Zambezia (1995), XXII (i).A DECADE OF CIVIL AVIATION IN ZIMBABWE:TOWARDS A HISTORY OF AIR ZIMBABWECORPORATION 1980 TO 1990A. S. MLAMBODepartment of Economic History, University of ZimbabweAbstractIn 1980 when Air Zimbabwe was established, there was great hope that itwould prosper, especially since it was going to operate in a global atmospherewithout the restrictions of economic sanctions that had constrained itspredecessor, Rhodesia Airways. In the first few years, Air Zimbabwe expandedits services, replaced old aircraft with newer and more hiel-efficient state-of-the-art aeroplanes. By the mid-1980s however, the airline had started to losemoney and continued to do so for the rest of the decade, necessitating heftysubsidies from the government. This article traces the development of AirZimbabwe from 1980 to 1990 and attempts to analyze the reasons behind theairline's disappointing performance. It suggests that the failure of the airlineto operate as a viable commercial enterprise was a result of both internalweaknesses of the airline's administration and restrictive government policies,as well as a generally difficult global economic climate.INTRODUCTIONAir Zimbabwe Corporation (hereafter called AirZim) was established underthe Zimbabwe Corporation Act (Chapter 253) of 1980.1 The new airlinetook over from Rhodesia Airways which had been established in 1967 andwhich had operated profitably throughout its existence, with the exceptionof the 1979 financial year when it registered its first deficit. RhodesiaAirways had registered profits despite the numerous formidable economicconstraints confronting it as a result of UDI. Apart from the fact thatRhodesia Airways was denied access to most regional and internationalmarkets, it also had to contend with an acute shortage of aircraft spareparts and aviation fuel because of the United Nations economic sanctionsagainst Rhodesia.2With the ending of sanctions and the re-integration of Zimbabwe intothe global community of nations, the conditions appeared to be optimalfor the re-named airline to expand its operations and become an even1 Air Zimbabwe Corporation Act (Chapter 253) of 1980.2 For a discussion of AirZim's predecessor, see A. S. Mlambo, 'Civil aviation In colonialZimbabwe, 1912-1980', in Zambezia (1992), XK, 01), 99-116.7980 A DECADE OF CIVIL AVIATION IN ZIMBABWEmore commercially viable concern than its predecessor. Yet soon afterindependence, AirZim was in serious financial trouble and remained sothroughout the first decade of independence. Except for 1981, AirZimconsistently recorded huge financial deficits and became increasinglydependent on state subsidies to keep it afloat. The poor economicperformance of AirZim was the cause of much national concern and thesubject of at least one major parliamentary commission of enquiry.OBJECTIVESThis article is the second of a two-part study of the history of civil aviationin Zimbabwe which, in addition to tracing the development of this importantindustry, also seeks to stimulate scholarly interest in undertaking detailed,industry-specific studies in order to enhance our knowledge of the forcesthat helped shape the nation's economy. In this study, I briefly trace thehistory of AirZim in the first decade of independence and attempt toaccount for its poor economic performance. The first section of the papercomprises a narrative account of the development of the airline, focusingon expansion of services, procurement of equipment and the financialproblems that dogged the airline throughout this period. The secondsection attempts to analyse the global and local factors that contributedto AirZim's dismal economic performance. Where appropriate, comparisonswith Air Rhodesia's economic performance will be drawn to highlightparticular trends in AirZim's operations. The study relies heavily onAirZim's annual reports, in-house journals, parliamentary debates, pressreports and the report of the Justice Smith Commission. The studyconcludes with a summary of its findings.MODERNIZATION AND EXPANSIONAt 1980, the prospects for the future prosperity and expansion of AirZimbabwe looked very bright, especially in the light of the fact that themany constraints that had beset Rhodesia Airways in the days of UDI hadended with independence. Sanctions had been lifted, the country's borderswere re-opened, while the country was readmitted into the worldcommunity after many years of international ostracism. Vital aircraft spareparts, aviation fuel and other essential operational inputs could now besourced from anywhere in the world, while regional and internationalairports which had been closed to Air Rhodesia were accessible onceagain. The potential for AirZim's expansion and growth appeared limitless.The airline did indeed expand its services considerably in the tenyears after independence. Through a vigorous and sustained campaign tore-organize, re-equip and open new routes, the airline replaced all its agedA. S. MLAMBO 81aircraft, improved its services on established routes and opened manynew ones. At independence, the airline inherited an almost obsolete fleetof aircraft consisting of 10 Viscounts and three B720s. According to onesource, in 1985, AirZim had the oldest fleet out of 22 African countries. Its13 aircraft had an average age of 21 years, while the overall Africanaverage age was 14,2 years.3To improve its operational capacity, the airline purchased modernaircraft, which are more fuel-efficient and cheaper to run. First, the nowuneconomical and aged B720s were replaced by five B707s bought fromthe German airline, Lufthansa. The first three were delivered in 1981 whilethe remaining two came the following year. Then