Flying Air Namibia to financial success

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Air Namibia recently appointed Advocate Ellaine Samson as its acting managing director. New Era chief reporter Mathias Haufiku recently had a one-on-one interview with her on several operational issues as well as the fight between Air Namibia and budget airline Fly Africa.

Will you be interested in taking the MD job on a full-time basis?
This seems to be a popular question around town, but in life it is important to remain focused. I was asked by the board to provide assistance, for me that is my focus. I am here to assist this organisation to do my bit of what we all can do to make Air Namibia a success. Being the focused, driven person I am, I think one will be in trouble when you take your eyes off the ball. I did not come here with the notion of staying long term, but the immediate issue at hand is Air Namibia’s need for an acting managing director and I have to assist the board to get the company right while the board finds somebody on a permanent basis.

What are your key strategies to reduce Air Namibia’s dependence on the state?
From a business fundamental perspective the first thing we will look at is to strengthen the balance sheet of the company. This business is one which, even if you look at other places, is not the type that will automatically make a profit on all routes, mainly because of the role it has to play, such as opening up certain parts of the country. This type of arrangement is the same as agreeing upfront not make a profit on some routes but rather to provide a service. We understand this cannot be a sustained arrangement because we do not want to be a permanent drain on the taxpayer. The country is aware that Air Namibia has a turnaround strategy in place aimed at assisting the company to improve its business fundamentals. I am happy I have a good management team in terms of devising ways to strengthen the financial position of Air Namibia. The best way to do that normally is by aiming to be an asset owning company – if we own assets we automatically strengthen the financial position and subsequently it means requesting fewer funds from taxpayers. Government currently, in terms of the subsidization agreement we have in place, pays for the leasing of some of our aircraft as well as the fuel and maintenance costs.

Is Air Namibia’s turnaround strategy that started last year still in operation or abandoned? If still in place, how is it faring/if no, then why was it abandoned?
It is still in place. To have a strong business you need strong components; in our case those components would be the fleet and the network. In terms of our fleet, we pride ourselves on having one of the youngest fleets in Africa. The constant problem for most African airlines is their ageing aircraft. Many of them are old while some use aircraft that were military planes modified for civilian use. We are lucky that through the commitment of our shareholder we have a lovely, springy and fresh fleet. In terms of the network component, we also have a lot to smile about seeing that in the airline business you are only as good as your route development that you have, while at the same time remaining realistic in terms of your geographical limitations. We have a good network in our country as well as regionally to the various countries in SADC, where we have sustained traffic in terms of travelling but also in terms of the African outreach. I was excited when I came and saw that there is an existing agreement with Kenyan Airways – we all know what a robust and strong brand that is in East Africa, and they are certainly one of the big boys when it comes to African airlines. To be in such an alliance is good for us. Operational integrity is also something we do not compromise because you want to be in a positon where you have a say over certain key components of your destiny and in relation to your business plan. We now maintain our Embraer jets locally – this has been an additional cost to us – and by doing so we managed to reduce the annual maintenance cost by at least N$6 million. This also helps us as a country to build technical capacity. Another component is customer satisfaction. We recently won some awards in South Africa making us one of the best airlines in southern Africa. The fact that we get recognition for our customer-focused approach speaks for itself.

How would you describe the relationship between Air Namibia and Namibia Airports Company (NAC), considering the fact your operations are dependent on each other?
We have a very good relationship; in fact in the past I worked for NAC, which shows the type of relationship we have. They have the infrastructure and we have the airlines and make use of their facilities at the airport. I will soon meet the airport company’s CEO to discuss some operational matters. Of course there may be a few hiccups but that is part of life. It is important that as we go forward we keep communicating, but as far as I am concerned I have not been informed of anything extraordinary regarding bad relations between Air Namibia and Namibia Airports Company.

