Kilimanjaro International Airport Interview

TANZANIAINVEST has been interviewing Mr. Arnold Kilewo, Chairman of the Kilimanjaro Airports Development Company (KADCO), to gather his vision and opinion about the Tanzania aviation sector.

Arnold Kilewo, Chairman of the Kilimanjaro Airports Development Company


TI:
The Kilimanjaro International Airport is the first and only airport in Tanzania to be privatised. However, the government of Tanzania is not completely satisfied with this move because investments in the infrastructure have not taken place to the extent that had initially been anticipated. What is your opinion on this?

Arnold Kilewo – Kilimanjaro Airports Development Company: The Kilimanjaro International Airport (KIA) was the first publicly operated infrastructure to be privatised by way of negotiation between the government and prospective investors.

To move from publicly managed operations to privately managed ones implied a change of the system in a short time.

Also, we needed to look at the number of people required and we had to reduce it, as the airport was over-employed for the size of the operations.

We suddenly discovered there were not enough operations and revenues to be able to run the airport in the way we had expected, by engaging expatriates to manage the airport.

We soon found them very expensive and we needed to make a change.

So, in the year 2000 when the expatriate management contracts ended, we did not renew them and we put in place Tanzanian management and started reducing operation costs.

For the first three to four year of operation, the company went through massive losses.

From 2000, we started to recover and, by the end of 2004, we managed to turn the company around.

In 2005, we made a small profit and in 2006 we are going to make an even better profit.

So, in terms of operations and personnel, this was accomplished.

It is true that the expected major investments did do not take place, but we sought strategically, in order to make a real change, to talk to other investors.

So we managed to attract investment and to build a hotel which is operational, the Kilimanjaro Hotel.

TI:
What are the plans for further development of the Airport?

AK: {xtypo_quote_left}The Kilimanjaro International Airport is the getaway to the northern zone of the tourism industry in Tanzania so we want to be at the best for the tourism sector.{/xtypo_quote_left}As we continue to manage and think of the future, we have decided to appoint a company to make a development master plan which will provide the vision on how we want the Kilimanjaro International Airport to look like in the years to come.

We believe Kilimanjaro International Airport is the getaway to the northern zone of the tourism industry in Tanzania so we want to be at the best for the tourism sector.

We want to establish around Kilimanjaro International Airport duty free and export processing zones [as well as] special economic markets and industries.

Also, we want Kilimanjaro to be the centre of horticulture business in Tanzania.

We would like to develop Kilimanjaro International Airport as a modern Airport city in the example of Dubai and I believe we can do it.

We have huge land available, we are placed between Arusha and Moshi, we also have a railway line which runs near the airport and we envisage, in the future, that we will connect Kilimanjaro International Airport with Arusha.

TI:
Is the demand for Kilimanjaro international Airport there? Is the expected increase in the number of tourist to Tanzania from the current 600,000 to one million by 2010 enough to sustain your master plan?

AK:
This development plan will not depend on tourism alone.

We are going to develop Kilimanjaro International Airport as an airport city, which means a small, self-contained city with attraction to put light industries, duty free zones, hotels, golf courses and conference centres.

We would like to make it a centre where people come and combine business and pleasure.

Not only tourists will come, but also business people and investors that use the Airport as a base to reach the surrounding markets in east Africa.

So Kilimanjaro, in my opinion, can be developed as a vibrant airport city.

TI:
How is this development plan going to be financed?

AK:
It will be very much [financed] through private investment.

At Kilimanjaro International Airport, we are going to survey the area and put in place minimum infrastructure.

TI:
The development plan of this airport seems to be similar to that of the Dar es Salaam International Airport. Are you in competition?

AK:
The good thing about the Kilimanjaro International Airport is that we have land available and any developer requires it for any type of activity.

For us, whatever we are doing is a natural development phenomenon.

Kilimanjaro is already placed in the northern part of the tourism industry in Tanzania, and Arusha is already the capital of East Africa.

