The future of Malawian Airlines looks cloudy as its major partner, Ethiopian Airlines, has gone into an agreement with Zambian government to operate a joint venture, a move business experts fear could shrink air spaces for the Malawi entity.
The signing of the agreement between Ethiopian Airlines and Zambia Airways took place last month.
The development can have huge repercussions for Malawi since some destinations might have to be reviewed or shared, which could shrink the financial earnings for Malawian Airlines.
This would throw off balance efforts of revamping the airline, bearing in mind the tough economic situation prevailing in the country at the moment.
Malawian Airlines flies to Zambia, South Africa, Zimbabwe and Tanzania besides operating domestic flights.
Since the agreement between Malawian Airlines and Ethiopian Airlines was sealed in 2013 and is expected to end in 2023, no new aeroplane has been bought for the local carrier as the airline is just flying rebranded aircrafts, previously used by Ethiopian airlines.
Ethiopian Airlines had reportedly pumped in K 6.9 billion in Malawian Airlines at the time of sealing the agreement with Lilongwe.
Nyasulu says the fact that Lusaka is building a big airport and already services more flights compared to Malawi offers a lucrative business appeal to Ethiopian Airlines.
He further pointed out that the Malawi market is small and an expensive place to operate flights.
“Ethiopian Airlines might be trying to consolidate their grip on Southern Africa region. The
Zambia agreement might pull more passengers into Lusaka and fly them to major airports such as Dubai,” Nyasulu said.
Ethiopian Airlines officials were yet to respond to our questionnaire on the development.
In a telephone interview, Public Private Partnership – PPP Chief Executive Officer, Jimmy Lipunga, said the agreement does not in any way affect the partnership Malawi made with Ethiopian Airlines.
When quizzed further, Lipunga only said Ethiopian Airlines are best placed to respond.
“As PPP, all we know is the agreement with Ethiopians Airlines is still intact. They remain shareholders and that commitment continues. They are delivering the commitment, and as far as we are concerned, the agreement will not change,”
And commenting on the 31 percent shareholding that was reserved for Malawi government to float so that willing Malawians could buy a stake, Lipunga explained that at the time of forming the Airline, the Malawi Government had 51 percent of the shares as a requirement in any aviation Industry where Aviation traffic rights are owned by government.
He admitted that Malawi government was indeed supposed to offload 31 percent shares to local people but on condition that the airline is making profit.
He said as of now they cannot advise government to sale shares when the airline is not making any profit He cited examples of the challenges facing some major airlines in Kenya and South Africa, to the extent that they are now demanding their governments’ support.
“Airline business is so complex. You can’t expect Malawian Airlines to make a huge profit while big airlines are facing a lot of challenges.
As PPP Commission, we cannot motivate government on the sale of shares in an environment that is not yet ready to sustain that decision because the decision to offload shares to Malawians is an empowerment decision. If the aviation sector is not stable, it will be totally irresponsible for PPPC to try to push government to offload shares to Malawians. That would mean that we are transferring a burden to Malawians,” Lipunga said.