West Air Aviation could build market share on the domestic routes after acquiring a scheduled air services license, a move seen by aviation experts as a direct threat to Air Namibia’s monopoly on domestic routes.
Namibia’s premier private airline currently only offers chartered flights, however it can now execute its long-term ambitions to offer scheduled flights to its clients. Sensitive communication between Air Namibia and West Air Aviation, to which The Patriot is privy, indicate that the private aviation firm plans to offer domestic and international scheduled flights.
The Patriot can confirm that West Air is in the process of venturing into a number of additional regional (international) and domestic routes. Its application for the amendment of its Scheduled Air Service License no. 00031 was approved by the Transportation Commission of Namibia last week.
West Air Aviation previously held a scheduled air services license number 00016 obtained in September 1993 which limited it to chartered flights only.
Since independence, Air Namibia has had a virtual monopoly, but years of mismanagement left the airline creating a vacuum as no other carriers were offered domestic scheduled flights. This has resulted in Air Namibia not owning a single aircraft. All 10 aircraft the national airline is using, are leased.
West Air has been a thorn in Air Namibia’s flesh in recent months, last year it was well on course to purchase the Embraer ERJ135 jets which Air Namibia is currently leasing from Air France Regional.
Air Namibia allegedly found out about the transaction when West Air informed it that it now owned the four aircraft.
Sources close to the transaction said West Air Aviation at the time already paid half of the unknown purchase price. The deal was subsequently called off.
The national carrier has been leasing four Embraer 135 aircraft for N$2.6 million monthly, for the last seven years. The lease agreements for the aircraft will lapse in February, April, May and June 2018 respectively.
With Air Namibia currently not in a position to buy any aircraft and government finding itself in a precarious financial position, the national airline could be forced to trim its fleet, a move that will most certainly play well into the hands of West Air.
“We are currently assisting our client in preparing an application for a number of additional regional (international) and domestic routes. It was the intention to try and file this application in time for publication in the November issue of the Government Gazette, but unfortunately we were not able to complete the application timeously,” said West Air’s legal team Ellis and Partners in a letter written to Air Namibia on 30 November 2017.
In the letter addressed to Air Namibia’s acting managing director Advocate Mandi Samson, the law firm said “the proposed application would be completed latest by 15 December 2017 when our office will shut down for the December recess.”
“It is assumed that the application would then appear in the Government Gazette of 29 December 2017.
We are well aware that during this period people do not necessarily take note of Government Gazette publications.
In the light thereof, we hold instructions to submit to you a complete copy of our client’s application to the Transportation Commission at the time when we file same with the secretary of the commission.
Due to the fact that some of your personnel may be on holiday at the time of filing the application we would appreciate it if you could indicate to us, if you so wish, such person within your company that would be available to receive the application on your behalf,” Ellis and Partners further told Samson.
The Patriot can also confirm that Air Namibia attempted to block West Air’s bid to obtain a scheduled services license.
The Transportation Commission of Namibia last week ruled against Air Namibia.
The commission’s secretary Natassja Kamuinjo informed Air Namibia’s legal team that all enabling requirements to award the license to West Air were met.
“You are hereby informed that the Commission resolved to approve the application, having been satisfied that the requirements of the Air Services Act were met,” Kamuinjo informed Shikongo Law Chambers.
The objection raised by Air Namibia was heard and decided upon earlier this month.
Kamuinjo did not provide the reasons which informed the commission’s decisions. Air Namibia’s legal team has since requested for such reasons to be availed to them.
Lease or purchase?
The Patriot also understands that should the ailing national carrier opt to buy the planes that it is currently leasing, it would cost them between N$19,5 million to N$26 million per aircraft.
Meaning a hire purchase agreement for six planes will cost about N$198 million including interest. While leasing the same aircrafts for the same period will cost N$234 million.
If Air Namibia opts to continue leasing, it will lease six ERJ aircraft (2 x ERJ 135 and 4 x ERJ 145) from the current lessors or look for similar aircraft from other potential lessors.
Information at hand indicates that “If for instance the airline manages to get aircraft to lease at indicative monthly lease amounts of USD 50 000, the monthly total payment for the six aircraft will be N$3.9 million.
The annual cost for leasing the six aircraft is N$46.8 million and if the aircraft are leased for five years the total contract amount will be N$234 million at current exchange rates.” But if it opts to buy, the committee says the airline will purchase “good second hand 2 x ERJ 135s and 4 x 145s aircraft from the market.”
“Indications are that the aircraft are available in the market at prices ranging from N$19.5 million to N$26 million.
Furthermore, if the airline borrows the N$156 million from the market to finance the aircraft purchase over a five year repayment period, the approximate interest cost will be N$41.7 million.
Sensitive documents seen by The Patriot show that the national carrier was busy with plans to purchase two ERJ 135 and four ERJ 145 aircraft as the replacement of current aircraft leases for the domestic market and some regional routes, pending board approval.
If Air Namibia were to acquire ERJ145 planes, it would need to convince Namibia Airports Company to upgrade the local airports. The ERJ 140 and ERJ 135 aircraft will both require at least a Category 6 Fire Fighting Category Airport.
The ERJ 135 aircraft, which Air Namibia currently operate on the domestic market, can do with a Category 5 Fire Fighting Category Airport; with a flexibility to operate on Category 4 Airports where frequencies are below the 700 threshold.
Any other operations to an airport below Category 5 will result in a regulatory non-compliance.
The categorizations of Namibia’s domestic airports as issued by the Namibia Airports Company indicates that only Hosea Kutako International Airport and Walvis Bay Airport are above Category 5, with the remaining six (6) airports being categorized below Category 5.