eBusiness Weekly
Business Writer
National flag carrier, Air Zimbabwe, intends to hire a long-haul aircraft to service Harare – London route, more than a decade the airline stopped serving one of its most profitable routes.
In a recent tender notice, Air Zimbabwe invited bids to hire a long-haul aircraft on a “wet lease basis” for the purposes of serving the lucrative route.
The tender notice came a few days after the national flag carrier had floated a tender for dry leasing its two long-haul Boeing 777 200ER aircraft acquired from Malaysia.
A dry lease is the leasing of an aircraft without any crew members.
Types of dry leases include rental agreements and in aircraft trust arrangements operating agreements.
On the other hand, wet leasing, also known as ACMI, is an agreement between two airlines, where the lessor agrees to provide an aircraft, crew, maintenance and insurance to the lessee–in return for payment on the number of block hours operated.
ACMI provides the lessee with additional or replacement capacity, even at short notice.
The main advantage of wet leasing is flexibility and subject to availability, lease operations can be started quickly–filling immediate capacity requirements, according to ACC Aviation, a provider of consultancy of aviation services around the world.
Alternatively, a wet lease can be used over longer periods – providing supplemental seasonal availability. Aviation experts say wet leasing is ideal for testing new routes and markets, without having to invest heavily in new aircraft and crew first.
An operating or finance lease, also known as a dry lease, typically requires a minimum-term commitment while purchasing an aircraft represents a significant capital investment that is simply not practical for some operators, says ACC Aviation.
“Wet leasing is completely flexible – use it when you need it. ACMI allows lessees to supplement their fleet capacity– without committing to an investment that may never produce a return,” says ACC Aviation, which has over 20 years experiencing in arranging ACMI leasing solutions, according to its official website.
Calls seeking further comments from Air Zimbabwe chairperson, Chipo Mutasa and chief executive Edmund Makona, were not answered.
But In March this year, Transport and Infrastructure Development Minister Felix Mhona, told the Parliament of Air Zimbabwe’s plans to resuscitate the Harare- London route following the clearance of the International Air Transport Association (IATA) debt. Zimbabwe owed international airlines close to US$144 million in unremitted ticket sales.
IATA represents over 300 international airlines. Foreign currency shortages made it difficult for international airlines to repatriate their earnings in local ticket sales.
At that time when the debt accumulated, locals would pay for international tickets in local currency, with airlines having to claim their US dollars from the Reserve Bank.
“It was an issue of some payment arrears to the International Air Transport Association, which the Government has since cleared so we are now connected to the international communication systems and we are now able to fly to international destinations.
“We would also like to resuscitate our London route because we very much want to revive our western routes in line with our re-engagement policy,” said Mhona.
AirZim had its long haul aircraft, a Boeing 767-200 also known as Victoria Falls, seized by American General Supplies upon landing at Gatwick International Airport over unpaid debts.
American General Suppliers had secured a court injunction in the U.S. to impound the plane.
In 2020, Air Zimbabwe said it was planning to lease the two long-haul Boeing 777–200 ERs acquired from Malaysia to give it time to re-establish a strong domestic and regional network. The revenues from leasing the planes will also help Air Zimbabwe to raise funds to acquire smaller planes to service domestic and regional routes.The B777-200ER is a long overhaul aircraft, which at best performance can fly a minimum of 10 hours non stop.
According to experts, it is more profitable for Air Zimbabwe to lease the planes than rush to establish international routes, which are too expensive to develop.
Since route development is too costly in the initial stages, leasing the planes would allow Air Zimbabwe to self-recapitalise as it can generate between US$300 000 and US$400 000 per month.
Proceeds from the lease of the aircraft will then be directed towards the acquisition of narrow-bodied aircraft that will assist in expanding domestic and regional networks.
