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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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InterviewsMarch 12, 2021

Tanzania Aviation Sector: Precision Air, The First IOSA Certified Airline in Tanzania

Patrick Mwanri, CEO of Precision Air
Patrick Mwanri, CEO of Precision Air
Written by Sandra Francisco
Published: March 12, 2021

Interview with Patrick Mwanri, CEO of Precision Air

What are the main challenges that Precision Air is facing?

The biggest challenge now is keeping the companies afloat. Especially now, in aviation, some of the costs are always fixed and they are not variable depending on the number of passengers. Meeting this obligation has also become a very big challenge for us. Another challenge is to convince most of the governments to understand the situation that the airline is facing so that they can give some relief packages. The same also applies to our service providers because we all depend on one another. We need to always speak to our service providers so that we can meet a mutual agreement. At times, we find it very challenging to meet the obligations that we set when signing the contract. It is all about financing the operations while surviving. Most of us will subcontract, especially with spare parts manufacturers, where we can do partial payment on a monthly basis. We have very lean operations but, of course, we need to continue maintaining these aircraft up to safety standards. That is one of the things that determines the overall rating of operations. It depends on how you generate your revenue and also meet your obligations.

What are the challenges you face outside of COVID?

One of the major issues that we have, especially in this part of the world, is skilled manpower for running operations. We have a shortage of licensed pilots, but most of them are not top rated. Also, looking for capital, most of the time, you will want to do some further investment or get some new opportunities. Going somewhere to get this capital is also a very big challenge to us at the moment. With airlines operating in Africa, most of the suppliers are out of Africa and even out of Tanzania. So much is external, mostly from European countries, to get spares. There are fees where you need to pay a lot of taxes whenever you are transporting anything, both here and the country we are bringing things from. Also, the understanding of these parts is a challenge. For example, when doing an engine overhaul, you need to take it down and send it somewhere, maybe Europe. When it comes back, most of the authorities and even the service provider treat it as a new item. We have some issues when it comes to logistics. How are we to transport it from one point to reach us on time, while you find that your aircraft is still on ALG? There are difficulties throughout the supply chain on this issue of spare parts and it becomes very hectic and you can find that your aircraft is on ground for more than the time that you expect it be. So, labor, fees, and logistics under normal circumstances are our main challenges. We also have a very big country. We are facing some challenges when we look at the airport infrastructures, not only the runways but all these other safety requirements that facilitate us to make sure that we can do our business safer, more efficiently, and more cost effectively. Even from our country, we are now seeing the rise of the middle class. Most people think that the airline industry is an expensive industry. So, the purchasing power of most of our domestic passengers is also an issue. Most of our revenue, the yield, comes during the tourist period during June, July, August, when we have a lot of tourists who are coming in to the country because they have more money than the ones we have here locally.

What is the current status of the tourism environment in Tanzania?

At the moment, we are all in an uncertain environment because we cannot predict much with this pandemic. Before December, the vaccination came out so there was hope. We saw some bookings because people were saying that maybe by March everything will be back to normal. But, with this new variant which has come out, we have seen more of these bookings which we expected to be there now being cancelled. That uncertainty will continue. So, we cannot predict how the market will be. We are looking at other markets, especially from Europe, to see with this rollout of vaccinations what the impact will be. The biggest issues that we are facing is the confidence of passengers to travel and the issue of quarantine. People are afraid to go on vacation not knowing what will happen when they return to their home country. We are optimistic because there is a lot of effort which has been done by the governments to make sure that things return to normal. In country, from April, May, until June, we saw some recovery, even within our business here from September. And then coming up to December, we had a lot of tourists visiting Zanzibar. But since mid-January, again, after the new variant in South Africa, we have seen a very big decline. It all depends on how the nation will be treated and how the governments are going to manage this issue of the pandemic.

What restrictions are imposed on travelers coming into Tanzania?

