Galileo International threatens to withdraw its franchise from Air Zimbabwe

Galileo International has threatened to withdraw its franchise from Air Zimbabwe Holdings, a move that could paralyse the airline's operations, The Sunday Mail Business reported on Sunday.

Galileo Zimbabwe was established in May 1998 as a division of Air Zimbabwe as a result of the distribution agreement entered into between Air Zimbabwe and Galileo International.

In 1999, Galileo Zimbabwe became Galileo Zimbabwe (Private) Limited, a wholly owned subsidiary of Air Zimbabwe, after registration with the Registrar of Companies in Zimbabwe.

Galileo Zimbabwe distributes a computerised reservations system (CRS) service to travel agents in Zimbabwe as its core business.

A CRS is an automated system which processes booking data.

Documents in possession of this paper reveal that Air Zimbabwe's acting chief executive, Mr Innocent Mavhunga, recently wrote a letter to the Permanent Secretary in the Ministry of Transport, Communications and Infrastructural Development, Mr Patterson Mbiriri, informing him about the development.

"Galileo International (Travelport) has threatened to terminate the distribution agreement and in its place wants to form a company to take over the functions of Galileo Zimbabwe.

"Travelport wants to terminate the agreement so that they can take over the Galileo Zimbabwe function through the company they are forming with some Zimbabweans who are being used as fronts for Travelport, while they are effectively in control," read part of the letter.

The termination of agreement will negatively affect revenue inflows at the beleaguered airline and loss of market share as travel agents who were on Galileo will no longer support Air Zimbabwe as is the case with the current set-up.

The letter further states that: "It should be recognised that the NDC (Galileo Zimbabwe) generates strategic funds which have been used to pay Air Zimbabwe's distribution costs.

"Without these funds the airline will not be able to pay the Galileo Worldspan distribution costs, which will result in the airline being cut off as had happened with Amadeus."

Air Zimbabwe further states that Galileo International has in the past tried to take over Galileo Tanzania and Galileo South Africa without success.

However, the letter notes that Air Zimbabwe has since met with Galileo International's vice-president for Southern Africa over the issue and they indicated that they were not agreeable to any suggestions that will see them not withdrawing the franchise.

"They want (Galileo International) an arrangement where they are in the driving seat and in total control of NDC," wrote Mr Mavhunga.

Air Zimbabwe had suggested that they share the commission on a 20-80 percent ratio with 20 percent going to the NDC to cover running costs while 80 percent goes to Galileo International to cover Air Zimbabwe's distribution costs.

Efforts to get a comment from Mr Mbiriri proved fruitless as he was said to be out of the country.
Sources allege that serious divisions have surfaced with counter accusations within Air Zimbabwe management of trying to sabotage the State-owned enterprise.

"A storm is brewing at the airline with counter accusations amongst the management. Recently there was a public fallout between the two general managers accusing each other of trying to act on behalf of Galileo International, violating indigenisation regulations.

"There is also a mass exodus of people at Galileo Zimbabwe and they have since been roped in by the new company.

"A marketing manager at Galileo has already signalled her intention to resign in anticipation of the formation of the new company although the real mastermind is alleged to be the former general manager of Galileo," added the source.

Statistics contained in a 2009 report by the Zimbabwe Tourism Authority on tourists showed that five of the major airlines serving Zimbabwe — Air Zimbabwe, South African Airways, British Airways-ComAir, Air Namibia and South African Airlink — take up 93 percent of the airline market share in the country.

The report also notes that the market share for Air Zimbabwe fell by 11 percent in 2009, which saw South African Airways taking over the leading position in terms of passenger market share in the country.

The airline has in recent years grounded several aircraft because they were no longer worth flying and scaled down on the number of flights per week to rationalise operations and contain ballooning costs.

Air Zimbabwe out of fuel

Zimbabwe's debt-ridden national airline has cancelled flights to London and South Africa because fuel companies have cut off its supplies because of unpaid bills.

A senior manager at the troubled carrier yesterday confirmed the flight cancellations.

"We had no option but to cancel London flights because suppliers refused to give us fuel for the trip," the manager said.

London-to-Harare flights were also cancelled.

Air Zimbabwe GM Innocent Mavhunga would not deny that the groundings were a result of failure to pay fuel suppliers.

"I would not want to comment on that," he said.

Airlines cancel flights to Addis Abba

Three airlines operating out of Entebbe International Airport to Ethiopia temporarily cancelled flights following the suspension of the use of the country’s airspace and that of Eritrea.

