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Tanzania Report

Marcopolis presents the Tanzania Report focused on topics such as economy, investments and doing business, featuring interviews with Tanzania's leaders. The sectors under review in this issue are agriculture, banking, construction and real estate, energy, financial services, exports, industry, tourism, logistics and many more. 

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InterviewsSeptember 20, 2021

Aviation and Tourism Industry in Tanzania: General Manager Jameel Kassam Presents Flightlink Airline

Jameel Kassam, General Manager at Flightlink
Jameel Kassam, General Manager at Flightlink
Written by Sandra Francisco
Published: September 20, 2021

Interview with Jameel Kassam, General Manager at Flightlink

How has business changed for you during the pandemic?

We had a temporary suspension of operations from April 1 and we resumed operations on August 15th. But, of course, we have done a lot of restructuring. We used to do about three flights a day to our main destination which is Arusha, and now those flights are reduced to single rotation, so just one flight in the morning. That flight is at about 30 to 40% capacity from what we used to do before.

How has Tanzania fared during the pandemic?

When the COVID pandemic was at its peak during the month of March, of course, the situation was very delicate here. People were taking a lot of precautions. But somehow, the government here has managed to take care of this pandemic and they have managed to control it well. So, there has been an easing on our movements within the city and the country. In fact, Tanzania is also opened up for tourism now and has been for a few months. Tourists can come and enjoy the wildlife, the resorts, and everything.

Tanzania is open, but surely you do not have the same numbers as before?

It has been about a month and a half. We have a big number of Russian tourists coming into Tanzania. Those airlines and those people in the travel industry that are related to hotels or safaris are benefiting right now. They are hoping for whatever they can get to at least break even at the end of the month. Along with the Russians coming in, we have tourists from a few Scandinavian countries, also. Zanzibar is doing very well right now.

What is your assessment of the tourism sector in Tanzania?

In the next three years, what I would like to achieve is having our own maintenance organization. We also want to become stable after this pandemic. And we would like to become the biggest tourism airline in Tanzania.

During the pandemic, the whole tourism industry, including airlines, came to a standstill because we had a closure of the airports for inbound flights. At Flightlink, we closed down our operations from April 1st until mid-August, just to get ourselves through this pandemic and we are constantly monitoring the situation. But definitely for all the other operators and especially the hotels and tour companies, everybody saw a very significant impact. For 2020, the forecast seemed to be extremely good and everybody had good loads of passengers, and the business was going to be one of the best that we had ever seen. At Flightlink, we were ready to bring an ATR 72 to help us get through the season because of the amount of bookings that we had accepted. But now, because of the pandemic, everything came to a standstill. Everybody had planned everything for the year and how they were going to operate, and people incurred a lot of expenses in acquiring assets to help them get through this year. So, all of us have taken a significant hit.

What are some of the strategies to bounce back as a fully operational business?

When it comes to the airlines, we have reduced the number of rotations that we do to our destinations. For example, for Arusha, we used to do three rotations, but now we just do one rotation to help us get the maximum load in one flight. Instead of having three different flights and dividing the loads between those three flights, we have one flight. We have taken some austerity measures too in terms of our staff. All of us have taken pay cuts of almost 50% for some time until the company stabilizes. We have also managed to restructure ourselves including our bank loans and aircraft finance which has helped us to break even at the end of the month. We have restructured within our staff also. We had about 63 staff before the pandemic and then because of the pandemic, some of the staff decided to change their careers. Some left and we have downsized to about 53 staff right now. Of course, we never laid off any of our staff, we retained everybody. Those who have left left to pursue careers in other sectors because there was a lot of uncertainty when it came to aviation and tourism.

Zanzibar is doing well. What is pushing this whole performance for them?

The government here has managed to contain this virus and it has opened up tourism. It has been about two months now that tourism has opened up and tourists are going to Zanzibar because of the ease in restrictions. This helped Zanzibar come up a lot. This traffic on a normal year would be diverted to other cities like Goa and other destinations. But because of the restrictions in so many destinations, Zanzibar has opened up so it has an upper hand now in taking the maximum amount of these visitors. And that has helped us a lot because all of our flights right now we are operating with maximum capacity for these Russian tourists who go on safari or a trip to the Serengeti or to other national parks in Tanzania.

With the downsizing and streamlining of your operations, have you seen increased profitability?

In terms of profitability, it has not increased. What has happened is that we have restructured our loans. The amount of money that we are getting is just enough to pay the loans, to pay operational costs such as maintenance, insurance, fuel, and salaries. So, we just barely break even. We make sure we sustain ourselves and survive, but we forecast a better season in 2021.

The tourism industry has been growing steadily over the years. What have been some of the policies or government strategies that have been put in place in order to help the industry grow?

First, there have been a lot of improvements in infrastructure. In the airports around Tanzania there have been a lot of upgrades in terms of the runway conditions and extension of runways. Secondly, there are different policies for aviation that also make sure that everything is eased up in terms of allowing us to operate as well as the cooperation extended to us at all times. In terms of the parks and hotels, they also have received tremendous support from the government. The current administration has put in a lot of investments in terms of hotels, camps and lodges around the Serengeti. The government has also been quite tough on poaching which has helped curb a lot of undesired killing of wildlife. The wildlife has increased to a certain extent in parks such as the Serengeti National Park.

What are the major challenges that affect your business? How competitive is the sector?

