TOURISM, ZAMBIAN AIRWAYS

posted by MrK @ 9:45 AM