in January 1986, AirZimcontracted with the Boeing Company for the purchase of three Boeing737-200 aircraft at a total cost of US$66 million. The first of the threeaircraft, named 'Mbuya Nehanda', was delivered to AirZim on December19, 1986. The remaining two aircraft arrived on June 25 and July 20,respectively, and were named 'Great Zimbabwe' and 'Matonjeni'. TheB737s replaced the bigger 707s and aging viscounts on domestic andregional routes. For international routes, AirZim acquired two high-technology, wide-bodied 767-200 Extended Range jets in 1989 and 1990. Bythe end of 1990, therefore, the airline's fleet consisted of modern and cost-efficient aircraft, including B737s, B767-200 ERs and one BAe aeroplane.4A vigorous effort to modernize and expand the fleet was therefore acentral part of AirZim's strategy to maximize the available opportunitiesduring the first decade of independence.Prior to 1980, AirZim's predecessor, Rhodesia Airways, serviced onlydomestic and South African routes. Following independence, AirZim notonly re-established old foreign and regional routes which had been closedduring the UDI period but also opened new ones. In 1980, AirZiminaugurated services to London, Lusaka and Blantyre. In 1981, Gaborone,Nairobi, Frankfurt and Athens were added to the list, while in 1982, AirZimbegan flying to Perth and Sydney, in conjunction with the Queensland andNorthern Territories Air Services (Quantas). 1982 saw the establishmentof the Maputo, Manzini and Dar-es-Salaam routes, followed by the PortLouis (Mauritius) service in 1988. A stop-over service to Lanarca wasadded to the Athens route in 1989, while a new schedule linking Francistownin Botswana and Bulawayo became operational also in 1989. In August3 Economist Intelligence Unit (EIU), Country Report: Zimbabwe (1988), III, 24.4 AirZim's modernization drive and purchases of aircraft are reported in the following:Air Zimbabwe, Annual Reports, 1981, 1985 and 1986; Air Zimbabwe, Air Zimbabwe News(Harare, Air Zimbabwe, Sept. 1982, October 1990, October 1988 and 1st Quarter 1990); ZimbabweChamber of Mines, Chamber of Mines Journal (Aug. 1989), XXI, (viil), 9; Africa Calls FromZimbabwe fJan/Feb. 1982), CXXXI, 21.82A DECADE OF CIVIL AVIATION IN ZIMBABWEAIR ZIMBABWE'S DESTINATIONS BY 1990NairobiDurbanDISTANCE IN KILOMETRES FROM HARARE.ZIMBABWELondon Lusaka Frankfurt Athens Nairobi Lilongwe Gaborone Durban8 283 405 7 873 6 256 1953 521 920 1339Johannesburg Perth Sidney Mauritius Maputo/Manzini959 8 495 11773 1534 568Not shown in the diagram are Windhoek (Namibia)and Dar-es-Salaam (Tanzania)A. S. MLAMBO 831990, AirZim opened the Windhoek service. By 1990, AirZim was flying to14 regional and international destinations.5As a result of the above measures, AirZim increased its passengerhandling capacity considerably. For instance, in 1988/89, the airline carriedover 525 000 passengers in its domestic, regional and internationaloperations as compared to only 200 000 in 1980. The number of passengerscarried on international routes increased from 4 000 in 1980 to 50 000 in1989. Similarly, the number of domestic passengers rose from 216 000 in1979/80 to 372 000 in 1988/89, while passenger kilometres flown rose from210 million in 1979/80 to 500 million in 1989. The graphs below documentAirZim's expansion in this period.The rise in the number of domestic passengers was partly the result ofincreased service frequencies and the introduction of a popular fly-now-pay-later scheme known as Creditair Worldwide, of which Zimbabweantravellers took full advantage. Meanwhile, as a result of a vigorous andsustained training programme for its technical staff throughout the decade,by 1990, AirZim was maintaining its aircraft and those of some SADCCcountries to international aviation standards and could even traintechnicians from neighbouring countries. To bring AirZim in line with thenew political dispensation, the airline also embarked on a campaign toappoint Blacks to leading positions within the corporation in accordancewith requirements of an earlier Presidential directive to promote Africanadvancement.6Also important in AirZim's operations at this time was the integrationof the national cargo carrier, Affretair, with the airline in 1982 and itsexpansion thereafter. Affretair had its origins in the sanctions-bustingefforts of the Rhodesian government during the UDI years. Established byJack Malloch, the Rhodesian-bom flying companion of Rhodesian PrimeMinister, Ian Smith, in the RAF during the Second World War, the cargocarrier operated clandestinely to smuggle goods into and out of the countryto keep the besieged economy from going under. Variously called 'RhodesiaAir Services', 'Air Trans Africa', 'Air Gabon Cargo', and 'Affretair', this aircargo carrier which flew into numerous airports worldwide in flagrantcontravention of United Nations sanctions against Rhodesia, later becameZimbabwe's national cargo carrier. During the period under study, Affretairexpanded its operations significantly.7The notable expansion of services discussed above notwithstanding,AirZim was not a commercial success throughout the decade. An analysisof AirZim's economic performance follows.5 Air Zimbabwe, Annual Reports, 1980-1990.6 Ibid.7 Ken Flower, Serving Secretly: An Intelligence Chief on Record, Rhodesia to Zimbabwe,1964-1981 (London, John Murray Publishers Ltd., 1987), 75-76; Air Zimbabwe News, 1984.84A DECADE OF CIVIL AVIATION IN ZIMBABWETable 1AIRZIM'S PASSENGER KILOMETRES 1980-1990 (in millions)1980 19B1 1982 1983 1984 1985 1986 1987 1988 1989 1990YEARSTable 2PASSENGERS CARRIED BY AIR ZIMBABWE 1980-1990 (in thousands)7007001980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990YEARSA. S. MLAMBO 