TZW
The Minister for Works, Transport and Communication, Prof Makame Mbarawa, elaborated here as he was winding up the 4.270trl/- budget estimates for the financial year 2018/2019, that leasing of aircraft was only cost-effective for a short period of time.
The government has so far purchased three brand new Bombardier Dash8-400 airplanes from Canada and additional three aircrafts including two bombardiers Dash 8-300 and one Boeing 787 Dreamliner from the United States are set for delivery later this year. “
Airlines resort to leasing aircrafts in short term to serve a new route or when there is an increasing demand in a certain route otherwise purchasing new aircrafts is more economical in a long term,” Prof Mbarawa explained.
After three days of heated debate which started on Monday and ended on Wednesday evening, Members of Parliament eventually endorsed the financial plan for the ministry. During the debate,
some MPs had faulted the purchase of new airplanes which they described as costly and proposed instead that the government should embark of leasing to minimize costs in revamping the once ailing national carrier.
However, Prof Mbarawa was categorical that buying new planes was more economical even when it comes to maintenance. “There are two types of hiring an aircraft; there is dry lease which includes hiring of the air craft alone and wet lease which involves hiring the plane, its pilot and crew which is even more expensive,”
the minister explained. And, contrary to arguments by some MPs that the revamped ATCL was making losses, Prof Mbarawa informed the august House that gross revenues by ATCL had increased from 34.4bn/-in July 2017 to 43.8bn/-as of March, this year, where 104,207 passengers used services of the company.
According to Prof Mbarawa, it costs between 200,000US dollars and 250,000 dollars for dry lease of one aircraft per month in addition to 18,000 dollars in maintenance fees and US 24,000 dollars in withholding taxes. “All these costs bring the total amount of leasing an aircraft through dry arrangement to 330,000 dollars per month.
This translates to 3.5 million dollars per annum and when you add insurance costs it comes to 4 million dollars per year,” he explained. Adding; “The new planes acquired by the government have a lifespan of 35 years which means that if you spend 4 million dollars for dry lease of an aircraft per annum for 35 years you will spend 140 million dollars
which is a lot of money.” Prof Mbarawa noted on the other hand that the government was making efforts to have ATCL re-admitted to the International Air Travel Association (IATA). The national carrier was de-listed from the IATA in the year 2008 due to unpaid debts.