Comeback carrier Eswatini Air is pursuing a lean and nimble strategy that will see it stick to the Embraer 145 as the mainstay of its fleet and paced growth within Southern Africa before venturing back into East Africa.
“It is not in our five-year strategy to expand services beyond the SADC (Southern Africa Development Community) region in the short-term,” Chief Executive Captain Qiniso Dhlamini tells AirInsight.
Dhlamini says that despite a market potential analysis showing a lot of movement between Eswatini and destinations such as Dar es Salaam in East Africa, “right now, we need to consolidate on the smaller routes. We will be expanding but within the SADC region initially, and then we will start looking at East Africa, which we previously served when we still operated as Royal Swazi Airways.”
Eswatini Air relaunched services after a 20-year hiatus last March, with a daily service to Johannesburg. Harare and Durban followed that, and, more recently, Cape Town completed the initial route development plan.
There has been no assessment of the West African market, but studies show that there is a lot of VFR (Visiting Friends and Relatives) traffic into and out of East Africa, as well as business traffic with a lot of people traveling for conferences and onward connectivity through the hubs in Nairobi and Dar es Salaam. However, plans could be brought forward if the market becomes more compelling sooner than anticipated.
“It is not in our current five-year strategy. We want to concentrate on the SADC region, and once that is established and viable, we will look at going into East Africa. But if our market potential analysis indicates that East Africa is becoming viable earlier than the end-term of our strategy, we will review it,” Dhlamini says, explaining that he would not want to start operating longer routes and cannibalize the smaller routes that are being used to buttress the company.
Equally, the company will stick to its current fleet of two Embraer 145 jets which are fully owned and fit the current operations better. “Our two aircraft are fully paid for, so we don’t have a debt burden on our balance sheet. We do not want to start expanding fast and finding ourselves with debt, for instance, because leasing a large aircraft is too early in our operation. That (leasing) is what has killed a lot of airlines,” Dhlamini says, pointing to what could happen in the event of a disruption to the market.
“If there is a pandemic or some other disruption, you will find that you have a lot of debt; as a start-up, we are trying as much as possible to keep away from debt.”
While most airlines are wary of market liberalization as proposed under the Single African Air Transport Market (SAATM), Dhlamini is upbeat about its prospects and the benefits it will bring to the market.
“For us, it is an opportunity. As a country, we are a signatory to the Yamoussoukro Decision, and we have also ratified SAATM. We don’t view airlines that come operating into our country, even under 5th Freedom, as a threat. When they are designated, we start negotiating the possibility of collaboration through codeshares and so on because we have a fleet of only two aircraft. If we have a long-haul operator coming in, then we will be negotiating a codeshare agreement, so for us, it is an opportunity for grow. With time we will be able to exercise similar rights in the territories of registration of those airlines. I think we should even go further than 5th freedom. We should also look at cabotage,” he says.
Eswatini Air was established to connect the underserved secondary markets between the kingdom and neighbors in Southern Africa. The next milestones under its five-year strategy are to achieve a 3-star Skytrax rating “over the next year or so” and “reaching our breakeven point in the third year of operation.”
Dhlamini says that to achieve that, “we have to improve our efficiency in sourcing of aircraft maintenance which entails the training of our personnel because our aviation cadre over the past 20 years had diminished, so we are trying to rebuild that from scratch.”
“Our strategy is hinged on three planks. One is cultural transformation, which is looking at an inclusive culture and engagement with all our stakeholders, improving our efficiencies, where we are establishing and Approved Maintenance Organisation, and we want to also insource training. The third program is commercialization for sustainability,” Dhlamini explains.
Dhkamini is, however, walking a high wire as he tries to meet the carrier’s mandate of providing affordable services while staying afloat. He says they are expected to be more viability and sustainability-driven than a profit-driven airline because they are considered a service. Yet they are exposed to all the pressures of sustaining service in a high-cost operating environment.
“We need to make sure that we are affordable to the people that need to travel, but on the other hand, we are experiencing all the impediments such as high fuel prices and taxes, and all the other tariffs that we have to pay.”