85AIRZIM'S ECONOMIC PERFORMANCE: AN ASSESSMENTIn spite of the airline's impressive expansion, its books, with the notableexception of the 1980/81 financial year, continued to 'show some red ink atthe bottom' year after year throughout the decade. In the words of one ofits officials in 1988, 'Since 1981 the airline had been operating on a RollsRoyce expenditure budget, yet it had come close to be widely viewed,often with justification, as offering something akin to a pirate taxi service.'8The airline consistently failed to fulfil one of its mandates as set out inSection 23 of the Air Zimbabwe Corporation Act (Chapter 253) in 1980,which decreed, among other things, that the airline was to exercise itsfunctions and conduct its business as to ensure that all its income, takingone year with another, is not less than sufficient to enable the Corporationto meet the outgoings of the Corporation which are properly chargeableto revenue account and, in general, the Corporation shall conduct itsbusiness on sound commercial lines.9Not only did AirZim fail to 'conduct its business on sound commerciallines' but it was also never able to meet its 'outgoings' as envisaged underthe Act. Table 3 shows the airline's operational costs per tonne-kilometrefrom 1984 to 1989, and Table 4 compares its performance with that of itspredecessor from 1970 to 1976. Table 5 shows that from 1982 to 1989,AirZim's losses increased from Z$4,4 million in 1981/82 to Z$28,2 million in1986 and remained unacceptably high for the remainder of the decade.In the face of such mounting deficits, it is most likely that the airlinewould have collapsed had the government not stepped in from 1984onwards to provide subsidies to keep AirZim afloat. Between 1984 and1990, the government subsidised AirZim to the tune of Z$140 million.AirZim's annual deficits and government subsidies are shown in Table 6below.Given the airline's continuous deficits, it is not surprising that there wasgrowing concern in the country over the airline's economic performance,resulting in the government setting up the Justice Smith Commission ofEnquiry in February 1986 to investigate AirZim and other state-ownedenterprises which were also performing below expectations. Those of itsfindings which are pertinent to our discussion are referred to below.8 X. M. Kadhani, Chairman of the Board, in Air Zimbabwe News (Oct. 1988), 2.9 Section 23 of Air Zimbabwe Corporation Act (Chapter 253) of 1980.86A DECADE OF CIVIL AVIATION IN ZIMBABWETable 3AIRZIM'S OPERATING COSTS PER TONNE-KM 1984-1989 (in cents)1.41984/85fj~[) COST PER T/Km.P^[ REVENUE PER T/Km.1988/89Table 4AIR RHODESIA: OPERATING COSTS PER TONNE-KM 1970-1976 (in cents)i-z3020101970-4-1ŠŠ197119721973YEARS19741975197650403020 <->10COST PER T/Km-«£ VENUE PER T/Km.A. S. MLAMBO87Table 5AIR ZIM: REVENUE, EXPENDITURE AND PROFITS 1980-1989 (inZ$millions)1980 1981 1982 1983 1984 1985 1986 .1987 1988 1989YEARS-Ł- EXPENDITURE-oŠ REVENUE-»- PROFIT/LOSSTable 6AIRZIM'S ANNUAL DEFICITS (1983-1990) AND GOVERNMENT SUBSIDIES(1984-1990) [in Z$]Year1982/831983/841984/851985/861986/871987/881988/891989/90Deficit16,285,00018,600,00028,300,00025,140,00023,000,00027,130,00012,199,00012,846,000Govt. Subsidies18,000,00012,000,00045,000,00040,000,00010,000,00015,000,000Source: AirZim, Annual Reports, 1983-1990.88 A DECADE OF CIVIL AVIATION IN ZIMBABWEACCOUNTING FOR POOR ECONOMIC PERFORMANCEA number of factors contributed to AirZim's poor economic performanceduring the decade under study. Among these were: the ever-escalatingprice of fuel; the airline's uncompetitive fare structure; over-expansionand the airline's continued operation of some uneconomic routes;increasing competition from other airlines following the opening up ofZimbabwean skies to other operators; loss of manpower as experiencedand qualified personnel left for greener pastures elsewhere; an unfavourableglobal and local economic climate characterised by a protracted globalrecession; constant government interference and poor management. Thesefactors are analysed below.AirZim's poor economic performance in the 1980s has to be seenwithin the backdrop of a global recession which, according to the AirZimbabwe Fourth Annual Report, persisted throughout the decade and'created unprecedented difficulties for airlines'.10 In addition, throughoutthe decade, AirZim had to contend with increasing operational costs,mostly due to ever-escalating fuel prices. The negative impact of risingfuel costs had, in fact, been cited as a cause of the first and only deficitrecorded by Air Rhodesia in 1979. In the words of the report,An operating loss was incurred for the first time since the airline was established inSeptember 1967 . .. The massive increase in fuel prices during the second half ofthe year [1979] had a profound influence on the 1978/79 financial result. Thecontinued effects of a 74% increase in Zimbabwe-Rhodesia and a 133% increase inSouth Africa produced a fuel and oil cost exceeding last year's expenditure by$1,300,000. Aircraft and oil costs contributed 30% of total expenditure.11Thereafter, the escalating costs of procuring fuel featured almost annuallyin the airline's reports accounting for AirZim's losses. For instance, in1980, the airline reported that fuel costs accounted for 59% of operatingexpenditure and 38% of total expenditure during the previous financialyear. In 1983 fuel costs accounted for 58,1% of the direct aircraft operatingcosts. This high fuel bill was partly the result of a recent 40% increase onlocally purchased fuel in February 1983. Fuel expenses remained high10 Air Zimbabwe, Annual Report, 1983. In reporting the airline's annual profit