If you visit our official government sites, they provide that information. Most of these things differ from country to country. But for us here, the COVID test is required. We have all the safety measures, such as checking temperatures. As a company, we have made sure that whoever comes in on our flights follows all the protocols which have been advised by IATA and the airlines, especially from our authorities.

What is your scope of business as an airline? What are your competitive advantages?

The company has been growing to become a state of the art airline. When you look at airlines operating in Tanzania, Precision Air is one of the best. For the past 27 years, we have really boosted the aviation sector in the country. We are benchmarking.

We are a company that has been in service for 27 years now here in Tanzania. We mostly do domestic and regional services from Dar es Salaam. We do flights to Nairobi. We used to do flights to Entebbe, but now we have just suspended those for some time. We cover more than 12 destinations. We are the second designator for the nation. Before Air Tanzania, we were the national carrier for the past 24 years. We cover a wide range over our network. If you look at how the company was founded, it was mainly from the touristic destinations of Arusha, Kilimanjaro, Zanzibar, Seronera. We are reliable. If you look at our safety standards, we are the first IOSA (IATA Operational Safety Audit) certified airline in Tanzania and we have maintained our IOSA certification since we earned it in 2007. Last year, we did our last IOSA, and now we are analyzing some of the issues that they saw during the IOSA audit. We are also a publicly listed company. After the joint venture between us and Kenya Airways, we also sold some shares to the public. Everything with us is very transparent. We operate from Dar es Salaam to destinations like Mwanza, Mbeya, Arusha, Kilimanjaro, Bukoba, our capital city Dodoma, Mtwara, and the biggest National Park which is Seronera. We also have a lot of partnerships with big carriers like Kenya Airways, Etihad, KLM, and we have connection and interline partners. At the moment, you can book a flight with us from KLM or KQ and you can reach all the destinations where we operate. We also have the biggest maintenance facility and all our aircraft have been maintained by our engineers, except for Testo because we cannot do an engine overhaul, landing gear sets, those kinds of things. We also do third party maintenance activity for some other operators. We are also looking forward to making sure that we can do more for all the aircraft which are operating within Tanzania and we see that as an investment opportunity for us. For the past 27 years, we have been the people who have contributed a lot in terms of manpower skills in the country, not only for the locals, but also for the people who will be joining us from around the world. For the past 27 years, we have had many alumni of pilots and engineers. We are very happy that we could give something to the country, but also for the aviation sector. Recently, we have integrated one of our training schools. We saw that each year we have been training pilots, especially on the ground school. We have also done a lot of training on cabin crew, the supporting staff from ground operations, and also from maintenance because we have mandatory trainings internally. We saw that there was an opportunity to contribute to the aviation sector. In January, we got approval from our regulator to start the approved training organization. Next month we are going to start and we are confident that we can do it. We will also do flight operations officers trainings. All these mandatory trainings are for crew resource management, safety management, etc. We have been doing a lot of charter operations during this pandemic to bring back Tanzanians, also some to Congo, Botswana, and Comoros. Comoros depends a lot on Tanzania, especially in terms of food and food products. We also did a lot of cargo operations internally. We are very good in fruits production. We normally carry some from the southern part where we have a lot of big plantations and we connect them with these big carriers. We also do some ground handling services for those who want some small services. We do some mail and parcel services. Last year, we also started another parcel service because we found that we had some urgent documents that needed to be sent to various destinations and mostly they are depending on our postal services, which by then were really weak. So, it was something that was so good that we included in our portfolio. We have a frequent flyer program so that we could also reward our loyal customers and loyal passengers. We are still here today because of these loyal customers. We could see from the past 27 years, a lot of competitors could not manage to remain afloat. We want to thank God. This is because of the dedication that we have from our staff and the standards that we have adhered to as a company. Even during this pandemic, we follow all the safety protocols which have been recommended by IATA, because apart from local regulations, we also need to follow the international standards because our clients are both locals and international clients.

What are some of the international flights that you have?

Regionally, we mostly operate to Entebbe and Nairobi. Connecting passengers from Dar es Salaam to the rest of the world we do through the partnership that we have with Kenya Airways and more than 24 other airline partners with which we do interline services.