The affected airlines include; Ethiopian Airlines, Emirates, and Kenyan Airways which fly to Addis Abba. Ethiopia and Eritrea have suspended flights over their airspaces according to Mr Ignie Igundura, the spokesman of Uganda’s Civil Aviation Authority.

Volcanic eruption
The suspension came on the back of the ash cloud formed by the eruption of a volcanic mountain in Eritrea at the weekend.
The cloud which could cause airlines to crash due to poor visibility, spread from Eritrea to Sudan, Ethiopia, Djibouti and Egypt, according to the BBC.

Despite the cancellation of flights, Mr Igundura told Daily Monitor that business at Entebbe Airport had not been severely affected.

“We have flights like Emirates that have been affected. You can call them to find out what they are doing about it,” he said in an interview yesterday.

Mr Igundura was not sure of when the suspension would be lifted to allow airlines to resume flights to or over Ethiopia. “You cannot know because it’s a natural disaster. It’s difficult to tell,” he said.

Despite the disruption, airlines such as Brussels which do not fly over Ethiopia, continued with their flights to Europe.
“We haven’t been affected, our operations are going on smoothly,” Mr Roger Wamara, the sales and marketing manager Brussels Airlines in Uganda, said.

By last evening, Ethiopian Airlines had also resumed flights to Djibouti but not to other affected markets brining hope to some disturbed travellers.

“The volcanic ash cloud in the Northern part of Ethiopia is clearing.

Air China to Host IATA Annual Conference 2012

Air China is to play host to and chair the 68th Annual Conference of International Air Transportation Association (IATA) and the World Civil Aviation Summit to be held in Beijing, China in 2012, which will bring together executives and decision makers of the world's airlines, airports, aircraft manufacturers and service suppliers.

Air China is the world's most profitable carrier with the largest market capitalization. With a brand valued at RMB 40.63 billion, it is China's only carrier featured on World Brands 500 list.

According to Zhao Xiaohang, Air China Vice President, Air China owes its success to the rebound of the global airline industry, China's economic boom and the support from customers.
IATA has 230 member carriers and holds its annual conference in different cities each year to release important industry economic data, produce industry projections and deliberate on important industry decisions. Its decision to invite Air China to host next year's annual conference reflects the ever increasing importance of the Chinese airline industry in the world.

Zimbabwe: Tourism Project Hangs in Balance

A multimillion-dollar tourism investment project hangs in the balance over a dispute between investors and resettled farmers regarding part of the land near Lake Chivero, initially earmarked for tourism.
The project in the Hippo Creek Resort initiative would have resulted in an investment of US$50 million, the largest in 10 years.
The Hippo Creek Resort is an investment vehicle formed early this year by a consortium of local investors and a European-based partner. Tourism guru Mr Emmanuel Fundira is the co-ordinator.

The consortium had secured permission to develop a tourism resort on the area around Lake Chivero, which also supplies water to Harare and Norton.
Herald Business understands the multimillion-dollar project has stalled after some of the people resettled under the land reform programme occupied part of the land.
Government embarked on the land reform programme in 1999 to address the land ownership imbalance created under the Land Apportionment Act, among other draconian laws of the period.
The then Ministry of Environment, Tourism and Natural Resources designated the disputed area as a Tourism Development Zone.


But Permanent Secretary for Land and Land Resettlement Mrs Sofia Chakwi professed ignorance of the issue and asked for written questions to carry out an investigation, after which the minister would comment.
This logjam also touched off a dispute with the Zvimba Rural District Council, but sources said only the intervention by the Ministry of Lands and Land Resettlement could bring the raging storm to an end.
Mr Fundira, the project co-ordinator, said Government had pledged to look into the matter.
"The logjam has to do with certificates of occupancy as various parties are claiming ownership of part of the land earlier designated for tourism development.

"The piece of land covers an area of 600 hectares of which 50 percent is secured in partnership with Kuimba Shiri and a few other players," said Mr Fundira.
It was envisaged the partnership with Kuimba Shiri, a bird sanctuary, would make the tourism products under the tourism scheme more adventurous.
The Hippo Creek project was to be rolled out in phases amid revelations that the US$6 million required for the initial phase was already available. The remaining US$44 million would be available in subsequent phases.
Mr Fundira said the investment was expected to create more than 500 direct jobs, but pointed out the potential benefits were more than the stated figures.
Under the project, Hippo Creek intended to put up accommodation facilities, water sports such as skiing, jet sailing, houseboat and boat cruising. The investors also planned to construct an upmarket service centre.
A speedy resolution of the matter would allow the country to benefit from investment and also enable resettled farmers to put land to productive use.
Zimbabwe needs huge amounts of investment to claw back on ground lost during a decade of economic instability, which scared away investors. Tourism is regarded as a "quick win" sector for economic reconstruction.

