JPM's plane 'shopping spree' now hits $500 million mark

06Dec 2016
The Guardian Reporter
The Guardian
JPM's plane 'shopping spree' now hits $500 million mark
  • PURCHASER-IN-CHIEF: The president has been personally involved in the purchase of at least six new airplanes for ATCL in just one year as part of plans to revamp the struggling national airline

WHEN President John Magufuli came into office a little over a year ago, troubled national flag carrier Air Tanzania Company Limited (ATCL) had just one aeroplane.

President John Magufuli admires a computer impression of an ATCL Boeing 787 Dreamliner being shown to him by the sales director of the US-based aircraft manufacturer, Jim Deboo, after talks at State House in Dar es Salaam yesterday

Fast forward 12 months later, and Magufuli is now set to increase the size of the ATCL fleet to seven planes.

This is after the president went on something of a shopping spree to buy new planes for the cast-strapped airline at a cost of close to $500 million (over 1 trillion/-). Last week, Tanzania signed a deal with Canada's Bombardier Inc to buy two CS300 jetliners and one Q400 turboprop aircraft at a combined cost of $203 million.

It will also be recalled that in September, the government took delivery of two other Bombardier Q400 planes at a cost of $62 million. And now the president's office has confirmed that an initial payment has already been made for the purchase of a Boeing 787-8 Dreamliner, which is expected to be delivered on June 2018 and thus boost Air Tanzania's fleet to seven planes.

Although the cost of the Boeing Dreamliner was not made public in yesterday’s statement from State House, the American commercial jet manufacturer says on its website that the list price of the 242-passenger 787-8 Dreamliner is $224.6 million.

This would bring the total amount of money spent by Magufuli's government so far on the purchase of new ATCL planes in just one year to around $490 million.

However, if the government opts for the bigger and more expensive 787-9 Dreamliner with a seating capacity of up to 290 passengers in two-class configuration, the unit cost of the plane would be around $264.6 million, hence bringing the total airplane shopping spree bill to around $530 million (1.16 trillion/-).

Yesterday, Magufuli held talks at State House in the city with Boeing company sales director Jim Deboo about the intended 787-8 Dreamliner plane purchase.

The talks were also attended by the permanent secretary in the Ministry of Finance and Planning, Doto James – who is also the government’s paymaster general - and his counterpart in the Ministry of Transport, Works and Communication, Dr Leonard Chamuriho.

According to the Ikulu statement, the president said his government is buying new jetliners for ATCL because it wants to increase non-stop direct flights between Tanzania and Asian and European tourism markets in a bid to boost annual foreign visitor arrivals beyond current levels of around 1 million.

"Tourists have to use several connecting flights to come to Tanzania...this is because we don't have our own (strong) airlines," Magufuli was quoted as saying in the statement. "We haven't even reached 2 million tourist arrivals a year, while a country like Morocco gets more than 12 million tourists each year," the president remarked.

According to official economic statistics, the tourism sector remains the country's biggest foreign exchange earner, bringing in around $2 billion a year. KAGAME’S ADVICE Since assuming the presidency in November last year, Magufuli has made the overhaul of state-run ATCL one of his flagship infrastructure development projects in a bid to transform the country into a regional tourism and transportation hub.

The Q400 turboprop planes seat 76 passengers; while the CS300 jetliners will seat up to 150 passengers and the Boeing Dreamliner - which is used for long-haul flights - will have a capacity of carrying up to 262 passengers.

The struggling ATCL has suffered from years of under-investment and mismanagement, and in September Magufuli appointed a new CEO and board of directors to oversee a restructuring of the company, including staff retrenchments, as part of a turn-around plan. The new planes purchased by the government are owned by the state-run Tanzania Government Flight Agency (TGFA), but will be operated by ATCL.

Magufuli and other senior government officials have previously defended the choice of planes being purchased by ATCL, describing them as fuel-efficient and made from state-of-the-art technology.

While the government has opted for a fleet comprised mainly of the Canadian-made Bombardier planes and one Boeing aircraft, private operator Precision Air has a fleet of French-made ATR 42 planes, while Fastjet recently got rid of its Airbus fleet in favour of Brazilian-made Embraer planes.

Fastjet said it has negotiated for three 108-seater Embraer E190s on short term lease. Load factor was one of the main reasons why Fastjet opted for the switch, projected to reach 70 per cent with the Embraers as compared to the current 47 per cent by the Airbus A319 fleet.

After a visit to neighbouring Rwanda in April, Magufuli announced that he was seriously considering advice given by Rwandan president Paul Kagame on what kind of planes to buy for ATCL. Kagame is reported to have later dispatched his officials to Tanzania to present the Magufuli administration with more detailed information on the economic benefits of ordering Bombardier Q400 planes straight from their Canadian manufacturer without using middlemen. Rwanda's own national carrier, Rwandair, uses both Bombardier and Boeing planes.

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