What is your general assessment of the airline sector in Tanzania?

It is still growing and there is a lot of opportunity because if you look at our country, Tanzania is very big. Accessing from one point to another by road is still not that easy. Aviation could play another key role on that. We do some of our maintenance abroad which could be done locally. At the moment, if you want to train pilots, most of it is done outside the country. Even myself, I had to do my Master's in France in Aerospace Management. We do not have sufficient institutions here in Dar es Salaam to carry out those types of courses. With the revival of Tanzania and the efforts that have been made by the government, we could see that the future for aviation could be there. However, this pandemic brought things in another direction.

What are your approaches for FDI?

Cargo is still underserved within our country so that is an opportunity for us. There is also a very big opportunity when it comes to skills development and training schools. There is also a very big gap in Africa in pilot training. There is one in the northern part, somewhere in Morocco, one in South Africa, but here in East Africa, nothing is available. If you look at the statistical data from the government, they say that our economies are going up. It means that there are also some more opportunities when it comes to doing business in the country. If someone can come invest, especially in the aviation sector, it could also facilitate more on these upcoming business opportunities which are being done by the government through other local partners and even international partners. Aviation is still not yet mature in the country so there are more opportunities for that.

Airline travel is quite expensive. Over the period with a lot of regional airlines in Tanzania, is there much competition that could lower some of the prices for these new potential customers in the middle class?

The biggest challenge that we are facing is the operational cost. If your purchasing cost is high, it means that your pricing will also go in the same direction. Most of the competition which came in tried to lower fares. But those fares that they are putting on the market are not good. Most of our sectors in Dar es Salaam are short sectors, maybe one or two hours, three hours maximum. We really need to have the right equipment. But now, the biggest challenge to make sure that people can travel with us more is the cost. The cost of doing maintenance, the hiring costs for the pilots, trainings, the GDS costs because most of this software is coming from abroad and is not locally made. If we were going to have more investment in this particular area, we could also lower operating costs and eventually that could go back to the customers who will see an affordable way of travel.

What is the status of airline infrastructure in Tanzania?

We have seen a lot of effort on the development of airports with the current phase. We have the new airport in Dar es Salaam and the new airport in Zanzibar and other regions. The country still needs more airports, though. Some of them do not have aviation facilities for us to operate more efficiently. In Seronera, the runway is unpaved, so during the rainy season you cannot access it. There are also some other airports like in Kahama. We have told the government that they need to do some pavement work. So, we have to suspend some of our operations because of that. In Mtwara and Tabora, they do frequent maintenance so that people can access those particular airports. These things can hinder us on the expansion of our operations when it comes to infrastructure. But also, most of the airport is for passenger services and passenger processes, like the check in counters, and most of it will depend on the airlines to put in place those facilities which is another additional cost to us.

What is a success story that you are proud of?

The founder is Mr. Michael Shirima. The company came from crop spraying and they started their first operation in 1993. The company has been growing to become a state of the art airline. When you look at airlines operating in Tanzania, we are one of the best. For the past 27 years, we have really boosted the aviation sector in the country. We are benchmarking. Everybody who wants to do any operations in Dar es Salaam or Tanzania looks at Precision Air and what we are doing. We are also the only publicly listed airline company, which is a very big achievement to meet. We are the second national designator airline. We are the number one so we play the biggest role to make sure that the tourists visiting Tanzania are able to access all our touristic destinations. We have great on time performance. Our standard for zero minutes is 88% and for 15 minutes, which is the international standard, we are at 93% to 95%. We try as much as we can to be punctual. We have done a lot for the skills development in the country. Even with this pandemic, we did not send anybody home. Our people are really committed. When things were very bad and we needed to do some cuts, that was well accepted. We have a very strong team that will continue to be there for the coming years. We have more than 2,000 indirect employees who depend on the company. We are always invited to national forums because even the government understands the contribution that the company has in the country. We are always a part of the plan when it comes to aviation.