There are claims Air Namibia is deliberately blocking Fly Africa’s entrance into Namibian airspace because it fears competition. Can you please comment on this?
We are aware of the accusations and I must say I am saddened by the quality of commentary and debate from Fly Africa on this matter. We have been maligned in this matter to the extent that I do not think it is advisable for institutions, especially if you call yourself a commercial undertaking, to say certain things. When this whole thing started we said we welcome competition. If you look at every route on which we operate there are other airlines competing with us, so for people to throw blanket accusations is unfair, insincere and untrue. Our only concern with Fly Africa is that they must adhere to the same rules like everyone else, regardless of the business model they follow. You also have budget airlines in Europe but do not have different standards for other airlines that do not provide full services. Our issue with them is an issue of compliance with the law, that is how I sum it up. We have competitors all over.
Why would Air Namibia take this matter to court, instead of the aviation regulators in the country?
If you are a law-abiding citizen and there is a business practice that could impact on your operations, you will not stand by and do nothing and if you turn a blind eye to it then clearly you do not have the best interest of your business at heart. We acted appropriately and we are happy. We are happy that on the basis of urgency the High Court ruled in our favour. I do not want to make comments that could be construed as trial by media, but that in itself leads to the fact that the court needs to look at the issue. I do not think we overstepped ourselves, neither did we overreach. The law exists and provides remedies for those that feel aggrieved; it is your right by law to use those remedies.

So why did Air Namibia run to the court first, instead of the transport commission?
In fact, this issue first went to the transportation commission, but the hearing was scheduled for 18 September 2015 while they wanted to start flying last week. We could not sit back and watch a decline in terms of standards and potential impact on your business. We did not decide out of the air to do something about this, we followed all due processes.

If a budget airline like Fly Africa becomes fully operational in Namibia how will that affect your operations?
If it is in full compliance like others, then no problem. In terms of impact on our business, we all have our different business models but Air Namibia will never hold out to be a low cost carrier. We are a traditional full service airline, and that is who we are. The public will be most welcome to spend their hard-earned money as they wish by choosing who to fly with, it is within their rights.

Are there any plans to introduce a low-cost option on Air Namibia’s routes?
This is a business model issue; take Mango for instance, South African Airways’ low-cost carrier, it clearly shows that you cannot mix the two. If we have to look at a low-cost option we would need a spinoff operation and it would mean coming up with a different financial and operational analysis, because you must build a business model around it. It will be a new business to structure, where you have to look at the entire business fundamentals. But at the moment, that is not our business model. No one can accuse us of saying we do not have a footprint in the community because we always sponsor tickets and offer reduced prices. In terms of saying we must change models – we need to sit and think about it, if that is who we want to be then we must have a new target market.

Since taking over as the acting managing director, in your view, what are the biggest challenges facing Air Namibia?
Let me first mention what I am thankful for. Firstly I am thankful to see the sense of appreciation shown towards Air Namibia by the public and government. Despite some negative comments, we can all see that government wants Air Namibia to succeed. When you have such a supportive shareholder who is willing to capitalize you with millions monthly, something which is rare, be thankful because shareholders will normally not put their money in a business which they do not want to succeed. Challenges include things such as getting everyone on the Air Namibia team to pull in the same direction, being less dependent on the taxpayers by pulling our weight financially. Technical issues such as compliance should also be constantly kept in check, because it can have an adverse effect on our operations if ignored.

There is a tendency at Air Namibia whereby foreign employees get paid more than locals for the same position. Why is this the case?
I was informed about this when I started but my stance is that we must all adhere to the remuneration equity policy, which states that people must be paid fairly. Even though there is a true scarcity of some skills in the local market, there is no big justification to pay people disproportionately. This issue is being addressed because remuneration and staff morale go hand in hand. In addition, since we are a parastatal there are structures guiding how people should be remunerated. You want people to feel fairly treated because it they feel unfairly treated you might not have a peaceful organisation.

Lastly, what will give you that peace of mind and a good sleep at night when it comes to aviation in Namibia?
I would be at peace knowing that we are maintaining our clean safety record. Every time our planes take off there are human lives on board who matter to their families, hence we should continue prioritizing the safety aspect. I believe that is also one of the reasons that ensures that our shareholders believe in us because not many airlines have a track record like ours. To maintain the track record we must ensure that issues which impact on safety such as queries of non-compliance should be resolved. If that is sorted, we will continue being an airline which government and every citizen is proud of.

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