Problems facing air zimbabwe and how to solve them
Air Zimbabwe, the major airline of Zimbabwe has been facing perennial losses for the past decade (since 1994), due to various reasons some of which has lead to the highest recorded level of labor turnover in the country (CEO’s report in Zimbabwe Review). This has been owing to factors like poor management from the subordinates and also bad publicity from the region. Also lack of proper and up to date technology has a contributing factor towards the losses. Poor cost cutting strategies Air Zimbabwe has been practicing poor cost cutting strategies.
This has seen it pulling out of lucrative routes which covered a substantial amount of their costs for example the Harare to DRC, Harare to Dar Es Salaam, Harare to Lilongwe and also Harare to Nairobi routes in their bid to cut costs (Zimbabwe Review). Although according to the CEO, Dr. P. Chikumba pulling the flights out was a temporary measure owing to the operational challenges, lack of proper management and tracking of progress made them into thinking that they were better off without the routes.
Problems facing air zimbabwe and how to solve them Essay Example
This led to losses since the routes they had were not as profitable and able to meet all the costs being incurred by the airline. This also led to the staff turnover; workers found out that the company was now failing to honor their debts so it was easier for them to go out for greener pastures. Regulation and sanctions Regulations and sanctions from major airlines also contribute to the airline’s perennial debt and to some extent labor turnover. There is no airline that survives on its own just as there is no island that can survive on its own.
Air Zimbabwe has been shut out from various partnerships and also from the IATA due to sanctions from other countries (Zimbabwe Review). Although this has to do with the external environment it is limiting its chances of ever getting in lucrative routes that guarantee them profitable returns. In most events air Zimbabwe’s planes are prohibited from entering certain air space as its planes are deemed unsafe and also unreliable. So in order to satisfy the customers all they now do is to take a shorter route to the hub country (i. e.
South African) and the passengers are taken to their various destinations from there. This is rather not lucrative for Zimbabwe since there is less income compared to the event in which air Zimbabwe transported the passengers itself. In this case year on year its losses increase as more and more countries are deeming the airplanes by air Zimbabwe unsafe to occupy their air space. Heavy debts Past debts have been haunting the airline since it has been failing to honor them as early as 1994 and currently most of its revenue is being attributed to the payment of the debts (Zim debt March, 2012).
This has leaded it into being kicked out of IATA after having failed to honor a huge debt from IATA of about US$140 mil and US$ 35 mil worth of wages and salaries. Its attempts to go regional in partnership with Air Malawi, Air Mauritius, Zambian airways Tanzania airways and Kenya have come to naught as the airlines fear lack of effective contribution from the airline since it is in huge debt (newzimbabwe. com 2012). Apart from the fact that the airline had a huge debt, its failure to enter into partnerships was also as a result of air Zimbabwe’s lack of polarized industrial relations with other airlines.
Since the airline has no partners the airline tends to pay a lot in terms of air space and landing costs which is leading to them procuring losses year on year. Recently Airline settled a debt of 1. 5 million US$ to release an impounded plane on London Gatwick Airport. Plane was impounded by American Aviation firm and now Air Zimbabwe flights to South Africa are also not resumed because management has a fear over creditors that they might impound their planes (Zim debt March, 2012) Lack of airplanes Air Zimbabwe is now unable to operate some routes due to their lack of aircrafts.
All in all the organization owns 10 planes some of which have been lying idle in hangers due to lack of fuel and repairs which is leading the airline to resort to other strategies. For example; air Zimbabwe is leasing aircrafts since they have withdrawn theirs from the requisite destinations (Newsday 2012). Air Zimbabwe is leasing Zambezi airlines to service the Harare to Johannesburg route and recently they have also added the Harare Victoria Falls route as well. This means Zambezi airline is operating those routes on behalf of air Zimbabwe at a fee.
This is rather expensive as all the costs incurred by the airline in accordance to the routes are met by air Zimbabwe. Although this is a noble move the airline is facing high costs leading to their perennial losses. Lack of advanced/ new technology According to (CEO’s report in Zimbabwe Review), air Zimbabwe is now operating with old and outdated technology in comparison to other airlines. Its equipment is now very old and unattractive that customers doubt the safety of the planes leading to them boarding other planes and also shunning from air Zimbabwe.
Lack of adoption to new technology owns to their failure to meet the costs for procuring the technology. This has led air Zimbabwe into buying sub standard goods. An example is when the management of Air Zimbabwe cancelled interior from Avis interiors with a loss of $250,000 and replaced the interior with rather, 2nd hand interior from American general suppliers. This shows poor management and myopic view from the management since they failed to foresee the loss and also the sub standard goods they bought would not last long. This lack of adaptation to new technology is leading to the organization being uncompetitive in the market.
This is so because the market is now flooded with rivals who have technologically advanced equipment which is showing efficiency and competitive for instance the South African airways is making use of 21st century technology making it very attractive to the customers. (newzimbabwe. com 2012) Flight cancellations Rampant cancellation of flights is also a major challenge that has forced many flyers to opt for other service providers. Since the president does not have his own private plane he resorts to using the national plane for his use in the event that he is going out of the country (newzimbabwe. com 2011).
This means that when he is going out the airline postpones all the bookings for the day resulting in people delaying their journeys thus losing faith in the airline. Since people would have lost faith in air Zimbabwe the airline tends to lose income and revenue and sine they face high fixed costs all they can do is continue facing persistent losses. Government overheads (attention on other departments neglecting the industry) Since air Zimbabwe is a parastatal there is need for the government to subsidies for it to function properly (Newsday 2011). However the government is not doing so since it is facing serious overheads.
