Eswatini Air flying to biggest loss
The airline’s operational costs are more than six times higher than the revenue generated to date. The ministry reported that Eswatini Air generated E27.9 million in revenues out of a projected E121.9 million which was below the budget by 77 per cent.
MBABANE – Eswatini Air has been flying at a loss since the airline began operations in March 2023. The airline’s operational costs are more than six times higher than the revenue generated to date.
It appears as though the numbers are not adding up for Eswatini Air, taking into consideration the revenue generated compared to the total operational costs for the local airline.
Between the months of April and December 2023, Eswatini Air operational costs including cost of fuel, maintenance, salaries and wages for the crew amounted to E173 956 472, meanwhile, income generated by the local airline amounted to E27 949 847 during the period under review.
Currently, Eswatini Air operations are heavily dependent on government subvention, which has been acknowledged by the airline which said they had projected to incur losses for a period of three years. In the current financial year, the airline received a government subvention amounting to E390 million.
Meanwhile, this week, the airline celebrated its one-year anniversary with a renewed commitment to connecting the country to the world.
Eswatini Air Chief Executive Officer (CEO) Qiniso Dhlamini said they were immensely honoured to witness Eswatini Air reaching the significant milestone.
“The journey has been challenging, but the professionalism and confidence of our staff, along with the unwavering support of our stakeholders, have been instrumental in our success,” he said.
Dhlamini acknowledged the hurdles faced by a startup airline and pointed out that there were teething problems, but the loyalty and patriotism of Eswatini helped the airline overcome them.
He said looking ahead, Eswatini Air planed to leverage the lessons learned in its first year to refine its strategy.
“We will recalibrate our plans to ensure further value creation for our stakeholders and the airline’s sustainability,” Dhlamini explained.
The CEO said the airline remained dedicated to its core mission, which is connecting Eswatini to the world, fostering regional ties within the Southern African Development Community (SADC), promoting tourism, and providing exceptional service that reflected the country’s warm hospitality.
He said with continued support, they were confident in achieving all of the goals set and more.
According to the Ministry of Public Works annual performance report for the financial year 2023/24, the airline optimised the schedule and continued to operate to all four destinations in the financial year, with a total of 44 flights weekly to all the destinations, being Johannesburg, Harare, Durban and Cape Town.
DISRUPTIONS
The airline operated 96 per cent of its planned schedule and disruptions were kept to a minimum through advance planning, to alert passengers of the change in the schedule.
The four per cent flight cancellations were due to operational reasons being weather, technical and reduced demand to name a few. To date, the airline has operated 2 172 flights, with a total of 28 753 passengers.
It was reported that the total passenger traffic had increased by 35 per cent from the previous two quarters cumulatively. Airlink held a larger portion of the market share with 61 per cent of the passengers and Eswatini Air at 39 per cent.
The ministry reported that Eswatini Air generated E27.9 million in revenues out of a projected E121.9 million, which was below the budget by 77 per cent.
It was stated that the main reasons for the Eswatini Air revenues to be below budget were that the budget was developed based on a two aircraft operation, while the actual operation was serviced with one aircraft for the better part of the three quarters.
Secondly, the budget anticipated a load of 60 per cent however; the actual load factor obtaining on the ground was plus or minus 26 per cent. In addition, the ministry reported that the airline was still at its infancy stage.
In terms of costs of Eswatini Air, E173.9 million has been incurred to the end of December. These costs include costs for fuel, maintenance, salaries and wages for the crew, landing and navigation costs as well as other administrative costs.
The ministry further reported that since the launch of the airline, the load factor has been steadily growing.
The airline has commenced its IATA Operational Safety Audit (IOSA) certification process targeted to be finished in August 2024.
It was further reported that the certificate would allow the airline to enter into interline and code share agreements with other airlines to improve seamless travel for its passengers. Meanwhile, there continued to be a need for intentional support by government travellers during the incubation stage of the airline, with due tolerance of the limitations imposed by lack of ISOA certification.
According to the Royal Eswatini National Airways Corporation (RENAC) operational overview, the corporation is a Category A public enterprise, for which 83 per cent of its survival is from government subvention, three per cent from Eswatini Air, two per cent from the sale of Jet1 fuel to other airlines and 12 per cent from the Royal Eswatini Travel Agency (RETA) ticket sales.
During the year under review, economic activities and demand for air travel recovered and reached about 80 per cent of pre-COVID-19 levels. The ministry reported that RETA, which is a subsidiary of RENAC continued to grow gradually, penetrating the private sector although government account continued to be dominant.
The corporation continued to be the sole supplier of ground handling services in the country and generated revenue from same. In aviation terms, ground handling refers to a range of services to flights on the ground, such as passenger and cargo handling, cleaning, towing, refuelling, catering, to name a few.
TERMINAL
Ground handling addresses the many service requirements of an airliner between the time it arrives at a terminal gate and the time it departs on its next flight.
The ministry reported that the corporation also supplied jet fuel at Matsapha International Airport. However, the corporation continued to experience a drop in fuel sales at Matsapha Airport, mainly because of the closure of the airport. The process of re-opening the airport for Eswatini Air maintenance has been completed.
Meanwhile, Eswatini Air commenced scheduled operations effective March 26, 2023, with flights between Eswatini and Johannesburg. Additional destinations were launched including Harare on April 14, 2023, Durban on May 5, 2023 and Cape Town on June 2, 2023.
On another note, the ministry reported that RETA business was operating well, and its sales turnover was steadily growing and the overall turnover for the agency was E63.1 million.
“Comparing the results to the yearto-date budget of E60 million, the agency performed above budget by E3.1 million. The budget year-todate turnover is 78.8 per cent of the total annual budget, which is 3.8 per cent above then year-to-date budget,” reads part of the report.
Pertaining to aircraft maintenance, during the reporting period, the corporation successfully performed the required scheduled and non-scheduled maintenance for the corporation’s aircraft.
It was common cause that the maintenance of the aircraft took a huge portion of the budget and to reduce the costs, the airline had in-sourced some of the maintenance.
To assist the corporation to achieve such, the Civil Aviation Authority has issued Matsapha Airport an unmanned aerodrome approval, to enable Eswatini Air aircraft to operate into Matsapha Airport for the utilisation of the anger for maintenance events of the Embraer Regional Jets (ERJs).
Following approval, Eswatini Air conducted its first maintenance event at the Matsapha Airport between, January 15 to 17, 2024.
The ministry reported that RENAC was entrusted with management of the VVIP terminal at KM III International Airport. The corporation continued to provide essential maintenance and repairs at the VVIP terminal. However, it was reported that there was a need for the shareholder being the Ministry of Public Works and