of Z$471 355in 1981, Air Zimbabwe noted that such a profit was a notable achievement 'compared with theinternational community of airlines which are reporting world-wide losses of over Z$2 billion[due to the global recession]'. Similarly, the 1982 Annual Report blamed the airline's lossespartly on 'the overall international economic situation' which was 'generally stagnant due tothe universal recession' which meant that 'the aviation industry incurred considerable losses'.11 Air Rhodesia, Annual Report, 1979.A. S. MLAMBO 89throughout the decade, accounting for approximately a third of the airline'sexpenditure annually.12In a bid to cut fuel costs, the airline introduced Computer FlightPlanning for all international flights in 1983. Computer Flight Planning wasdesigned to map out the most direct and cost-effective routes to befollowed by international flights. The Computer Flying System immediatelyproved to be cost-effective as there was a saving of Z$20 839 in the singlemonth of June 1983 when it was introduced.13 Tables 7 and 8 show theincrease of the price of aviation fuel between 1984 and 1989 and therelationship of fuel costs to the airline's operating expenditure from 1981to 1986, respectively.Adding to the problems created by rising fuel costs were the negativeeffects of the devaluation of the Zimbabwe dollar which added to the costsof procuring spare parts and increased the cost of servicing foreign loans.Between 1979 and 1981 the Zimbabwe dollar had appreciated againstmost currencies, making it easier for local industries like AirZim to procurenecessary production inputs from abroad at reasonable prices. In December1982, the government devalued the local currency by 25%. Thereafter, theZimbabwe dollar fell progressively.Devaluation had a negative impact on the airline because it increasedthe cost of all foreign obligations such as fuel and food purchased inforeign countries, navigation and landing charges, parking fees and thecost of importing vital spare parts. It also increased the cost of servicingearlier foreign debts which had been incurred before the devaluationexercise. For example, as a result of the 25% devaluation of the Zimbabwedollar in December 1982, the cost of servicing foreign loans rose fromZ$2 911 000 to Z$5 660 000.14The severity of these problems would have been minimized had AirZimbeen able to charge market prices for its services to offset the impact ofthe increasing operational costs. Unfortunately, AirZim was not at libertyto raise its tariffs as and when it felt it necessary to do so, for, as a state-owned enterprise, its fare structure was determined not by market forcesbut by government. All fare increases had first to be approved by theMinistry of Transport of the Government of Zimbabwe, which had theoverall authority over the parastatal. Government price control measuresthen in operation severely handicapped the airline in its efforts to becomecommercially viable.12 Air Zimbabwe, Annual Reports, 1980-90.13 Air Zimbabwe, Annual Report, 1983.14 Ibid. The report also noted that devaluation had affected outward bound traffic becauseof the increased cost for Zimbabweans.90A DECADE OF CIVIL AVIATION IN ZIMBABWETable 7AVIATION FUEL PRICES 1980-1989 (in Z$)1981 ' 1982 1983 " 1984 ' 1985 ' 1986 " 1987 1988 ' 1989YEARSTable 8AIRZIM: HOW EACH DOLLAR WAS SPENT 1981-1986 (in Z$cents)4019811982198319841985YEARSFUELŁ SALARIESŁ OTHER COSTSŁ ROUTE COSTS1986A. S. MLAMBO 91To make matters worse, functionaries of the Ministry of Transportoften took their time approving the airline's applications for fare increases.The result was that, by the time the airline's application was approved,whatever gains the airline had hoped to reap from the increase hadalready been eroded by escalating operational costs and inflation. Forinstance, in December 1981, AirZim submitted to government a requestfor an immediate increase in international and domestic fares. Thegovernment delayed in granting this request until May 17,1982, resultingin an estimated Z$100 million loss in revenue for the airline. Similarly, inFebruary 1983, the airline requested an increase in the price of tickets tocover an increase in operating costs due to the increased fuel prices andthe 25% devaluation of the Zimbabwe dollar in December 1982. The Ministerof Transport considered the application only in May, 1984, and Cabinetfinally approved the fare increases on December 11, 1985. When the newfares were eventually introduced on February 1, 1986, three years after theapplication had first been submitted to government, their impact was minimalas operating costs had escalated in the meantime. Again in October 1987,AirZim applied for a fare increase and the Ministry of Transport sat on theapplication for a long time. Cabinet approval only came in November 1988.15The negative financial impact of delays in approving fare increases onAirZim operations have to be understood within the context that ticketprices have a direct effect on airline revenue. If the airline fails to adjustfares in line with increases in operating costs or a decline in foreignexchange rates, it loses money. For instance, in February 1983, AirZimasked for a 10% increase. The government's belated approval in 1986granted the airline a 25% fare increase, but between 1983 and 1986, theZimbabwean dollar had declined further, inflation had risen and the airline'sdomestic costs had also increased. By 1986, the airline was facing a 53%increase in operating costs as a result. The 25% fare increase granted in1986 was therefore grossly insufficient to rectify the situation.16Another contributory factor to AirZim's poor economic performancewas increasing competition