Air Tanzania

Air Tanzania Corporation (1977–2002)

The Air Tanzania Corporation (ATC) was established on 11 March 1977 after the break-up of East African Airways (EAA), which had previously served the region. The liquidation of EAA followed its accumulation of US$120 million of debt. According to Andy Chande, the founding chairman of the board, Tanzania and Uganda did not receive a fair share of the former carrier's assets despite being equal partners.

The airline commenced operations with a Douglas DC-9-32 leased from Kenya Airways and purchased an additional two Boeing 737, financed by a U.S. bank. It also leased aircraft from Air Madagascar. Four Fokker F27s and four DHC-6-300 Twin Otters were added in 1980. Because of less demand, two of the Fokker 27s were made obsolete in 1981. These aircraft returned to service in 1983 but were once again removed.

In May 1991, Air Tanzania began operating a Boeing 767-200ER that was leased from Ethiopian Airlines, but this aircraft proved to be too large and was returned to the lessor in February 1992. The airline reported a profit of US$650,000 in 1994.

During the 1990s, the airline's acronym ATC was humorously referred to as "Any Time Cancellation" due to its unpredictable flight schedule.

Alliance Air

In 1994, Air Tanzania joined with Uganda Airlines and South African Airways (SAA) to form Alliance Air. Air Tanzania had a 10 percent stake in the venture. Flights operated from Dar es Salaam to London–Heathrow via Entebbe on a Boeing 747SP initially, and then a smaller Boeing 767-200. This venture ceased operations in October 2000 after accumulating losses of about US$50 million. The losses had been funded by Transnet, the parent company of SAA, through April 2000. When Transnet refused to continue funding the deficit, Air Tanzania accused SAA of using Alliance Air "as a Trojan Horse to take over national airlines in the region". In February 2002, the government began the process of privatising ATC through the Presidential Parastatal Sector Reform Commission. Advertisements were placed in the local, regional, and international media inviting potential bidders. The International Finance Corporation advised the government in this transaction. The government had approved a transaction structure that included:

Creation of a new company, "Air Tanzania Company Limited", which would be incorporated as a limited liability company under the Companies Act to take over the operating assets and specified rights and liabilities of ATC.

A second new company, "Air Tanzania Holding Company", would be created to take over the non-operating assets and all other liabilities of ATC.

Eight airlines submitted expressions of interest:

Aero Asia International (Pakistan)

Air Consult International (Ireland)

Comair (South Africa)

Air Gulf Falcon (United Arab Emirates)

Kenya Airways (Kenya)

Nationwide Airlines (South Africa)

Precision Air (Tanzania)

South African Airways (South Africa)

Of the eight, four airlines carried out due diligence – South African Airways, Kenya Airways, Comair, and Nationwide Airlines. By 19 September 2002, the bid deadline date, only SAA had submitted a bid. Kenya Airways and Nationwide Airlines had informed the government that they did not intend to submit bids.

ATCL (2002–2006)

The Tanzanian government selected SAA as the winning bidder. After signing an agreement with the government, SAA in December 2002 purchased a 49 percent stake in Air Tanzania Company Limited (ATCL) for US$20 million. US$10 million was the value of the government's shares, and the remaining US$10 million was for the Capital and Training Account for financing Air Tanzania's 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 intended to replace ATCL's fleet with Boeing 737-800s, 737-200s, and 767-300s; and planned to introduce regional routes, including routes to the Middle East and West Africa. The government was expected to sell 10 percent of its stake to a private Tanzanian investor, thereby reducing the government's ownership to a non-controlling interest of 41% n ATCL.

The new Air Tanzania airline was launched on 31 March 2003, offering direct flights from Dar es Salaam to Johannesburg, Zanzibar and Kilimanjaro.

Air Tanzania recorded a pre-tax loss of almost US$7.3 million in its first year following privatisation. The loss was attributed mainly 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 were delayed as Air Tanzania had only had short-haul Boeing 737-200s in its fleet. The development of Dar es Salaam as an East African hub for the SAA 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.