Arusha is an international city because of the international court of justice for the Rwandan genocide of 1994 [because] the European Union (EU) has designated the African Union Court of Justice to be located in Arusha, so the city is gaining in international status.

The Kilimanjaro International Airport will take full advantage of this and will increasingly become the international entry point to East Africa. {xtypo_quote_right}Arusha is already the capital of East Africa [and] will increasingly become the international entry point to East Africa.{/xtypo_quote_right}

It will be a natural growth, not a forced one.

So we see our competitor not being Dar es Salaam, but Nairobi.

TI:
Why do you think that the East Africa Community (EAC) will not collapse this time?

AK: It will work this time because it is based on the opinions and the desires of the people of East Africa and it has been properly negotiated with the involvement of the private sector that will be able to expand in this wider market.

In the East African Business Council, we bring the business people of East Africa who discuss business issues and express their opinions and tell the government the way it should be run in order to make East Africa one business destination.

Rwanda and Burundi are also coming in [and] both represent an added value to the East African Community.

TI:
As you mentioned, East Africa already has a consolidated international hub in Nairobi. How are you going to overcome this?

AK:
First of all, Nairobi is growing fast and becoming congested.

This is why, in our development, we have to choose a niche market, the tourism in the northern part of Tanzania.

Also, we have not marketed ourselves properly yet and when our master plan is ready, we will go out there and demonstrate to the business world what we can offer.

We are not afraid of competition; if you are, you will never do business.

We will be competitive in the quality of services provided and in the fantastic investment opportunities available.

Tanzania Aviation Sector
Outlook

TI:
With regard to competition in the aviation sector in Tanzania, what is your opinion on the current ground handling monopoly that was granted to Swissport and which is due to end in 2007?

AK:
There is no point in continuing to grant Swissport a monopoly when we know that many of our clients, the airlines, are complaining about the services received and particularly their cost.

Kilimanjaro-International-Airport-Tanzania
Kilimanjaro International Airport (KIA)


I think this cost is what will deny us business if competition is not introduced.

If we look at what happened in the mobile phone sector in Tanzania a few years ago, although some argued at the time that there was no room for several operators, the demand for mobile lines has been much higher than expected and the price for the consumers has been going down dramatically.

So, we believe the same will happen with ground handling services: services will improve and prices will go down.

TI:
Prices are said to be high for airplane fares in Tanzania. What are the challenges you face in order to be able to welcome more airlines enter the country and in order to increase the frequency of flights for those who already flying here, thereby generating higher competition and lower fares?

AK:
The challenge, indeed, is for us to attract more airlines to come in and to ensure they make business.

So time has come for Tanzania to be focused. {xtypo_quote_right}The challenge, indeed, is for us to attract more airlines to come in and to ensure they make business.{/xtypo_quote_right}

The Tanzania Airport Authority (TAA) and the Tanzania Civil Aviation Authority (TCAA) should be focused on marketing Tanzania to the aviation industry and telling the world what Tanzania can offer.

TI:
The national air carrier has a pivotal role in marketing the country. What do you think is going to be the future of Air Tanzania (ATCL)?

A
K: It is very expensive to have your own airline.

We missed the boat when the East African Airlines collapsed; we started drawling and we never recovered.

Only with a strong East African air carrier can you, at the right time when the airline is big enough, develop smaller national carriers.

I believe Precision Air, rather than Air Tanzania, should be strengthened because this private airline acts as the Tanzanian national carrier today.

If we do not encourage our own people, who will?

Unfortunately, I think we are going to try to establish a Tanzanian national airline again.

TI:
As a true Tanzania business man involved in many companies and sectors at once, where would you like to see your country positioned internationally in the coming year?

AK:
{xtypo_quote_left}Any investor coming here must respect the people and be fair […] In turn Tanzania will be more than fair to the investor.{/xtypo_quote_left}I would like us to be categorised as an emerging economy, like Malaysia or Thailand.

The idea of developing thanks to somebody from the outside helping us is something of the past.

Any investor coming here must respect the people and be fair and don’t exploit them.

In turn Tanzania will be more than fair to the investor.