For us, a major challenge currently is personnel and facilitation when it comes in Tanzania. All our maintenance has moved to Kenya now. One of our future plans is to build our own maintenance facility here. The second is that the cost involved in aviation training is quite high. If you send somebody to do an Embraer 120 course, it will cost close to $14,000. And then you have two sets. The cost is very high in terms of investing in personnel but we are getting there slowly. We have built a good team and we have invested a lot in human resources in the past two years for our staff. The second challenge is, of course, finance. A company like ours is very ambitious in terms of expanding, but we face a lot of challenges when it comes to finance because the banking sector is not really ready or they might not have a lot of know-how on the airline industry or the aviation business. We managed to secure some loans to procure some aircraft which are operating right now. Hopefully, in the future, we want to see banks opening up to the aviation industry. It is very restricted right now and there are very few banks that offer these services. They will not invest or they will not provide support for the airline industry because they lack the knowledge and they do not have the correct personnel at their offices to advise them on how this industry is run.

Is it better for you to find financing from the banks or through FDI?

With the course of the company and the way that we are heading now, FDI is the way to go. When you take a loan from the bank, with the installments, the interest, there is so much that goes into it, but if it is an investment, then it is a large amount of money for a longer period so installments are smaller. And, you operate without any pressure because the investments are all a part of it. When it is a loan, you are on your own to pay it back, but if it is an investment, the person or the company who has invested is a part of you. Even when you are making decisions, you can get some guidance and some help when it comes to day to day operations. We are small players in this industry. There are bigger players in this industry, people who have more experience, who have more ideas on doing things differently and such help is always appreciated.

Are you open to investors?

We have tried our best to secure investors. There was one that was almost to completion but then the pandemic took over. So, those investors thought that it was not the right time to invest in this industry and they pulled out. But we are putting efforts in when it comes to investments. From the last time we met in 2016 to now, we have increased our fleet capacity and we have procured different aircraft. We have two Embraer 120s that we just bought in January, one Beechcraft 1900 and two Caravans. We have done quite well through this support with the local banks, but, of course, we are always ready for people who would like to invest and be a part of our journey.

What is your competitive advantage?

We have a good percentage of the regional market. Over the years, we have managed to get quite a good portion of the tourism industry business. With the introduction of multi engine aircrafts between the destinations of Arusha and Zanzibar, which are the main tourism hubs, it has reduced flying time by almost 45 minutes. That is an advantage because if a person leaves at 1:00, by 2:00 they are at their destination. Also, with establishing our network, we have managed to link the bush and beach business – the safaris and Zanzibar respectively. We have managed to establish the network with the timings and with our aircraft that we have and we have the niche that we have created for ourselves. Our future plans are to link other destinations to our network and we are almost there. We are just waiting for two or three documentations that we need to submit. By next year, mid-January, we are going to announce our next destinations that are coming onto our network.

What makes you competitive compared to the other air companies?

Business here is very competitive. In Tanzania, there are only a few operators and everybody is trying to get the maximum out of the business. But now, everybody has their own niche and everybody has their own way of working, their own way of presenting themselves. For us, we have transformed ourselves from single engine operations to twin engine operations. For twin engine operations, the safety is high, it is comfortable, and, of course, you save on time. We also have our services that we provide onboard. We used to do these pre-pandemic and we are going to resume them very soon. We provide inflight services, such as drinks and snacks, onboard. Our safety record has definitely helped us to get the upper hand in this market. We have also introduced bigger capacity. So, at any given time, we are ready to take three times the load of what our competitors are able to take.

What are some of your success stories?

There are many things that we can be proud of at Flightlink. Firstly, something that has touched me and has touched our employees is to be able to advance our careers. Personally, I joined in May 2014. I was an assistant supervisor at the airport. Over the years, I have grown into becoming the general manager and the director of operations of this company and that is due to Flightlink investing in its own people. We also have staff who used to be dispatchers and have now gone on to become pilots or cabin crew. What Flightlink is offering and what we are proud of as employees and a big part of this journey is we have grown and we invest a lot in human resources. Our success story has been attributed to two things. The first is vision. The vision of this company is very motivated. In the airline industry you need to be very patient. Things do not happen overnight. There are a lot of challenges that you go through in your day to day operations, but we have always been patient, we have always had the vision, and we have always worked together to take this company to where it is right now. In terms of the company, it is faith and patience and vision. In terms of employees, we are the success stories of Flightlink. We have always been ambitious. We as a company have never been stagnant. We started with building single engine operations and then we decided to take it a step further to twin engine operations and multi engine operations. Now we are also working on our own maintenance facility in Tanzania. Every year at Flightlink there is something new coming.

What is your vision for the medium term, three years' time? What would you like to have achieved?

In the next three years, what I would like to achieve is having our own maintenance organization. That is my key focus right now. We also want to become stable after this pandemic. And we would like to become the biggest tourism airline in Tanzania. We have companies that are bigger than us. Our focus is to get there, but not forgetting about providing the highest safety standards, on time performance, and customer satisfaction. Of course, everybody wants to grow bigger, but if your roots are not strong, there is no point in growing if you are lacking certain disciplines of this industry.

On a personal level, what is your personal ambition? What do you want to achieve?

My personal ambition is in the future to merge this company with other airlines and other big companies so that we can become service providers for the big carriers and the international airlines that are coming in. In terms of my own ambition, personally, I would like to remain in the aviation field, as this has been my career for the past several years. The other focus is to make sure our company grows into becoming an airline that passes the safety audit. It has been a long journey for the past seven years. I have learned so much to be able to handle running this company. So, I feel like it is time that we do something big. We will see what the future holds for us.

 

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