Also the government is mandated to consider the welfare of the society so there is consideration of other sectors for example the agricultural sector, the health sector and the education sector. This would then leave inadequate funds to subsidies for the airline thus its continued decline over the years. In such cases, those with requisite skills that is, engineers, financial managers and even accountants whose jobs are not fixed in the airline industry look elsewhere for employment, there had been a serious turnover in those departments as the people are not being adequately remunerated.
(Newsday 2011). High labor turnover Air Zimbabwe is also facing a high labor turnover due to poor management strategies, failing to motivate their workers to stay and also they lack a good remuneration strategy leading to people going months without a pay. Air Zimbabwe is also unable to satisfy the needs of its workers for its workers do not even have descent incentives. This has lead to serious industrial actions that are unhealthy for such a big organization like air Zimbabwe.
According to a case study done by (Air Zimbabwe Overstaffed 2012), air Zimbabwe’s failure to pay workers led to strikes which saw about 400 workers striking out of which 50 of them were pilots and it led to the airplanes being grounded. Without the pilots there was no way to ferry the booked passengers so they had to cancel all their flights and people lost confidents in the airline altogether. Recommendations to the afore problems facing the industry In order for air Zimbabwe to get back to its feet and start being competitive serious recommendations should be put in place.
As a CEO of the airline suggestions to be made would be based on the empirical example considered by other airline industries that faced similar challenges. Retrenchment Air Zimbabwe employs over 1400 workers some of which are either not productive at all or who do not fit the selection criteria. In such instances there is a need to carry out a human resource audit where there would be assessment of personnel’s technical competence to run the airline (digitaljournal. com). In so doing there is easy cutting of unnecessary workforce leaving only competence ones capable of handling the industry.
Employee motivation (on both financial and non financial incentives) It is a fact that air Zimbabwe employees are not motivated at all which is leading to their low working morale (CEO of air Zimbabwe). There is need to motivate the workers by providing for their non financial need as well as remunerating them fairly and competitively so that there would be reduced turnover and also insure a high working morale. According to (www. insiderzim. com) there is need for competitive remuneration for the technical personnel so as to attain experienced personnel.
This was seen as a success when implemented by Kenyan airways so if properly implemented it would yield the same results with air Zimbabwe. Also non financial incentives could also be provided for example paid holidays, meal provision or even staff fare prices as these would effectively motivate workers to work efficiently and effectively Introduce new routes In a bid to cut costs air Zimbabwe closed out some routes which saw them face perennial losses. There is need for them to introduce new routes as implemented by air Malawi, for example Harare to DRC, Harare to Dar Es Salaam, Harare to Lilongwe or Harare to Nairobi.
Air Malawi introduced new routes which saw them enjoying some profits as the routes were lucrative especially the one from Lilongwe to Dubai (www. galbithink. org). If Zimbabwe was to follow suit then customers would gain trust in the airline once more. This would in turn reduce their losses if routes turn to be lucrative. Privatization It has been known that the government owns the majority of the share at air Zimbabwe if not all of them. They charge prices that they see fit which are not profitable as seen over the past decades (digitaljournal. com).
Privatizing the airline means that the private sector would have to own the majority shares, this is good in that it encourages the market forces to control everything occurring thus maintaining an equilibrium level of supply and demand. Privatization was successfully implemented by Kenyan airways were 77% of the shares were sold to the public sector. Now the airline is incurring profits year on year (www. galbithink. org). However there would need for the government to revise their indigenization policies as there is need for foreign direct investment which is not possible if there is a 51% indigenization policy.
Zimbabwe is known for its 100% safety record so as long as there is a policy review investors are surely to come. Enter into partnership There is no industry that can survive on its own; there is the need for air Zimbabwe to enter into partnership agreements with other airlines so as to cut costs associated with air space, landing cost and so on. This on its own has the power to increase competition and since competition is healthy it would see the industry improving its service delivery.
Zimbabwe is on its way to implement such, as it has already entered into a partnership agreement with Fly Emirates to operate its skies as it now operate the Harare Dubai route (www. insiderzim. com) Facilitating change, (technology) These days due to the introduction of technologically advanced equipment airlines make use of technology to stay competitive. There is a need for air Zimbabwe to do the same as this ensures competitiveness in the industry. Most airlines, for example, the South African airways makes use of computers to book passengers a seat, also they makes use of state of the art entertainment for the passengers enjoyment (www.
travellersjournal. com). These are the small changes that would have a huge impact in the industry. Introducing aggressive marketing strategies The reason why the airline is not being lucrative is also as a result of their lack of effective marketing strategies. There is a need for aggressive marketing so that people may be re incarnated into trusting the airline again. When Kenyan airways was facing a decline one of the ways they got back on their feet was through aggressively advertising so that people became aware of what changes they were to expect (www.galbithink. org). There is need for air Zimbabwe to do so since it would guarantee them a market share. Change management style The leadership style being used by the airline is not being effective as t is failing to control the environment. There is a need for air Zimbabwe to adapt to a new management style that ensures effective communication and also ensures that everything being done is known to every level of the organization. For example the airline should make use of a democratic leadership styles since it allows for everyone’s views to be considered in decision making and all (CEO’s report). If this is done properly then the airline is sure to succeed. Conclusion In the event that these recommendations are taken into consideration there is a high possibility of air Zimbabwe dominating the skies once again. This will ensure the least possible rate of labor turnover and also ensure that profits are earned year on year. However if these enabled success in other airlines it does not guarantee success for air Zimbabwe as there would be need for effective implementation of the above.