Challenges for new CEO at beleaguered AirZim
WITH Air Zimbabwe (AirZim) now on the job market scouting for a substantive chief executive officer (CEO) to replace Peter Chikumba, who left the airline in 2010, this could be the right time to reflect on the shortcomings that have led to a high turnover of CEOs at the beleaguered airline.
For outsiders, a career as CEO for AirZim, a former regional aviation industry giant, offers prospects for an exciting life.
But previous CEOs will explain why the scientific principle that “the higher you go the cooler it becomes” could probably be a fallacy when it comes to the politics at AirZim: It is very hot in the CEO’s office at the airline.
This is why when the current recruitment process shall be finalised, the candidate who will secure the airline’s top job will be the seventh CEO in 14 years since 2003. That is a pretty much scary statistic.
Government has 100 percent shareholding in the airline, whose CEOs are fired each time a Minister of Transport wakes up with a bad mood, many times under politically motivated circumstances.
The 2003 departure of Rambai Chingwena as CEO marked the beginning of a frenzy of hirings and firings that have seen Innocent Mavhunga, Oscar Madombwe, Grace Pfumbidzayi and current boss, Edmund Makona taking over in acting capacities.
During this period, only Peter Chikumba and Tendai Mahachi have run the airline in substantive capacities.
It is important to note that after making a string of losses, top airman Madombwe was the only CEO to drive AirZim to a profit in 2008. I am aware that he has entered the race for the CEO’s job; he has also been interviewed for the general manager’s post at the National Handling Services.
But my feeling is that Madombwe has had his time at AirZim, and should concentrate on his private aircraft hiring business, which gives him the scope to build his own empire.
I have nothing against him.
AirZim requires an injection of fresh brains, probably revolving around the current executive, which has done an incredible job stirring the ship under extremely difficult circumstances.
That AirZim requires a substantive CEO to take swift and binding decisions is not in dispute.
But taking six years to appoint a CEO for a major parastatal is a clear demonstration of incompetence on the part of responsible authorities.
My point is that CEOs are not entirely to blame for the turbulences that have rocked AirZim in 14 years; it is government that is letting this nation down.
It would have been a miracle if AirZim had bounced back to the splendour of the 1990s under a vicious cycle of turnaround plans implemented by half a dozen acting CEOs and only two substantive bosses who worked under excessive State interference.
This is the environment that confronts a new CEO as soon as Industrial Psychology Consultants recommends a candidate to government.
The airline, which has in excess of US$200 million in debts, is a high risk client for banks and no one has come up with a clear and concrete plan to say how this debt would be repaid.
Perhaps this is the job for the incoming CEO, but the resolution of the debt crisis has taken too long and this is working against the interests of the country.
I know that during psychometric tests, the debt puzzle was one of the crucial questions thrown at candidates to solve.
Whatever the solutions they proffered, the winner will still have to start on a clean slate so that they have nobody to blame should they drive AirZim into the swamps again.
Yet government is broke and reluctant to rope in private capital to revive a brand that has an indelible imprint across the world.
The new CEO’s task would be more difficult considering that they will have to change a culture of abuse by chefs, such as requests for free flights, before dealing with the much reported shortage of suitable aircraft.
Because government failed to take advantage of the boom times, such as in 1996 when AirZim carried one million passengers, to plough back funding for future growth, the airline is sometimes forced to operate an expensive Boeing 767 on the Harare-Johannesburg route.
I understand that it guzzles over US$26 000 worth of fuel for a return trip, and mostly flies with 50 percent load.
This fuel expense was reduced to US$3 000 when a progressive deal was clinched three years ago to operate 60-seater Brazilian planes on the route.
An appropriately sized aircraft, the Chinese assembled MA60, is operating the three weekly frequencies into Lusaka from Harare.
But bad publicity has meant that the aircraft has perceived safety issues.
Passengers are trooping to Ethiopian Airlines (ET) and Emirates, which have fifth freedom rights on the route.
The fifth freedom traffic rights allow airlines in transit to pick passengers in Zimbabwe, even to destinations where AirZim would be servicing.
