Air Tanzania - History - ATC-SAA Partnership

ATC-SAA Partnership

The government selected South African Airways as the winning bidder. In December 2002, SAA after signing an agreement with the government purchased a 49% stake in ATC for USD 20 million; USD 10 million as the value of the shares and the remaining USD 10 million for the Capital and Training Account for financing its proposed business plan.

As the strategic partner, SAA planned to create its East African hub in Dar es Salaam to form a “Golden Triangle” between Southern, Eastern and Western Africa. It also intended to replace ATC's fleet with Boeing 737-800s, 737-200s and 767-300s. It also planned to introduce regional routes, routes to the Middle East and West Africa. The government was expected to sell 10% of its current 51% stake to a private Tanzanian investor, thereby reducing the government's ownership to a non-controlling interest in ATCL.

The new airline Air Tanzania Company Limited (ATCL) was launched on 31 March 2003, offering direct flights from 1 April between Johannesburg and Dar Es Salaam, but also to Zanzibar and Kilimanjaro.

Air Tanzania recorded a pre-tax loss of almost USD 7.3 million in its first year following privatisation and part ownership by South African Airways. The loss was mainly attributed to the inability to expand the network as quickly and extensively as originally planned. It had been hoped to launch services to Dubai, India and Europe, but these have been delayed as there are only Boeing 737-200s in the fleet. The development of Dar Es Salaam as an East African hub for the South African Airways alliance had also not proceeded as quickly as planned.

On 31 January 2005, Air Tanzania suspended one of its few regional services: Dar es Salaam to Nairobi, following intense competition from Kenya Airways on the route. The airline did however reaffirm intentions to launch long-haul services within a year from Dar es Salaam to Dubai, London, Mumbai and Muscat.