Rwandair struggling to reposition in aviation industry

Rwanda government plans to set up a cargo airline to boost horticultural exports and foreign currency earnings, Ambassador Gerald J. Zirimwabagabo, Executive Chairman, Rwandair announced.

The plan to have a state-run cargo carrier comes at a time horticultural exporters in the country have been relying on passenger planes to deliver consignments to the European markets.

Exporters are currently using Brussels Airlines, Kenya Airways and Ethiopian Airlines to ship their exports out of Rwanda.

These passenger planes have a capacity to airlift between 20 and 30 tonnes of cargo.

But aviation industrial players say introducing a cargo airline particularly targeting the Rwanda export sector may not be viable.

The players argue that the country still has low volume of cargo out of Kigali International Airport.

For optimists, growth of the air cargo industry is key to rapid integration of the world economy as it brings efficiency to complex production processes by moving intermediate goods to regions, which add the highest value at the lowest cost. 

For this reason, Zirimwabagabo says every thing is set.
"In six months time we will have set up a cargo airline and both Rwandair and the new cargo airline will be very competitive in the market.”

He said in an interview with Business Times that the company is however not yet registered.

Government hired Zirimwabagabo, a carrier diplomat to turnaround the loss making national carrier currently operating without a plane of its own into a profit making competitive airline and an airline of choice.

As a landlocked country, Rwanda depends on the aviation industry as the life blood of economic development.

Ground handling
To pump blood in the struggling airline, Rwandair, with sole rights to run the only ground handling services—both passengers and cargo is investing heavily to improve the delivered at Kigali International Airport.

"Our aim is to make Rwanda a destination of choice. We are therefore injecting over $1 million (Frw548 million) to purchase new equipments that will in turn help us improve our services, thus giving passengers and cargo carriers value for their money,” Zirimwabagabo added.

Some  old handling equipments the airline has been using at the airport are to be replaced.

A new universal loader, a ground power unit, toilet cart, 2 belt conveyers, 2 portable water carts and two tractors are to be supplied next month. 

Eyeing regional skies
Rwanda air has been flying daily to different destinations of the world such as Uganda, Kenya, Tanzania, Burundi and South Africa among others.

But the airline was forced to suspend the South African route partly because the national carrier had no large aircraft to be used on the lucrative route.

The Boeing 737-300, Rwandair had leased from Malawi Airlines was returned—partly because it had technical problems. After halting its Kigali-Johannesburg flights, the airline recently announced that it is set to resume next month.

Market speculation indicates that Rwandair could be losing more than $636,000 (Frw346.9 million) a month from the grounding of the Kigali-Johannesburg bound plane.

Not to close operations totally, Rwandair leased a SRJ-100 plane from Jetlink and Dash8-100 aircraft from 748, an aviation firm from Kenya.

The planes fly to Nairobi, Entebbe and Kilimanjaro daily.
The company plans to purchase two new aircrafts and one used one between 2008 and 2015.

The airline also intends to begin new destinations to Gisenyi by October, Dar es Salaam, and Zanzibar before end this year.

The chairman said he also has high hopes for its upcoming partnership with Lonrho Aviation, a UK-based company that will be sold a 49 per cent share of the capital.

According to management however, it will take a lot more effort to make the airline a much stronger competitor in the aviation business.

Zirimwabagabo says that Rwandair still needs a clear strategic plan plus a corresponding strong business plan that is well financed to turn around the airline into profit making.

Apparently, the airline is engaging a consultant to come-up with a 10-year strategic plan, the company will base on to reposition in the business.

"We are putting together a team to develop our strategic plan and we are certain that all the other developments that will set our airline to a higher standard will come in handy.” Zirimwabagabo added. 

Like most airlines, the skyrocketing fuel prices world over the last six months, hurting its operations by eating into capital.

A litre of jet fuel that used to cost Frw547 in February this year, today costs Frw815. This almost a 50 per cent increase in price. This has forced the airline to start charging a fuel surcharge on the ticket.

What Rwandair-Lonrho partnership means?
Lonrho has a long history in aviation and although, it had pulled out of Africa due to crises that existed back in 70 and 80, Lonrho’s Fly540 is developing an expanding aviation network across Africa.

Already existing in Kenya, Lonrho wants to provide much needed air transportation at international standards of comfort and service by entering all the other markets in the region including; Uganda, Rwanda and Tanzania.

With 20,000 shareholders and substantial institutional backing to support its mandate, Lonrho is set to build a profitable business that plays a fundamental role in the development of the African economy hence qualifying as a suitable partner in the growth of Rwanda’s aviation industry.

Partnerships within the aviation chain are of prime importance in order to ensure the continued growth of the industry to benefit all the role players.

Only a few countries, most prominently India have embraced the logic that all cargo services should be treated separately from passenger traffic. Rwanda will soon join the many that have created liberalized regimes for cargo.

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