Air Zim too rotten to sell — minister

Air Zimbabwe is in such shambles and its financial position so hopeless it would be difficult to find takers even if the government decided to offload it, a Cabinet minister has said.

State Enterprises and Parastatals minister Gorden Moyo on Wednesday told the Parliamentary Portfolio Committee on State Enterprises and Parastatal Management finding an investor to buy the ailing airline was likely to prove a mammoth task.

Moyo was responding to a question by Chiredzi North MP, Ronald Ndava, a member of the Portfolio Committee chaired by Zvishavane-Runde MP, Lawrence Mavima, who had asked him to explain why his ministry was not disposing of loss-making parastatals that were draining the fiscus.

“There are certain entities where we think surely, government should be out of,” Moyo said.

“But it may not be easy to sell Air Zimbabwe right now even if you want to offload it because you may not find a taker because of its state,” he said.

Moyo however said the difficulties facing Air Zimbabwe were not unique to Zimbabwe as a lot other airlines around the globe were performing very poorly. He cited Zambia Airways as an example.

“It is not just Air Zimbabwe which is suffering — very few airlines are doing business and it might be a big problem to sell Air Zimbabwe. A lot of parastatals are faced with huge debts and this on its own makes our parastatals unattractive to suitors. To get investors investing in a shell is not easy because of this debt overhang,” Moyo said. Moyo indicated most of the equipment in the country’s parastatals was dilapidated and archaic. To get investors to inject funds into businesses that were going under was not easy.

“The fiscal space is also too constricted to inject capital or even expertise into these entities especially given the serious human capital flight Zimbabwe has suffered,” he said.

State Enterprises and Parastatal Management deputy minister Walter Chidakwa said the issue of marketability to suitors by ailing parastatals was affected by tariffs.

Senegal Airlines announces new services to Central Africa

Dakar, Senegal - The new Senegalese airlines company, Senegal Airlines, on Tuesday announced the opening of new services to Cotonou (Benin), Libreville (Gabon) and Douala (Cameroon) from Dakar, with a technical stopover in Abidjan, Cote d'Ivoire. A communiqué issued by Senegal Airlines said the opening of new stopovers is made possible by the arrival of a third Airbus A320, which will go into operation early July. According to the communiqué, the new flight schedule of the company is characterized by the reinforcement of the Dakar-Abidjan service, adding that the airline will propose 14 weekly non-stop flights between both capitals, with schedules adapted to the needs of the business clientele (daily departures from Dakar).

The opening of new direct services to depart Abidjan to Bamako and Cotonou: three times per week (Tuesday, Thursday, Saturday); to Libreville: two times per week (Wednesday, Sunday); to Douala: two times per week (Monday, Friday), it also announced.

Non-stop flights between Dakar and Ouagadougou: two times per week on Thursdays and Saturdays was also announced, in replacement of the flights operated hitherto via Bamako and non-stop flights between Dakar and Praia (Cape Verde): two times per week, on Fridays and Sundays.

Senegal Airlines will serve all these destinations with the assistance of its strategic partner, Emirates, for the transportation of the passengers to Dubai and beyond towards the Asian continent.

Groundbreaking air agreement signed between SA, Cameroon

Cape Town - Transport Minister Sibusiso Ndebele on Tuesday signed a groundbreaking bilateral air services agreement with his Cameroonian counterpart Maigari Bello Bouba, which will help further open up the African skies to flying.

Ndebele and Bello Bouba signed the agreement on the final day of the Transport Infrastructure conference at the Cape Town Convention Centre.

It is the first such agreement to be signed in line with the Yamoussoukro Decision of 1999, which aims to deregulate air services on the continent.

Ndebele said the bilateral agreement allows South African airlines to fly to Cameroon and take on passengers and fly on to second or third countries.

Currently, South African Airways (SAA) flies four times a week, direct from Johannesburg to Douala and Yaounde, while Kenya Airways also has a connection from Johannesburg to Cameroon via Nairobi.

Ndebele said at present, certain parts of Africa can only be reached from flights routed via Europe.

"This makes no business or economic sense, and the peoples and economies of Africa suffer as a consequence, and opportunities for improved aviation, including profitability and development of tourism, cannot be effectively responded to," he said.

He pointed out that the EU had implemented an open skies policy in the mid 1990s, which after five years resulted in a doubling of the number of passengers carried by airlines, a reduction in air fares and an improvement in the profitability of airlines.

"There has to be a message in this for African aviation, and the sooner we understand the consequences of lost opportunities the better," he said.