for customers from other internationaloperators plying the same routes. This was particularly harmful given thefact that the airline was operating too many routes for an airline of its sizefollowing its vigorous campaign soon after independence to open oldroutes and establish new ones. The rapid expansion of AirZim's operationsto regional and overseas destinations increased its operational costs inthe form of parking and landing fees, fuel costs, office rentals, staff salaries,15 Air Zimbabwe News (July-Dec. 1982), 11; Zimbabwe, General Report of the Committee ofEnquiry into the Administration of Parastatals Š Justice L. G. Smith (Chairman), Presented toParliament in January 1989, 36, 73, 84 and 152 [Hereafter called The Justice Snith Report].16 The Justice Smith Report, 36.92 A DECADE OF CIVIL AVIATION IN ZIMBABWEaircraft maintenance costs and other expenses without necessarilygenerating sufficient revenue for the airline due to the stiff competitionfrom other larger and more established international operators.It can be argued that Air Rhodesia had been able to operate profitablyduring the UDI years because it had restricted its services to domestic andregional destinations. It had been able to maintain favourable load factors,particularly given the absence of competition from international airlines.Before 1980, except for South African Airways, TAP, DETA and Air Malawi,Air Rhodesia had a virtual monopoly of passenger traffic into and out ofSalisbury as most international airlines had stopped flying into Rhodesiabecause of the United Nations sanctions.With independence and the opening up of Zimbabwe's skies tointernational operators, several airlines added Harare to their list ofdestinations. By 1983, no less than 16 foreign carriers were flying intoHarare. Among these were the following: British Airways, South AfricanAirways, Air Malawi, Zambian Airways, Kenyan Airways, Quantas, TAP,UTA, Air Botswana, Swissair, Balkan Airlines, Air India and EthiopianAirways.17 Increasing competition eroded AirZim's market and pushed theairline's load factor to uneconomic levels. Acknowledging the impact ofinternational competition on AirZim's operations, the Minister of Transportnoted in 1983 that AirZim's financial woes were partly the result of thegrowth of 'international competition to which the airline had not beenexposed until independence'. Similarly, AirZim noted that in the 1989/90financial year, there had been a 30% decline in passengers on the Harare/Frankfurt route and that this was the result of competition from theGerman airline Lufthansa which was using 'superior equipment'.18A statistical analysis of passenger load factors between 1972 and 1990shows that Air Rhodesia's passenger load factors were consistently above60%, while, from 1980 onwards, AirZim's passenger load factors fell belowthis figure, plummeting to an all-time low of 49% in 1984 and 1990. Whatthis meant was that AirZim's planes were often flying with passenger loadswell below the break even point, resulting in operational losses everyyear. Table 9 shows Air Rhodesia and Air Zimbabwe's passenger loadfactors between 1972 and 1990, while Table 10 compares AirZim's actualpassenger load factors to what would have been the minimum load factorsto enable the airline to break even.Had AirZim concentrated on capturing and consolidating a share ofthe domestic and regional market and limited its international operationsonly to those international routes that it could service profitably, it would17 Air Zimbabwe, Annual Report, 1983.18 Zimbabwe, Parliamentary Debates, House of Assembly (4 Aug. 1983), VII, (xxiv), 1157-1160; Air Zimbabwe, Annual Report, 1990.A. S. MLAMBO93Table 9PASSENGER LOAD FACTORS: AIR RHODESIA (1972-80)/AIRZIM (1980-90) (%)1972 1974 1976 19781980 1982YEARS19841986 1988Ł481990Table 10AIRZIM'S BREAK EVEN AND ACTUAL LOAD FACTORS 1984-1990 (%)40198419851990ŠIŠ BREAK EVEN L/FACTORŠŁŠ ACTUAL L/FACrOR94 A DECADE OF CIVIL AVIATION IN ZIMBABWEmost likely have reduced its overheads and reduced its operational losses.As it was, AirZim persisted in operating several international serviceseven though competition from better-equipped and establishedinternational operators meant that the airline had a relatively small shareof the market.Apart from the difficulties arising from operating at below cost oninternational routes, AirZim also had to contend with financial losses inthe domestic sector where some routes consistently lost money whileothers barely paid for themselves. Passenger traffic on the Buffalo Rangeservice in the south-eastern lowveld, for example, was persistently toolow to generate enough revenue to cover the costs of maintaining theroute. Other domestic routes, though not as unrewarding as the BuffaloRange route, were equally uninspiring in their performance as illustratedin Table 11 below.Table 11AIRZIM DOMESTIC ROUTE ANALYSIS, 1987RouteBFO/FTVBUQ/HREBUQ/VFAFTV/GWEHRE/GWEHRE/KABKAB/WKMHRE/VFABreak evenLoad109.573.674.3181.7140.3125.5139.468.7Actual LoadFactor28.369.833.320.625.972.352.164.9RevenueZ$000s8670721056368811887764092DirectCosts33374622357318477206220774392Contributionto Overheads-247-390-1301-282-389-874-1301-300Source: Air Zimbabwe, Annual Report, 1986/87.It is clear from the above that AirZim had to subsidise domesticroutes and kept them open as a public service to the nation rather thanbecause the routes were economically viable.The poor performance on domestic routes can be explained by thesmallness of the domestic market, given the fact that a very smallpercentage of the Zimbabwean population travelled by air, with the majoritypreferring road and rail transportation, which is considerably