Coastal Aviation: Tourism Industry and Aviation Services in Tanzania

Interview with Julian Edmunds, Managing Director at Coastal Aviation

Coastal has now been operating for 29 years. What changes have you seen in the role of your industry since then?

A huge, massive growth. We started in 1988 with one Cessna 206, which is a five-passenger seat aircraft, and now Coastal has 20 Cessna Grand Caravans, with 13 seats, and four Pilatus PC12, which are pressurized nine-seat commuter aircrafts. Still, we are adding two more in order to have a fleet of 26 aircrafts. Back in those days, there were three more companies of aviation services, and now there are probably 12 similar companies, in varied sizes. The second biggest company now has 13 Caravans. Each one of these airplanes is worth US$ 2,6 million, so it is quite a feasible investment. We were the first company to bring a Cessna Grand Caravan to Tanzania, in the late nineties. There are now 70 of them in the country. So there was big growth, in some ways, too much of it. At the moment, the supply of seats is probably outstripping the demand for tours, so there is quite a lot of overcapacity, what is causing little price wars. But the scenario is pretty good. The big problem is that it is a very seasonal activity. In July and August we are frantic, but in other times of the year companies often got lot of capital, equipment and pilots sitting on the ground. And you still got to pay them through the year.

Do you think that TTB (Tanzania Tourist Board) should focus on diversifying the industry by expanding different geographical options and tourist attractions to meet the expectations of a broader range of tourists?

Tanzania is in the middle of Africa. It is a diverse country, with lots of different people. To a degree, we do represent the soul of Africa.

It is a difficult question. To a certain extent, I am a little bit skeptical about it. I feel we are almost going backwards. Tourism in Tanzania is becoming more polarized between the wildebeest migrations and the beaches of Zanzibar. Slightly less popular parks are now getting fewer visitations. As Serengeti and Ngorongoro get busier, places like Katavi seem to be getting a lot quieter. I think more needs to be done to encourage people to experience the other parks of Tanzania. We have had some negative publicity in places like the Selous Game Reserve and in Ruaha National Park, and that is having a negative effect. So, while we are seeing a huge growth in Serengeti, there are declining businesses in the Selous Game Reserve. We need to concentrate in destination marketing of those areas. We need to get a balance, because otherwise we are going to damage our product in the long term. At the moment, a lot of people can’t see it. They just look at Serengeti and see how busy it is. What they are not seeing is that everywhere else is not as busy as should or could be.

Is Tanzania doing enough to properly market itself to the world?

I feel very sorry for those who work at the government tourism boards, because they are never going to please everybody. They have quite a small budget and have to please their political masters, so they will often carry out strategies that have more to do with ego than with effectiveness. I think the Tanzania Tourist Board tries very hard, but it is an open-ended question if they are always effective. “The Soul of Africa” [Tanzania’s official tourism motto], though, is a good line. We had the interesting challenge of trying to get a new motto. It used to be “The Land of Kilimanjaro, Serengeti and Zanzibar”, but that was a bit mouthful. Then they tried to change it into something very disappointing and we managed to avoid it. Tanzania is in the middle of Africa. It is a diverse country, with lots of different people. To a degree, we do represent the soul of Africa.

How can we compare Tanzania’s efforts with Kenya’s and Uganda’s in terms of generating tourism employment?

Tourism employment in Uganda is largely driven by tourist demand. The one thing Tanzania has is a perception of stability. Very fortunately, we don’t have security issues as Kenya, so it gives us a very good platform to build actions. But there is no doubt that Kenya’s tourism board is much more dynamic. They had to be, because of their needs for dynamic leadership and creativity. In Kenya, all competitors come together in times of crisis. They work very effectively and put their arms around each other to go out as the brand Kenya. When Kenya is busy, everyone is well. It is quite entertaining when you see them in travel conventions around the world. You can always tell when Kenya is in trouble, because they are all being nice to each other, working well and brand Kenya is very much on display. They are coming through it, not necessarily finding it easy with the government in terms of taxation, but the government is finally listening. They have dropped VAT [Value Added Tax] on tourism services in certain times of year and for certain age groups, created visa-free travel spots, given free landing access to charter airlines flying to Mombasa. So they are trying hard. Uganda has other issues, like terrorism in the North, so they tend to yo-yo a little bit as well. But they are fighting hard and they are doing well. When they get together, brand Uganda is really strong.

Does Tanzania stand to be a net beneficiary of negative events in these countries?