Bello Bouba said the agreement would help to deepen regional integration on the continent.

"It's only through connectivity that our freedom will be complete and make way for development of our dear continent, Africa," he said.

Bello Bouba said he looked forward to maximum exploitation of the air routes, with the country's new national airline Camair-Co recently having started operations in March.

His hope is that Cameroon and South Africa would also be able to co-operate in other transport sectors in the future.

He said African nations were proud of South Africa's "absolutely perfect" organisation of last year's World Cup.

"We are all proud and grateful to South Africa and the early exit of the African teams notwithstanding, South Africa has made the world know that Africa is able to do what it has done..." he said.

Air Zimbabwe Collaps

Rising debt of over $108m, industrial action and an aged fleet have grounded Zimbabwe’s only national carrier-Air Zimbabwe and left passengers stranded for weeks. 

Group acting chief executive Innocent Mavhunga told Theafricareport.com Thursday that the government was reluctant to bail out the airline.



“There is a compelling need for government to bail us out. Its collapse would negatively affect national pride which is at stake,” said Mavhunga. 

According to Mavhunga, as of Thursday 2 June, neither the treasury nor international funders had come forward to rescue the airline, which needs at least $80m to offset urgent debts.



Air Zimbabwe's long list of foreign creditors include the Agency for Air Navigation Safety in Africa and Madagascar (ASECNA), China’s National Aero-Technology Import and Export Corporation (CATIC), Aero Industrial Sales, among others.

Founded 47 years ago, the airline has suffered several strikes this year with pilots, engineers and other workers refusing to work, demanding outstanding allowances. The airline's troubles have piled up due to mismanagement and an aging fleet.

Its three Boeing 767 planes, which have reached a certain limit of 34,000 cycles or trips, and two MI60 from China have been grounded. The International Air Transport Association (IATA) has also suspended Air Zimbabwe over a $280,000 debt.

With at least 50 per cent of Air Zimbabwe customers booking through travel agents, an order from IATA demanding international travel agents to refund foreign travellers with bookings placed with Air Zimbabwe has dealt the company another blow. 



Foreign airlines have been major beneficiaries of the crisis, increasing their footprint on the routes formerly dominated by the national carrier.



Major beneficiaries of the change in fortunes at the national airliner were Kenya Airways, up 7.5 per cent from 6. 1 per cent, Ethiopian Airways from 4 per cent to 6.8 per cent. There were marginal increases in market share for Air Malawi from 0.9 per cent to 1 per cent and Air Botswana from 0.8 percent to 1.2 per cent.

Biti rejects Van Hoogstraten Air Zimbabwe bail-out

FINANCE Minister Tendai Biti last night shot down a plan by Air Zimbabwe to borrow US$2 million from “loan shark” Nicholas Van Hoogstraten, declaring: “Over my dead body.”
“As long long as I live, this government will not borrow money from any individual, and that includes Mr Van Hoogstraten,” Biti said, a week after it was revealed that the struggling airline had taken its begging bowl to the controversial British property tycoon.
“For all I care, Mr Hoogstraten can go and throw himself in the River Thames but we will not sanitise his nefarious activities. Let him try his luck elsewhere, not from this ministry. Over my dead body!”
Hoogstraten revealed last Friday that he had over the years extended “small short term emergency loans” to Air Zimbabwe at no interest. In the latest request from the airline, he said, Air Zimbabwe was seeking US$2 million to pay-off the International Air Transport Association (IATA).
IATA suspended the cash-strapped airline earlier this month over a US$280,000 debt which the aviation control body insists must be paid, plus a whooping US$1,7 million deposit – being penalty for defaulting -- before it can be restored on its worldwide financial and flight booking service.
Hoogstraten said: “It is correct that I have been asked by Air Zimbabwe’s London office for a US$2 million loan which I have agreed to subject to Minister Biti personally signing the acknowledgment of debt agreement.”
Van Hoogstraten would have known his conditions were unlikely to me met, his comments coming barely a week after Biti accused him of corrupting the country’s financial services.
Biti said struggling financial institutions were now at the mercy of “two loan sharks — one of Indian descent and the other British” in clear reference to Jayesh Shah and Van Hoogstraten.
Van Hoogstraten shot back: “I do not advertise loans –– institutions and companies come to me as I am generally known in the market as the ‘lender of last resort’. This is similar to my situation in the UK where I have been a financier since my late teens.
“I have been the single largest investor in the Zimbabwean financial market and currently have Zimbabwe Stock Exchange-quoted holdings with a value of well over US$250 million.
“As for being a loan shark, apart from a few relatively small personal loans, all loans I have made are of a 30, 90 or 180-day tenure to financial institutions at market rates of between 16% and 24% per annum with no fees.”

