Report on Air Namibia’s value to economy out today

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Edgar Brandt

Windhoek-Air Namibia’s recently commissioned report by an independent institution, Oxford Economics, which aims at establishing the value contribution of the national airline to the Namibian economy versus the cost of keeping Air Namibia afloat, is expected to be delivered today during the 2017 Air Namibia Annual Stakeholders’ Conference taking place the Safari Hotel.

Representatives of Oxford Economics are already in the country and are scheduled to present their findings.

“The outcome of the study is what we believe should be used by our government in deciding the way forward. It will be dangerous for Namibia to take a decision of that magnitude (to discontinue the Windhoek-Frankfurt route) without taking all factors into consideration,” said Air Namibia spokesperson Paul Nakawa.

He noted that Air Namibia’s strategic plan, presented and approved by Cabinet in July 2016, does not contain any proposal to cancel the Frankfurt route.

Today’s conference includes a one-hour panel discussion with five panelists under the theme: ‘Aviation as a catalyst for socio-economic development’. The annual event is scheduled to be hosted by Minister of Works and Transport Alpheus !Naruseb and is expected to weigh Air Namibia’s contribution to the national economy and provide feedback on any new developments in the country’s aviation Industry.

New Era reported last week that Finance Minister Calle Schlettwein had presented Air Namibia with a written proposal requesting the cancelation of the Frankfurt-Windhoek route as part of sustainability measures. However, Nakawa pointed out that the N$30 million the proposal envisages to save, is based on “old figures” and “does not take into account present and future improvements”.

He further cautioned that if the route is cancelled the impact on government revenue and the impact on the Namibian economy will be far more than the N$30 million savings.

“Air Namibia’s mandate includes the promotion of Namibia as a touristic and business destination, with tourism being the third largest contributor to Namibia’s prosperity in terms of employment creation, contribution to GDP, among others.

“One needs to look at the cost of the route versus the benefits to the nation. If Air Namibia terminates the Frankfurt route, there will be massive losses in Namibia in terms of many businesses (across all sectors of the economy), which will be forced to shut down,” he opined.

These job losses, he said, would result in rising unemployment and this would be contrary to the Harambee Prosperity Plan’s war on poverty. “We have many conservancies in rural communities whose livelihood will be negatively affected and the communities will suffer,” Nakawa warned.

He continued that millions of dollars locally invested in tourism facilities and infrastructure would become white elephants, thereby imposing losses on the private sector and even public sector organisations, such as Namibia Wildlife Resorts and the Namibia Tourism Board.

“There have been a lot of developments on the Frankfurt route, which are aimed at reducing the losses incurred. Among them is the decision to increase the number of flights from six per week to seven per week since April 2017, with the prospect of increasing these flights even more in 2018 by virtue of the increased demand for flights to Namibia from Europe.

“The benefits of the recently signed codeshare agreement with Condor Airline will also go a long way in improving the financial performance of the Windhoek-Frankfurt route,” said Nakawa.

He, however, admitted that one of the items contributing to the losses on the route is the high cost of leasing the two airbus A330-200 aircraft used on the route. In this regard, Air Namibia has already started engaging relevant stakeholders to re-structure these leases to reduce the cost, while maintenance costs and agreements on these aircraft are also to be reviewed with the aim of reducing them further to improve financial performance of the route.

“Our figures for the 10-month period ended 31 January 2017 (compared to the 10-month period ended 31 January 2016) show a reduction in loss of N$61 million. With the new developments, i.e. frequency increases on the route due to improved demand, the code-sharing agreement with Condor, [as well as] re-negotiation and re-structuring of the lease and maintenance agreements, we expect further and significant reduction of the losses and improvement of financial performance of the route,” Nakawa added.

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