cheaper.Even those predisposed to fly were likely to opt for other forms oftransportation when their economic situation was negatively affected bysuch factors as devaluation of the local currency, an increase in sales taxfor airline tickets or the loss of spending power due to rising inflation orA. S. MLAMBO 95the effects of climatic changes during drought periods. Indeed, the airline'sannual reports record periodic declines in passenger traffic in the domesticsector following fare increases, devaluation and sales tax hikes. Forinstance, the airline reported in 1980 that:A marked decline in passenger traffic on all tourist routes and more particularlyover the Salisbury/Bulawayo sector became increasingly evident and the trendwas aggravated by a cumulative 38% increase in domestic fares introduced in Mayand June 1979 to counter escalating fuel costs.19Similarly, there was another fall in domestic passenger traffic followingtwo increases in sales tax from 12% to 15% in August 1982 and a further 1 %in March 1983. In 1984, the airline reported that the domestic sector wasdepressed 'by the incessant drought which entered its third consecutiveyear' and 'the decline in the Zimbabwe dollar'.20Moreover, regional political and economic factors sometimes alsoimpacted negatively on regional and domestic traffic. For instance, it wasreported in 1982 that traffic on regional routes had dropped by 2% between1981 and 1982 and that the contribution of the regional sectors to the totaltraffic volume had dropped from 37% to 32%. The most significant declinewas reported to be on the Harare/Johannesburg route where there was a19% drop. This decline was attributed to the introduction of visas betweenSouth Africa and Zimbabwe towards the end of the 1980/81 trading yearwhich had inhibited free movement of people between the two countries.It was also partly due to the fact that Zimbabwe had become an expensivedestination for South Africans during the last six months of 1981/82 whenthe South African Rand was floating downwards.21In addition, the airline's operations were continually frustrated by theincessant brain drain which led to the loss of qualified and experiencedpersonnel while adding to the airline's operational costs because of theneed to train new recruits to fill the jobs vacated by those who hadresigned. Throughout the decade, the airline was dogged by the loss ofmanpower as staff left for greener pastures either within the country orabroad. Contributing to the brain drain were the low salaries which resultedin low staff morale. According to the airline's sixth annual report, skilledmanpower was leaving because 'the corporation's salaries areuncompetitive in the labour market'. Citing dissatisfaction with the airline'suncompetitive salaries, the 1981 annual report stated that staff losses in19 Air Zimbabwe, Annual Report, 1980.20 Air Zimbabwe, Annual Report, 1984.21 Air Zimbabwe, Annual Report, 1982. The same report noted that traffic on the Zimbabwe-Zambia route had also declined due to 'spiralling costs' which had discouraged Zambiansfrom travelling.96 A DECADE OF CIVIL AVIATION IN ZIMBABWEthe Engineering Division were severe, especially those of experiencedaeronautical journeymen. So serious was the brain drain that the airlinereported that by June 1981, 'more than a quarter of the (staff) complementhad less than one year of service with the corporation'. As a result, 'levelsof individual productivity have fallen owing to the higher proportion ofinexperienced staff and the airline had incurred 'exceptional expendituresin training [the new recruits.]'22Similarly, in 1987, it was reported that 140 employees had left thecorporation during the year because of poor salaries and that 100 of thesewere from the Engineering and Traffic Operations divisions. A further 95left in 1988/89 'in pursuit of higher salaries'. The situation was compoundedby the fact that, as the more experienced workers left, those who remainedhad to carry heavier workloads, forcing the employees to review theircommitment to the airline and fueling yet another round of resignations.Thus a vicious cycle in which dissatisfaction led to resignations, whileresignations themselves led to increased dissatisfaction among those leftwas underway by the mid-1980s. According to the airline's journal calledAir Zimbabwe News, the brain drain was affecting the morale of those whoremained at the airline. The journal noted:Discipline and morale have been a problem throughout the year, mainly because ofthe continuing losses of skilled personnel and the heavy burden falling upon theshoulders of those remaining in Air Zimbabwe.23Even more significant was the airline's report that the brain drain washampering the smooth operation of the airline, for, as the airline's in-house journal noted,Shortages of skilled staff in all departments of the Engineering Division continuedto present increasing problems and the past record of achieving a high level of on-time departures could not be maintained this year.24As if the problems outlined above were not enough, AirZim alsosuffered from poor management, ministerial interference and pooraccounting procedures. The Justice Smith Commission's report notedthat AirZim's management had failed to provide the inspiring leadershipnecessary to make the airline a viable commercial concern, that at leastone of them was unqualified for the post, was incapable of making decisions,arbitrarily appointed unsuitable people to responsible positions, and'neither communicated with his heads of divisions nor encouraged22 Air Zimbabwe, Annual Report, 1981.23 Air Zimbabwe News, 1982, 8; Air Zimbabwe, Annual Reports, 1987-1989.24 Air Zimbabwe