Malawi's Flight Woes

The on-going crisis at the national flag carrier, Air Malawi, has left local air passengers at the mercy of market devices. Investigations carried out by The Sunday Times Business have revealed the spectacle of passengers starved of choice, a development compounded by findings that seats on almost all the planes are fully booked.
Some travelers who talked to The Sunday Times complained that some operators have hiked fares from as low as K112, 000 in November to K290, 000 by December 10 in the same category. Most observers have blamed the situation on the crisis at Air Malawi.
The national flag carrier has two out of its three birds grounded, with only the ATR 42 doing the rounds on domestic and regional routes.
Mathews Jeremiah Kalanda, who granted The Sunday Times an interview at Air Malawi premises on Wednesday, said he has been tossed from one airline office to another in the endless search for a seat to no avail.
“I was supposed to travel to the United Kingdom on December 17; however, I have so far failed to secure a seat because there are no available seats. Workers at one airline operator even told me that seats may only be available on February 9, 2012. I think all these problems are coming in because of government’s failure to bail Air Malawi,” Kalanda said.
The situation in the corridors of Air Malawi is said to have spurred a chain of fare price rises, with some operators reported to have hiked the cheapest economy class seats by almost 150 percent.
This was revealed by another passenger found at Air Malawi offices, Agness Philemon. She said she secured a seat on one of the airline operators, but “I have been forced to pay three times as much as I paid on October 16, when I traveled to Johannesburg. I paid K112, 000 in October and, now, I have been forced to pay K290, 000”.
When contacted to comment on the situation, Air Malawi’s marketing, tariffs and industry affairs manager, Tony Chimpukuso, acknowledged that other airline operators have taken advantage of the situation at the national flag carrier to rip passengers off.
Chimpukuso further admitted that passengers only have two choices at the moment: either to pay the higher fares or stay home!
“This is the reason we are working hard to have the (two) airlines operational again. What is happening now is that people are paying double the normal price and we want to bring normalcy to the industry. We are a national carrier; we are not in business to make money or punish the traveler,” Chimpukuso said.
Chimpukuso added that there were many advantages appended to traveling on the national flag carrier, among them the fact that all proceeds, including foreign exchange, are invested locally. He added that the airline operator also spends significantly on corporate social responsibility initiatives.
“Therefore, our current situation is translating into the loss of some advantages, especially those to do with Bilateral Air services Agreements (Basas). Basas allow foreign airline operators not to pay taxes. This means even Air Malawi does not pay taxes to governments of destinations it travels to, and that money is brought to Malawi.
“This means that, with Air Malawi not capitalizing much on Basas, foreign operators are enjoying the advantage over us, and externalizing forex,” said Chimpukuso.
Apart from failure to capitalize on Basas, Air Malawi has also been losing out on Code Share Agreements (CSA) following the collapse of its CSA with Zimbabwe Airways. However, the flag carrier still maintains Inter-Line Agreements with a horde of other airlines.
Chimpukuso said, however, that, in the face of escalating fares, some passengers were connecting to far-away destinations through ATR 42’s flights to Zambia, Tanzania and Zimbabwe.
He also dispelled the notion that Malawi had a narrow airline industry currently; saying, instead, that 23 other off-shore planes also service Malawians.
In a related development, South African Airways (SAA) - one of the dominant airline operators on the domestic market- has dismissed reports that it was one of the operators cashing in on Air Malawi’s flight problems.
SAA country manager for Malawi, James Chikaonda, indicated in a written response that SAA was not one of the operators that have raised fares by almost 150 percent. He said the operator last reviewed fares between October and November, which saw fares rise by only between 3 and 5 percent.
“Just a little explanation as to how the pricing system airlines use (works). We do not sell the seats on the aircraft using one type of fare only. We have a number or a list of fares to any given point within the economy class or business class. And on each flight there are specific fares allocated to specific number of seats. So, date of travel and availability of what type of fare and seat on a particular flight determines the final fare to be charged.

“So you find people paying for different fares on the same flight and in the same class of travel. The cheapest fares or seats on any given flight are the fastest to be taken. Then as time goes the next higher ones get sold too until the highest fares/seats are eventually sold. This is explained better in yield management.

“So if you look at November as a month of reference, we had fares as low as MWK118,000 in economy class to as high as MWK327,000. Those cheapest seats/fares are no longer in the inventory. Meaning they are all sold out,” Chikaonda said.

Chikaonda also dismissed suggestions that SAA was now enjoying monopoly power over the local market.
“South African Airways is not a monopoly power on the market as we have many other players, too, that we call ‘online carriers’ that operate into Malawi and fly to the very destinations that South African Airways fly to. We have other players, too, that we call ‘offline carriers’ that offer services from hubs outside Malawi but have agreements with the online carriers to uplift their passengers from Malawi.
“So (put both, the online carriers and the offline carriers) we cannot call SAA as a monopoly power or player on the Malawi market. Consumers are spoiled with choice as to who they want fly with. We do not discount the ground operators as part of the players,” said Chikaonda.

But Chikaonda acknowledged that SAA flights were fully-booked, attributing the trend to school holidays and festivities. He said people’s increased movements push up the demand for seats.

On concerns that airline operators were making a killing out of the current situation, Chikaonda said: “Our customers may appreciate the fact that not all that they pay to the airlines is a fare and thus revenue to the airlines. Airlines have been mandated by respective governments to collect taxes on behalf of those governments.

“Taxes like airport departure taxes, security taxes are some of those taxes airlines collect on behalf of governments and differ from one country to another. The total amount paid to the airline consists of the fare and the taxes. The taxes may go up and affect the final amounts to be paid,” Chikaonda said.

He added that foreign exchange rate was another factor that influences fare prices. He said SAA fares are quoted in US Dollars and converted to Malawi Kwacha at a given rate of exchange.

“The rate of exchange may change and that affects the final amount to be paid,” he said.