Air Tanzania Company Limited (ATCL) () is the flag carrier airline of Tanzania. It is based in Dar es Salaam, with its hub at Julius Nyerere International Airport.
It was established as Air Tanzania Corporation (ATC) in 1977 after the dissolution of East African Airways and has been a member of the African Airlines Association since its inception. The airline was wholly owned by the Tanzanian government until 2002 when it was partially privatised in partnership with South African Airways, but the government repurchased the shares in 2006, making it once again a wholly owned government company.
In 2016, the Tanzanian government under President John Magufuli initiated a new drive to revive the national carrier by acquiring additional aircraft from Bombardier and Boeing. The airline further intended to double its fleet to 14 aircraft by 2022 and increase its long-haul and regional routes.
A 2021 government report by the Auditor General warned about the company's huge debts. Air Tanzania flights flying abroad ran the risk of being impounded due to huge debts incurred by the company. Despite the warnings, the government of Tanzania continued to finance the airline and announced its biggest bailout of US$194 million for the airline.
History
Air Tanzania Corporation (1977–2002) The Air Tanzania Corporation (ATC) was established on 11 March 1977 after the break-up of East African Airways (EAA), which had previously served the region. The liquidation of EAA followed its accumulation of US$120 million of debt. According to Andy Chande, the founding chairman of the board, Tanzania and Uganda did not receive a fair share of the former carrier's assets despite being equal partners.
The airline commenced operations with a Douglas DC-9-32 leased from Kenya Airways and purchased an additional two Boeing 737, financed by a U.S. bank. It also leased aircraft from Air Madagascar. Four Fokker F27s and four DHC-6-300 Twin Otters were added in 1980. Because of less demand, two of the Fokker 27s were made obsolete in 1981. These aircraft returned to service in 1983 but were once again removed.
In May 1991, Air Tanzania began operating a Boeing 767-200ER that was leased from Ethiopian Airlines, but this aircraft proved to be too large and was returned to the lessor in February 1992. The airline reported a profit of US$650,000 in 1994.
During the 1990s, the airline's acronym ATC was humorously referred to as "Any Time Cancellation" due to its unpredictable flight schedule.
Alliance Air
In 1994, Air Tanzania joined with Uganda Airlines and South African Airways (SAA) to form Alliance Air. Air Tanzania had a 10 percent stake in the venture. Flights operated from Dar es Salaam to London–Heathrow via Entebbe on a Boeing 747SP initially, and then a smaller Boeing 767-200. This venture ceased operations in October 2000 after accumulating losses of about US$50 million. The losses had been funded by Transnet, the parent company of SAA, through April 2000. When Transnet refused to continue funding the deficit, Air Tanzania accused SAA of using Alliance Air "as a Trojan Horse to take over national airlines in the region". In February 2002, the government began the process of privatising ATC through the Presidential Parastatal Sector Reform Commission. Advertisements were placed in the local, regional, and international media inviting potential bidders. The International Finance Corporation advised the government in this transaction. The government had approved a transaction structure that included:
Creation of a new company, "Air Tanzania Company Limited", which would be incorporated as a limited liability company under the Companies Act to take over the operating assets and specified rights and liabilities of ATC. A second new company, "Air Tanzania Holding Company", would be created to take over the non-operating assets and all other liabilities of ATC.
Eight airlines submitted expressions of interest: Aero Asia International (Pakistan) Air Consult International (Ireland) Comair (South Africa) Air Gulf Falcon (United Arab Emirates) Kenya Airways (Kenya) Nationwide Airlines (South Africa) Precision Air (Tanzania) South African Airways (South Africa)
Of the eight, four airlines carried out due diligence – South African Airways, Kenya Airways, Comair, and Nationwide Airlines. By 19 September 2002, the bid deadline date, only SAA had submitted a bid. Kenya Airways and Nationwide Airlines had informed the government that they did not intend to submit bids.
ATCL (2002–2006)
The Tanzanian government selected SAA as the winning bidder. After signing an agreement with the government, SAA in December 2002 purchased a 49 percent stake in Air Tanzania Company Limited (ATCL) for US$20 million. US$10 million was the value of the government's shares, and the remaining US$10 million was for the Capital and Training Account for financing Air Tanzania's proposed business plan.
As the strategic partner, SAA planned to create its East African hub in Dar es Salaam to form a "Golden Triangle" between southern, eastern, and western Africa. It intended to replace ATCL's fleet with Boeing 737-800s, 737-200s, and 767-300s; and planned to introduce regional routes, including routes to the Middle East and West Africa. The government was expected to sell 10 percent of its stake to a private Tanzanian investor, thereby reducing the government's ownership to a non-controlling interest of 41% n ATCL.
The new Air Tanzania airline was launched on 31 March 2003, offering direct flights from Dar es Salaam to Johannesburg, Zanzibar and Kilimanjaro.