News, 1982, 8.A. S. MLAMBO 97communication among them'. As a result, those appointed to jobs theywere not suited for performed badly, while poor supervision on the part ofthe General Manager meant that he was not able to monitor the work ofhis subordinates and call them to account when they did not performtheir duties well.25In a speech to parliament in 1986, the Minister of Transport reportedthat as a result of poor management, the airline's Finance Section haddeteriorated so much that there were insufficient budgetary controls anddivisional and overall annual budgets were seldom fully discussed bymanagement. In addition, because of poor accounting procedures, theairline was losing money either because the Finance Section did notthoroughly check other airlines' claims and therefore sometimes overpaidor failed to recover money owed to the airline by other operators forpassenger handling. Frauds went undetected because the Finance Sectionwas unable properly to scrutinise claims by either employees of theairline or the airline's agents.26It was noted, for instance, that certain individuals at the airline hadappointed a cargo consultant in Germany as an AirZim cargo agent.Although the agent rendered no service whatsoever since Lufthansahandled all AirZim's cargo, he continued to be paid by AirZim. The revenuecollected by the bogus agent and not accounted for to AirZim was over800 000 Deutsch Marks (approximately Z$799 000). Such fraud was possiblebecause, according to the Minister of Transport, the internal audit sectionwas headed by an unqualified person and could not, therefore, carry outits functions properly. The Minister of Transport also pointed out that latepayment of accounts was earning the airline a bad name inside and outsidethe country and a great deal of money owed to the airline had to bewritten off as bad debts 'due to poor control of debtors' accounts'.27Concern over the poor management of AirZim was expressed inparliament where one member, B. Irvine, described the situation at AirZimas a 'horror story ... a story of total incompetence on the part of thosewho have been responsible for administering AirZim'. Similarly, the Ministerof Transport summed up the situation graphically by saying, 'If there wasa university in managerial incompetence, most of the present management[at AirZim] would be professors there.'28 Concern over the poor leadershipat AirZim was not restricted to members of parliament alone, but was25 The Justice Smith Report, 41ff.26 Minister of Transport's testimony on Air Zimbabwe to the House of Assembly on 13 Nov.1986, in Zimbabwe, Parliamentary Debates (12 Nov. 1986), XIII, (xxxii); The Justice Smith Report,50-59.27 Minister of Transport in the House, in Zimbabwe, Parliamentary Debates (6 July 1988),XV, (iii), 56-58.28 B. Irvine and the Minister of Transport's comments reported in Zimbabwe, ParliamentaryDebates (12 Nov. 1986), XIII, (xxxii), 1473.98 A DECADE OF CIVIL AVIATION IN ZIMBABWEshared by some junior managers at the corporation as the managers'revolt of February 1988 shows. On February 4, eight AirZim managers, fiveof whom were named as A. T. Fisher, T. A. Kanjere, F. A. R. Garner, J. M. P.Makamure and S. Parirewa, drew up a petition asking for a vote of noconfidence in the General Manager whom they charged with incompetenceand of being inaccessible to his juniors.When the managers' petition was subsequently published in the localpress, AirZim's board of governors fired them all on June 10, 1988. Theboard's decision was subsequently overturned by the Department ofLabour, which ruled that the board had acted illegally in firing the managersand should reinstate them without loss of salary and/or benefits. Whenthe airline authorities were tardy in complying with the Department ofLabour's ruling, the sacked managers took their case to the High Courtwhich ruled in their favour and ordered their reinstatement.29Managerial incompetence and the conflict surrounding the managers'petition caused serious concern among the ordinary workers asdemonstrated in the following message sent to the Minister of Transportby the AirZim Workers' Committee on June 14, 1988 which read:We wish to convey to you our extreme concern over the state of affairs whichexists at Air Zimbabwe Corporation. We as workers think that we have exhaustedall the proper channels and followed the correct procedures in order to have thissituation registered and rectified before this airline reaches the bottom level . . .We are receiving tremendous pressure from our workers who are continuallydemanding a detailed explanation to this continuous in-house fighting which isaffecting the state of the airline and our good name in the public eye.30From the above, it is clear that AirZim's operations were seriouslyhandicapped by poor management and the low staff morale that resultedtherefrom. Added to poor management was the rapid personnel turnoverat both general management and board levels Š there were five differentGeneral Managers and boards at the corporation between 1980 and 1988.This contributed considerably to the poor operation of the airline, if onlybecause the constant change of leadership disrupted continuity.Another contributory factor to AirZim's poor economic performancewas constant ministerial interference which disrupted normal operationsat the airline. The commission provided several examples of ministerialinterference in the day-to-day operations of the airline. Two examples are29 The Herald (Harare, 10 Feb., 1988); Minister of Transport to the House on 21 July 1988, inZimbabwe, Parliamentary Debates (21 July 1988), XV, (xi), 399-408; 411-416.30 Letter signed by Air Zimbabwe's Workers' Committee