What CSR activities are you active in?

Our biggest product we have is selling tickets. We have collaborated with most of the hospitals. For example, last year, we did one campaign for CCBRT about fistula. We bring people that are less privileged to Dar es Salaam to come for those treatments and we facilitate the tickets. Last year, we ran a campaign together with CCBRT collaborating with [Unintelligible] Heart Institute and they intend to treat 200 underprivileged kids from various very poor families to come for treatment. Rather than bring those patients to Dar es Salaam and find out that maybe they do not need that type of treatment, we send those doctors to the patient to do check-ups. When they find anybody who is in need of an operation, if they need a quick evacuation, then we would provide a ticket to any of our destinations. We see the impact when we send these doctors out. We have also done a lot of campaigns when it comes to the environment, like tree planting, especially in Kilimanjaro. Kilimanjaro is where the government gets a lot of tourists. We planted more than 1,000 trees there and we also keep on tracking to see that how it is proceeding. Always, we invite people who want to participate with us, especially concerning what we really want to focus on like health projects, because we see that those are the institutions where we can contribute a lot of support. We also work a lot on education. We do a lot of partnerships with universities, especially on engineering. We have a very big hangar where we do all our aircraft maintenance. We have an exchange program with the National Institute of Transport in Dar es Salaam and the University of Dar es Salaam. Students of mechanical engineering come and do an internship program and an apprenticeship program. Also, on various areas like our reservation system, we have a lot of travel agents and personnel who need to do the reservation passenger handling which we accommodate in house. I joined this company 15 years ago as a junior staff in flight operations. I have been growing with the company and I have just become the Chief Executive. But all the training innovation that I had was done by the company. I did my first degree in computer science but when I joined here, that is when they were transforming to a digital platform. They wanted staff who had some IT background. It is also one of the pluses for the airline that they have a local Tanzanian who is now running the company. It is not only me; we have a number of alumni who are holding various posts in other companies. Even if you go to India, you will find a lot of our pilots there as training captains and training pilots. These are some of the things that we really pride ourselves in as Precision Air.

What is the vision of the company for the next three years? What would you like Precision Air to achieve?

I really want to make sure that this company continues to be stable and that anyone can see that this company has a high level of standards, especially safety standards. We also want to expand so we can contribute more for Tanzanians and others. For example, at the moment, when this issue of COVID is finished, we want to make sure that we reach every point of Tanzania where our aircraft can operate. We are also looking to expand to the neighboring countries like Mozambique, Malawi, Congo. Another achievement that we want to see is to make sure that our maintenance facilities can serve the Tanzanian market. We also want to look at opportunity within the regions which surround Tanzania. Most of them can also come and do remittance activities of the aircraft in Dar es Salaam. We also want to partner with other institutions to make sure that rather than sending people abroad they can come to Tanzania and get these skills and training through our training center.

Are you working on a specific project at the moment?

We have put the expansion on hold because we cannot do much because we really want to see how things are evolving with COVID. For the maintenance facility, we have continued to improve on the skills that are required to make sure that we can serve the aircraft that are not certified in our maintenance organization. So far, we have one Hawkeye 800 in our hangar. Now, we are also looking for certification for the Cessna Caravans. In these small airports, small operators like Coastal have 20 of those. If we can capture those and maintain them in our maintenance facility rather than sending them to Nairobi or elsewhere it will be a very big achievement. We got our certification for the [Unintelligible] organization and we have started our cabin crew training. We also want to do the flight operations officers’ license. When we bought this new aircraft, the ATRS, about ten years ago, we were provided VPT, virtual pilot training. We have already assembled it and now we are looking at the software needed for it to run so that all the ground training for pilots can also be done in house. In the future, before pilots go for our tech training outside the country, that ground training can be performed in house to reduce the cost of pilot training. Then, when they go out, they can do that simulator training. This is an area where we are now trying to focus. In the next two years, if things allow and we have enough capital to do that, we really want to see this up and running.

 

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