Swissport Tanzania, the main ground and cargo handling company for airports in the country has reported a 50 per cent drop in profits for the first six months of this year, blamed on the exit of its key client FastJet Tanzania, a low-cost carrier as well as stiff competition from the national carrier's new ground handling firm.
The Dar es Salaam Stock Exchange listed company's 2019 half-year results show net profits dropped to Tsh2.28 billion ($991,776), from Tsh4.947 billion ($2.15 million) reported in 2018. Revenues fell to Tsh17.24 billion ($7.5 million) from Tsh25.088 billion ($10.9 million) and operating costs to Tsh14.07 billion ($6.1 million) from Tsh17.633 billion (7.67 million).
The firm attributes the drop in revenue to a reduction in business and flight frequencies "by some of our airline customers."
The Tanzania Civil Aviation Authority (TCAA) gave NAS-Dar Airco the nod to operate at the Julius Nyerere International Airport in order to meet the rising demand for ground handling services. Swissport Tanzania Ltd, a subsidiary of Swissport International, dominates the business in the country.
With the exit of Fastjet Tanzania, a key client of Swissport, and the entry of NAS-Dar Airco which is handling Air Tanzania's ground handling services, business has been thinning for the Swiss firm.
Sources say that Air Tanzania is angling to for a subsidiary to exclusively service its cargo and provide allied services. The firm will be domiciled at the airline's hub at the JNIA.
Just last month, Tanzania unveiled a state-of-the-art terminal at the airport, which is seen as part of country's bid to position itself as a regional aviation hub.
The $282 million facility will exclusively handle international flights, and is expected to serve up to six million passengers per year. JNIA's other two terminals have a combined annual capacity of two million passengers, bringing the total to at least eight million. The new terminal will also allow additional freight volumes, signalling a potential rise in revenue collection, with Air Tanzania's preferred firm expected to gain most from this windfall.
Swissport Tanzania's chairman Mark Skinner, gave specific mention to "the cessation of business by FastJet Tanzania," as a setback for its business. The once-popular carrier stopped operating late last year as it ran into trouble with local aviation authorities over repeated cancellation of flights and mounting debt owed to contractors and the Tanzania government.
FastJet Tanzania's outlook now appears increasingly uncertain after TCAA ordered the carrier to address various "regulatory and non-regulatory issues" which disqualified it from further operations in the country.
On Swissport Tanzania's future outlook, Mr Skinner sounded upbeat in the report, saying no further decline in business volume or yield was expected.
"We anticipate our airline customers to continue operating as per their presented plans while cargo volume shall remain stable. We therefore envisage the financial performance for the second six months to be in line with the first six months," he said.
Without giving details, Mr Skinner said the company's management had taken "several cost-saving initiatives" to improve the financial situation going forward.
"To cope with the changing and demanding business environment, we will continue to enhance operational performance, control our operating and overhead costs, and invest in ground handling equipment, facilities, technology and human resources development to make sure we exceed customers' expectations and provide a better working environment to our staff," he said.
Swissport Tanzania Plc offers provides ground and cargo handling, executive aviation and aviation security services at all four of Tanzania's major airports -- JNIA, Kilimanjaro International Airport, Mwanza Airport and Songwe Airport -- as well as several others around the country.
Swissport Tanzania also offers aviation fuelling and aircraft maintenance.
By: Bob Karashani