chairman and secretary,reproduced in full in the House of Assembly by Byron Hove, Zimbabwe, Parliamentary Debates(22 July 1988), XV, (xi), 606-607.A. S. MLAMBO 99cited here to demonstrate the deleterious effect of such ministerial activitieson the airline, especially when such interference meant that operationaldecisions that should have been taken by the airline's management oncrucial issues such as what type of aircraft to purchase were often takeneither by functionaries of the Ministry of Transport or the Minister himself,who had no expert knowledge of the industry and its needs. Often decisionswere imposed on the airline's management against its wishes. Apart fromundermining the authority of the General Manager and his aides, ministerialinterference sometimes forced the airline to adopt a course of action thatwas not, in the opinion of its own experts, ideal for the smooth operationof the corporation as the following controversy surrounding the purchaseof new aircraft demonstrates.As early as 1983, in that year's Five-Year Development Plan, AirZim'smanagement had noted the need to purchase new aircraft to replace itsageing and fuel-inefficient fleet. A committee appointed by AirZimmanagement to recommend the best aircraft to purchase advised thatonly Boeing aircraft Š the B737-200 and the B747SP Š were most suitablefor AirZim's needs. To obtain a second opinion, AirZim engaged CanadianOverseas Airlines (Services) Ltd as consultants to analyze the airline'sneeds. In their final report, the consultants endorsed the earlierrecommendations of the airline's own committee. Under normalcircumstances, the experts' opinions should have carried the day, but thiswas not to be.The Minister ignored the recommendations of the consultants andproceeded on March 9, 1984 to direct the airline's management to makearrangements for the purchase of aircraft of his choice, namely, twoDClOs, three Boeing 737s and four FOKKER 28s.On another occasion, the Minister of Transport ordered that AirZimshould purchase the two-engined B767-200 Extended Range aircraft eventhough the airline's experts and management preferred the four-enginedAirbus A300-200. According to The Herald of January 28,1988, 'The airline'stop management... unanimously decided that Boeing 767s were unsuitablefor AirZim's operations, especially in the light of the corporation's presentand future expansion programmes.' The management further noted thatas a two-engined aircraft, the 767 would cause serious problems for theairline given the fact that aircraft had to abide by the 90 minute rule,namely that all air-borne aircraft should be within 90 minutes of flight timeto the nearest airport if one engine should fail. Using the 767 would meanthat AirZim would have to re-route its European flights to ensure that theairline abided by this rule, particularly since, as the management noted,'the Sahara Desert is designated an ocean crossing'.Furthermore, management was not prepared to 'compromise the safetyof passengers' by re-routing flights especially in the light of the 'unreliability100 A DECADE OF CIVIL AVIATION IN ZIMBABWEof alternative airports' on the European route. In any case, this would addnot only to the total flight time but also to the fuel consumption of theairline's aircraft. In addition, purchasing the 767 would mean that theairline would not be able to fly to American and Australian destinationsincluded in the corporation's Five-Year Plan. These objectionsnotwithstanding, the Permanent Secretary of the Ministry of Transportinformed the airline's management that 'the Minister is not interested incomparisons with any other aircrafts [sic]' and ordered that the airlineshould purchase the 767s. Thus the airline could not purchase theequipment its own experts believed, on the basis of their knowledge of theindustry, would be best for AirZim's needs. Such incidences of ministerialinterference undermined the efforts of the airline to improve itsperformance and operate as a viable commercial concern.31CONCLUSIONThe above discussion has shown that despite the impressive efforts madeby AirZim to take full advantage of the improved operating conditions inthe post-UDI era by expanding operations and improving services, theairline was a commercial failure in its first decade of operation.It has been argued that the airline was handicapped by a number ofconstraints, some of which were the result of global economic factorsover which the airline had no control, while others emanated either fromshortcomings within the corporation itself or from government policiesand practices. Among contributory factors over which the airline had nocontrol were the effects of the global economic recession that lastedthroughout the decade and escalating fuel costs. Government policieswhich impacted negatively on the airline ranged from the periodicdevaluations of the Zimbabwean dollar to crippling delays in approvingfare increases and harmful ministerial interference in the day-to-day runningof the airline. Over-expansion, poor management, managerial wrangling,and poor accounting methods were the other additional problems thatprevented the airline from operating profitably. Furthermore, the poorsalaries paid to the airline's employees which resulted in a constant braindrain, the periodic droughts which affected regional and local passengertraffic and increasing competition from regional and overseas operatorsadded their fair share to the financial problems that confronted AirZimbetween 1980 and 1990.31 Air Zimbabwe Corporation: Interim Report of the Committee of Enquiry into Parastatals ŠJustice L. G. Smith (Chairman), Presented to Parliament in July 1986, 39ff.