Manzi Kayihura: Guiding Rwandair Express through privatisation

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Manzi Kayihura may have had the longest journey among the over 100 airline chief executives attending the IATA annual general meeting in Vancouver earlier this month. The Rwandair Express chief executive had to first fly in one of his aircraft to Nairobi, one of the carrier’s five overseas destinations, to catch a flight to London and eventually Vancouver.

But you don’t have to tell Kayihura about what it takes for Rwandans to travel outside eastern Africa. Remarkably, 90% of Rwandair’s passengers connect at one of the carrier’s five overseas stations onto flights by other carriers.

“We have very little point-to-point traffic. Interline to us is vital,” Kayihura says.

This makes Kigali-based Rwandair heavily dependent on interline agreements with larger carriers. But as medium- and large-sized carriers drop some of their smaller interline partners prior to IATA’s 31 May 2008 e-ticketing deadline, carriers like Rwandair risk losing a large part of their revenue stream. Kayihura is one of several African carrier chief executives vocal about how large carriers seem uninterested in signing interline e-ticketing (IET) agreements with small carriers from undeveloped regions before the deadline.

“Getting them to sign up is a problem,” Kayihura says. “They haven’t cut us off yet, but we’re not a top priority for them.”

IATA is now asking its larger members to decide promptly which interline agreements they want to migrate to IET. But Kayihura is concerned only large interline agreements will be migrated: “We’re at the bottom of the list. This is an issue for small airlines. It sucks being small.”

Kayihura says Rwandair has no problem implementing e-ticketing on its own flights and its codeshare flights with partners Kenya Airways and South African Airways. But the biggest challenge is convincing the 19 non-African carriers it currently interlines with to migrate to IET.

Privatisation

Kayihura is also now dealing with Rwandair’s planned privatisation and search for a strategic partner. Brussels Airlines and Italy’s Meridiana pre-qualified in May as bidders for a 40% stake in Rwandair. Kayihura says final bids will be submitted in early July, following a bidders conference scheduled for late June, and the privatisation process will be completed in late August assuming one of the bids is satisfactory.

“We’re privatising to the best strategy for our country, not the highest bidder,” Kayihura says.

He adds whether the process is completed “depends on what’s on the table”. If the government sells a 40% stake to a foreign airline it will subsequently launch a tender to sell another 40% to an institutional investor.

If neither of the bids is deemed satisfactory by the government, Rwandair will look at other alternatives for privatisation. “If it doesn’t happen we have a plan B,” says Kayihura, adding the government is keen to privatise several government-owned companies.

Brussels Airlines and predecessor Sabena has been operating flights to Kigali since 1962. Over the last year it has been looking to expand its presence in Africa by investing in and partnering with local carriers. “They’ve been in our backyard for so long, that’s why they are interested,” Kayihura says.

Meridiana currently does not operate any scheduled services to Africa but has been looking at expanding its network to the south and buying stakes in African carriers.

Kayihura says Rwandair seeks a foreign partner “to take over the long-haul traffic” and it has no ambitions to operate its own long-haul services. It currently serves Nairobi in Kenya, Bujumbura in Burundi, Entebbe in Uganda and Kilimanjaro in Tanzania from its Kigali base with one Boeing 737-500 and one Bombardier Dash 8-200.

“Our priority is to be a regional player,” Kayihura says, adding because Rwanda is a landlocked country the flag carrier plays a vital role in the country’s economy.

Kayihura points out that although only eight million people live in Rwanda, the carrier’s catchment area is 120 million when citizens of neighbouring countries residing within a three-hour drive of Kigali are included. He says the carrier in particular wants to attract more traffic from neighbouring eastern Congo, where there is little infrastructure and limited air services.