Air Tanzania recorded a pre-tax loss of almost US$7.3 million in its first year following privatisation. The loss was attributed mainly to the inability to expand the network as quickly and extensively as originally planned. It had been hoped to launch services to Dubai, India, and Europe, but these were delayed as Air Tanzania had only had short-haul Boeing 737-200s in its fleet. The development of Dar es Salaam as an East African hub for the SAA alliance had also not proceeded as quickly as planned.Airliner World, March 2005
On 31 January 2005, Air Tanzania suspended one of its few regional services, Dar es Salaam to Nairobi, following intense competition from Kenya Airways on the route. The airline, however, reaffirmed its intention to launch long-haul services within a year from Dar es Salaam to Dubai, London, Mumbai, and Muscat.Airliner World, April 2005
The Tanzanian government announced on 31 March 2006 that it would dispose of ATCL following four years of losses, which amounted to US$20.5 million (TZS.24.7 billion). The director-general of the Tanzania Civil Aviation Authority, Margaret Munyagi, said: "Air Tanzania was in a worse state than before it was taken over by SAA." SAA, however, claimed the Tanzanian government was "not serious" for failing to release about US$30 million, which was needed to implement Air Tanzania's business strategy to reverse continued losses.
On 7 September 2006, the Tanzanian government bought SAA's 49 percent stake in ATCL for US$1 million, officially terminating its partnership with SAA. The venture collapsed due to the partners' different interests in the business.
Relaunched ATCL (2007–2015) After the partnership between Air Tanzania and South African Airways (SAA) was officially terminated, the government set aside US$10 million (TZS13 billion) for Air Tanzania to start using its ticket stock (number 197) instead of the stock of SAA (number 083), changing revenue systems and fuel services, preparing e-ticketing and accounts systems, using a new trademark, and clearing outstanding debts. President Jakaya Kikwete appointed Mustafa Nyang'anyi, a veteran politician and diplomat ambassador, as the board chairman, and former Parastatal Pensions Fund director general David Mattaka as managing director and chief executive officer.
In conjunction, the government also began to look for another private partner to run the airline. The first discussions began with China Sonangol International Limited in 2007, however, the discussions were ultimately unsuccessful and ended in 2010. From 1 July 2007, ATCL started using its own ticket stock and began operations as a wholly owned government airline.
The Parliamentary Committee on Economic Infrastructure expressed its concern about no funds being set aside for ATCL. According to the opposition, the airline has debts amounting to US$4 million due to SAA.
Rebranding Air Tanzania was relaunched in September 2007 with two leased Boeing 737-200s in its fleet. The new brand represented the company's name, Mount Kilimanjaro and the airline's international destinations. The introduction of the airline's new logo on a leased Airbus A320 bore the image of the imposing giraffe – Tanzania's national icon, to replace the South African Airways flag symbol. On 1 October 2007, the revamped Air Tanzania made its inaugural flight on the Dar es Salaam to Mwanza via Kilimanjaro route.
In February 2008, the carrier acquired two de Havilland Canada Dash DHC 8-Q311s. In December 2008, the Tanzania Civil Aviation Authority (TCAA) withdrew Air Tanzania's Air Operator Certificate because the airline had failed to meet the standards of the International Civil Aviation Organization. Two weeks later, the International Air Transport Association banned the air carrier from all aviation transactions and informed all travel agencies and other aviation companies to stop all transactions with Air Tanzania until further notice. The certificate was restored in January 2009, with both the TCAA and Air Tanzania claiming there had never been any doubt about the airworthiness of its aircraft. In 2009, Air Tanzania flew 60,018 passengers, while local competitors Precision Air moved 583,000 passengers and Coastal Aviation 141,995 passengers.
Once the talks with China Sonangol International Limited fell through, press reports in July 2010 indicated that Air Tanzania was in serious discussions with Air Zimbabwe to establish extensive and substantive management collaborative arrangements. Both airlines were reported to be in search of strategic partners to shore up their operations, which had been in decline over the past decade.
Decline From 2011 to 2015, the airline was in a constant period of decline, shutting down operations multiple times due to lack of aircraft. Air Tanzania was effectively grounded in March 2011, after its sole remaining operational aircraft, a Bombardier Q300, was sent to South Africa for heavy maintenance, leaving the carrier stranded due to its failure to secure suitable aircraft leases for the duration. At the time, the other Bombardier Q300 was undergoing a heavy C-check at ATCL's hangar in Dar es Salam, stranded there due to lack of funds to import spare parts from abroad. Air Tanzania resumed flying in November 2011 following the return of the aircraft. The maintenance cost US$1 million, but other accumulated expenses brought the total bill to $3 million, which the Tanzanian government paid in September 2011.
In November 2011, Air Tanzania leased a Fokker F28 aircraft from JetLink Express on a standby basis in case its only operational aircraft were incapacitated. The airline assured the public that it would never cease operations again and that more aircraft would be procured over the next several months and years, according to the airline business plan shared with the media. On 21 November 2011, Air Tanzania began negotiations with Export Development Canada (EDC) to explore how EDC could assist the airline in acquiring more aircraft from Bombardier, a Canadian aircraft manufacturer. Those negotiations, however, failed due to the airline's large amount of debt.