This is part of the contentious open skies policy. In many African countries, these rights are tightly controlled to protect domestic carriers.
That is why AirZim will not be allowed to ply domestic routes in Nigeria, Egypt or South Africa, for instance.
It is not a taboo to protect domestic markets, as many in this country seem to think.
I hope government sees light and reviews some of these agreements if it is serious about rebuilding a strong and viable domestic airline industry.
Last week, Tata raced to seek government protection in London to insulate itself from stiff competition from imports in the steel industry. It is not like government is not aware of this, but some in positions of authority have chosen to be impervious to calls for policy reviews, because some of them are imbedded in a number of deals that have recently allowed foreign airlines to threaten the domestic industry.
AirZim management have been forced to misallocate equipment because of serious shortages, which I blame on the shareholder.
So, it is wishful thinking to hope that in the current environment, a new CEO will perform miracles.
Ageing aircraft have been a drain on the airline. There is clear evidence that there has been an exodus of passengers to competitors that have acquired modern and efficient planes.
Interestingly, even ministers and civil servants no longer trust their own airline.
This gives an indication of why load factors are deteriorating, and why foreign airlines have been creaming over US$100 million from Zimbabwe per annum, according to a 2009 Zimbabwe National Chamber of Commerce report.
From 2011, AirZim has failed to salvage its market share against South African Airways, which wrested leadership of this market in 2009.
Annual passenger numbers have dropped to about 230 000 since 2009, from one million in 1996.
In the case of AirZim CEOs, what government has been doing is like deploying soldiers to war without guns. When they lose, we blame them.
Competition is cutthroat in modern aviation and forcing an airline to scrap through with old planes would not work.
The numbers are clearly demonstrating this to government. This lack of capital has affected the re-launch of the cash spinning Harare-London route, which has a ready market.
Long haul passengers want direct flights, and Zimbabweans scattered across Europe would surely benefit from direct and reliable flights out of London into Harare.
Zimbabwe must repay the outstanding landing fees in London, probably lease an acceptable jet such as the A330 and resume flights if government is serious about rebuilding AirZim.
It is interesting that while we are mourning, progressive African airlines are making profits and facilitating tourist and investor travel into their countries. ET posted a US$42 million profit in 2012. During the same period, AirZim was trying to re-establish itself after running into storms that grounded it in 2011.
Transport and Infrastructure Development Minister, Joram Gumbo, has made progressive efforts to fill key positions, but he is out of his depth.
The reason is simple.
Bureaucrats are not properly advising him.
During his inaugural tour of AirZim in February, he said low cost airlines were no threat to AirZim. But given what has since happened, he should be rethinking if this is correct.
Load factors have tumbled since London headquartered fastjet Zimbabwe expanded to the Harare-Victoria Falls routes, knocking off prices and using impressive aircraft.
Pointing out the need to adhere to the Yamoussoukro Declaration that binds signatory countries to open skies to foreign competition, Gumbo failed to lay out a viable plan to drive traffic to AirZim. Perhaps he is doing this behind the scenes.
But time is not on their side as shareholders.
“I am aware a number of low cost airlines have entered into the market but this should not worry you as your markets are different,” Gumbo said.
His comments came as airline insiders said they were feeling the heat.
“fastjet is operating three weekly frequencies that is the reason why we have survived. During the days when they fly into Victoria Falls, we feel the heat,” said one senior AirZim official.
Low cost carriers are offering advanced services in their modern aircraft, while government’s procrastination in striking aircraft deals has resulted in passengers ditching the national airline in favour of those offering better services.
I must give credit to Gumbo, though, for the high professionalism that he has demonstrated during the current phase of recruitment, as invitations for interviews have not been based on which candidate hails from which region or province.
It has been above board.
But until this airline recovers to become a force that it used to be in the mid 1990s, there won’t be any reason to give the Transport Minister full marks.
Competition would be tougher this year, as low cost airlines enter all lucrative routes while offering less than half the present prices.
Red lights are flickering over AirZim again.
At the heart of the imminent troubles are not the mistakes of CEOs; it is government that is messing things up.
Gumbo has promised to do his best in order to leave a legacy. Only time will tell!
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