I passionately believe that we need a strong Kenya. Kenyans would say they have invented the safari. Due to films like “Out of Africa”, Kenya certainly put safari tourism on the map. We need a strong Kenya, Tanzania feeds of Kenya. The number of dual opportunities is growing, we see a lot of people doing the Masai Mara and Serengeti in the same holiday, and that is very much a growing scenario. Political violence in Kenya or security issues that cause travel warnings are a downturn for East Africa. We are competing but, together, Kenya and Tanzania are competing against Southern Africa, Botswana, Zimbabwe or Zambia. And Zambia has some good news, such as the lifting of the travel ban and the fact that tourists no longer need yellow fever vaccine to go there. There is a lot of opportunity in South Africa, as the rand becomes an affordable currency. Collectively, we compete with the Far East. We are competing for the tourist’s time.

Why are safari tours so much more expensive in Tanzania than in Kenya?

To some extent, due to taxation: we have just increased VAT to 18%. We don’t know whether it will really have a long term effect. I think the government probably has a point, and they have already said it will have a limited negative effect and will be a short-term solution that everyone will forget about. On the other hand, they claim that we have a low-volume, high yield business. Within our own business we have a top end, a middle end and a budget independent traveler end. That middle bracket, that represents a significant volume of tourists, will be affected. They are much more price-conscious; they buy through companies as Leopard Tours and Ranger Safaris, which have big fleets of vehicles. They are much more susceptible to that VAT issue.

Do you think the government should do more to promote and market low cost tours and regions which are currently not visited by mainstream tours?

Yes, always. As a businessman in Tanzania, I think that if we can get free marketing from the government, we are all for it. Any kind of growth in tourism here or in Coastal aviation will naturally benefit us.

How much more investment is necessary in infrastructure, like in airports?

Unfortunately it almost always comes too late, but it is good and we welcome it. If you go to Terminal 2 at Julius Nyerere International Airport in the afternoon, you will see hell, because South African Airways arrives at ten to three, Qatar Airways at three o’clock and Emirates at ten past three. That terminal has outlived its designed life. Now, a very smart new Terminal 3 is being built, which will, undoubtedly, alleviate these issues. But in Terminal 1, where we are based, due to the growth of our industry, there is nowhere to park our airplanes. We have a critical issue with infrastructure, particularly in key areas. They are addressing it, but five years too late. The benefits will come, but we will endure some pain until it gets better.

Do you think upscale hotel chains are capturing too much of the gains of tourism?

Having brands such as Hyatt, Hilton, Ramada and Radisson drive the standards up for other players in the industry. It is good that Tanzania is seen as an attractive place for those hotels, but let’s be realistic. Those brands are largely hotel management companies which are actually managing hotels owned by Tanzanian corporations or foreign investors. We have seen the benefits: we can no longer accept a low quality standard product; there is an international standard that has to be met now. When I first came here, in 2003, there were very few hotels, and certainly none offering the quality level of Hyatt Regency. Now there are a lot of hotels offering that quality.

Can quality services be delivered by local agents?

Regarding our agents, we see that big hotels and online distribution enable people to book services, such as flights, directly. That is no problem at all. But the local tour operator is feeling threatened. It means they have to improve their services. It is not about competing for prices. It is actually saying: “you need to book through us because we’ll make sure you’ll have the best time. People can book hotels, safaris and Coastal aviation flights online, but do you know there is a really funky place to have dinner? We do and we can take you there”. The agents have to reinvent themselves to add that value rather than just complaining. No one has the divine right to be in the value chain.

How can Tanzania contain or control negative environmental and social effects to be successful in the tourism industry?

Communication. We need to talk within the industry and we also need strong private sector tourism bodies. We need to embrace the environmental lobby and work with them, talk to them. We need to work with government departments. In certain areas, regulation is good, but in others it is definitely restrictive or has a negative impact. The classic example, at the moment, is the uranium mining in heritage Selous Game Reserve. The country needs foreign investment and to earn foreign currency from its natural resources, but tourism is also a natural resource, and it’s an export, because it brings foreign currency. One needs to get the overall balance correctly and pay attention to the message it sends to the rest of the world. If you redraw the boundaries of the Selous Game Reserve just so you can accommodate a uranium mine and hopefully keep its World Heritage status, it might not be sending the correct message. I am not saying it is wrong or right, but we need to understand that there is a potential negative impact. We don’t want to find that the world says “we don’t want to go to Tanzania any longer because they don’t really care and they are not managing what they’ve got”. It’s all about communication, working together and trusting people. If we can do that, we’ll win.