Malawi’s flag carrier, Malawi Airlines Limited has been flying for just three and a half years, but is holding its own in a difficult market. EBM spoke to Adamu Tadele, Malawi Airlines’ Acting CEO, on how his company is overcoming various obstacles.
Malawi Airlines is one of Africa’s more successful regional airlines, one that’s beginning to grow out of its home country and spread its wings across the rest of Africa. The company operates B737-700s and Bombardier Q400 propeller aircraft between Johannesburg, Lusaka, Harare, Dar es Salaam, Zanzibar and Nairobi, flying out of its base in Lilongwe and to Blantyre. Adamu Tadele has been Malawi Airlines’ Director of Finance and Strategic Planning for 12 months now and Acting CEO since September 2017, following 22 years in Finance and Treasury at Ethiopian Airlines, the continent’s leading state-owned carrier.
It’s a difficult time to be an African domestic commercial aviation company. The industry has been struggling to break even for years across Africa, hampered by difficult and complex regulations, high fuel prices, financial restraints, inter-state disagreements and a lack of passengers. Many domestic and regional airlines that were blossoming prior to the 2008 financial crisis have subsequently collapsed or found themselves out of business thanks to these issues. Air Malawi, which went into liquidation in 2012, was no exception.
The modern Malawi Airlines was established as a result of the fall of Air Malawi in 2012, and is operated by Ethiopian Airlines under a management contract and a 49% ownership stake. It has enjoyed more success than its predecessor, but it’s still been held back by the after-effects of the oil and commodity price crashes that have left it short of passengers as much as anything else. After all, as Mr Tadele notes, “on the demand side, flights are not like food and shelter. During an economic slowdown people can cancel their flights or postpone them. It’s a challenge.”
Malawi Airlines operated at a loss in 2013 and 2014, but had more comfortable and reliable returns in 2015 and 2016 thanks to the lower price of jet fuel, although the unsteady economy and limited numbers of Malawians able or willing to travel by air continued to provide obstacles. While jet fuel prices were slightly lower, the comparatively high local prices of fuel in Malawi meant that the airline often opted to buy from South Africa, creating a significant and expensive logistical challenge.
Another challenge is the lack of bilateral air traffic rights and open skies agreements between African states, a problem for domestic carriers attempting to fly internationally within the continent.
More than a few routes across Africa involve long detours via European airports, an opportunity for foreign carriers from Europe and the Middle East that already have links to those sectors. Said foreign carriers are out-competing African flag carriers and domestic airlines on their own turf, partly thanks to European aviation safety laws that ban African carriers from flying to European destinations (while of course not banning European carriers going in the other direction). However, this does present an opportunity, as Mr Tadele points out, “the fact is that more than 80% percent of the continent’s traffic is carried by non-African airlines, so that means there is a lot of room for growth.”
One ongoing benefit of Malawi Airlines’ existence is that it helps drive healthy competition between the airlines flying into and across Malawi. A Malawian-owned budget competitor airline, Lakestar Express Limited, has been issued its own air service license and will begin flights in January 2018, flying two smaller 19-passenger Beechcraft 1900D aircrafts between Lilongwe and Blantyre, and to the northern regions, with plans to go regional around April 2018. This may help Malawi Airlines bring down fares, which remain high despite recent cuts in fuel costs.
Opposition parliamentarian Juliana Lunguzi has argued that the airline is “not benefitting Malawi” because of these high costs, although Malawi Airlines has other benefits for the nation beyond domestic passenger travel. Stable, reliable aviation brings in foreigners, both tourists and more importantly business passengers. Tourism revenue is nice, but foreign direct investment (FDI) is even more so, and Malawi Airlines is focusing on bringing it in. “We’re working on attracting FDI in cooperation with the government of Malawi. Improving point-to-point traffic is a part of this focus. Malawi has a young, growing population, so really it will be a good target for FDI.”
Despite the trying circumstances it operates under, Malawi Airlines is still growing and offering Malawi’s growing middle class transport links to destinations across Africa. The company is also making strides in other areas as well, with all-female crews and efforts to encourage women to join the stereotypically male-dominated industry. As Mr Tadele points out: “it’s important to encourage young girls so that they can be technicians and pilots, which is why that flight was such good news. As an airline, we want to tell them and make them aware that this industry is open to them.”