CTPD cautions state on new airline

ZAMBIA should learn from South Africa on the tax-revenue demands of running a national airline and the pitfalls to avoid challenges, the Centre for Trade Policy and Development (CTPD) has advised.

CTPD researcher Bright Chizonde said Zambia should consider its current stock of public debt and whether or not the economic benefits of re-launching the airline would outweigh the costs.

CTPD conducted a study focusing on Zambia’s plans to relaunch a national airline and unveiled a number of lessons from other countries like South Africa, Malawi and Ethiopia on the potential risks and success prospects of running a national airline. Mr Chizonde said South African Airways operates in a highly competitive regional and domestic industry, which squeezes profits.

South Africa has a huge population size 56.7 million people and large economy with Gross Domestic Product (GDP) of about $349 billion translating into a large middle class which demands for air travel.

Zambia, in contrast, has a relatively small middle class since the population is smaller about 16 million people and the GDP is less than $30 billion.

In terms of regional location, Zambia is also disadvantaged when it comes to intercontinental air travel.

Mr Chizonde said South Africa does not only bailout its national airline but also exerts considerable interference in its operations.

In 2012, the entire board of directors resigned in protest to interference from government.