Hoogstraten, 64, briefly returned to Sussex, England, last year to chase up money owed by several local businesses, including a doctor’s surgery which was temporarily forced to close over a £30,000 debt.

Once heralded as Britain's youngest millionaire, Hoogstraten has never made any secret of his robust approach to business.

During one of his many court appearances in Britain, a judge described the tycoon as a "self-styled emissary of Beelzebub".

From an early age he aspired to be what he calls a "quality person" and was a great fan of Margaret Thatcher because she made him "proud to be English".
He left school at 16, joined the Royal Navy and travelled the world. Just a year later, he sold his astutely acquired stamp collection for £1,000 and embarked on a business career, buying property in the Bahamas.
Now he is believed to have homes in Barbados, St Lucia, Florida, Cannes and Zimbabwe.
He has spoken warmly of President Robert Mugabe, whom he once described as "100% decent and incorruptible".

He holds vast fortunes in Zimbabwe and once said: "I don't believe in democracy, I believe in rule by the fittest."

Hoogstraten is no stranger to controversy and his list of previous convictions includes ordering a grenade attack on the home of a business associate, a Jewish clergyman who he claimed owed him money.  For that, he spent four years in Wormwood Scrubs prison in the 1960s, but he would later face much more serious charges.
In 1999, Mohammed Raja, 62, was shot dead by two men identified as Hoogstraten's henchmen, but the tycoon's conviction for manslaughter was quashed by the Court of Appeal in July 2003 and he was freed five months later.
Following his release from prison, Raja's family brought a £6m civil action against him. The civil courts - where the standard of proof required is much lower than the criminal courts - ruled that on the balance of probability, Van Hoogstraten was involved in the murder.
High Court judges ordered him to pay £500,000 interim costs but the businessman was typically defiant and stated that Raja's family would "never get a penny".
Van Hoogstraten also hit the headlines during an ugly spat with ramblers over a public footpath through the grounds of the enormous mansion near Uckfield in East Sussex.
Called Hamilton Palace, after Bermuda's capital, it is neo-classical, with a copper dome. It is estimated to have cost £40m so far and is reportedly the most expensive private house built in Britain for a century.
It is bigger than Buckingham Palace and has a 600ft art gallery and a mausoleum designed to hold Van Hoogstraten's body for 5,000 years. The mausoleum's walls are three feet thick because he said he wanted to "make the building last forever".
Never afraid of a fight, he has described taking on a nun at school. She "tried to whack me with a chair-leg once - I grabbed it and hit her and she never tried again".
In 2008, he was arrested in Harare on charges of illegal currency dealing and possession of pornography. Police who raided his home in Emerald Hill they found hundreds of photographs of naked women in what they said were “indecent poses”. Van Hoogstraten appeared in many of the pictures.
Van Hoogstraten was cleared on the illegal currency dealing charge because police were not able to produce the officer who had allegedly caught him. A magistrate ordered that the tycoon's photograph collection be destroyed.
He was born in 1946 in Shoreham, East Sussex, as plain Nicholas Marcel Hoogstraten - the "van" was added later. His father was a shipping agent and his mother a housewife.
With the profits he made from his Bahama property deals, he moved on to the British housing market, buying six properties in Notting Hill, London, before moving on to Brighton.
By the time he was 22, he was reputed to have had 350 properties in Sussex alone and to have become Britain's youngest millionaire.
But he also gained a sinister reputation and was accused of using strong-arm tactics against tenants of slum properties which he bought cheaply for redevelopment.
In the 1980s, as the housing market boomed, he prospered, acquiring more than 2,000 properties. By the 1990s he had sold 90% of them, making massive profits and investing in other areas, including global mining.
When a fire broke out at one of his properties in the early 1990s in Brighton, he described the five people who died in the blaze as "scum".

To Van Hoogstraten his tenants are "filth", while people who live in council houses are "worthless and lazy".

He once said: "The only purpose in creating great wealth like mine is to separate oneself from the riffraff."

He has also said he believes that "the whole purpose of having money is to put yourself on a pedestal".

Van Hoogstraten has five children - four sons and a daughter - by three different mothers.

He said he is preparing his eldest son Rhett, 20, to take over his empire - which he says is worth £800m.

He declared recently: "I'm still young and fit and I've got a long time to go. I'd like Rhett to shadow me and find out everything that's going on.
"But it's a difficult task because I keep everything close to my chest, nothing's in writing, there are no records of anything."