RwandAir: Why it's too early to consider privatisation

Editor, RE: “Rwanda reaps big from Serena, RwandAir” (The New Times, July 15). I believe that it’s too early to give this airline to any private investor. The investment it still needs is huge and the profits not directly redeemable to the investor, because as a new African airline, you basically need: a) To make no mistake on the quality of your fleet and services. b) A hub, a quality airport capable of handling and satisfying a large number of passengers and air traffic as you grow; c) Expand routes in an optimized way (routes are complementary) that gives a viable alternative to passengers; d) Have your own long-haul flights (not code-shared). e) This is a huge investment – the break-even of which many years ahead are needed to attain—and it has a lot of issues to solve which only a fully government-backed initiative can survive (e.g.: competition and skirmishes from regional countries based airlines, Non Trade Barriers )… f) The other thing is how the investor finances this: a leveraged investment will be very heavy on the political and economic risk that unless it is the government doing it or 100% backing it, it would be difficult to pull through. For laymen, a long range aircraft like a new Boeing 777-200LR (the longest range) cost some $250m, and you need at least 3 for Rwanda to complete the picture for, let’s say, Kigali-New York-Montreal, Kigali-Paris-Brussels or Kigali-Dubai-Shanghai). The cost of one of these airplanes is almost the yearly hard-currency import from all exports of Rwanda. A full-fledged airport that can handle up to 10 simultaneous arrivals and departures with at least 15 gates (I prefer using this rather than the number of passengers to ease things) will knock you $700m baseline (supposing you have two runways and parking lots for 15 aircrafts). That means an investment of at least $2.5 billion to put RwandAir on the map. In my humble view, the idea of giving it away to a private operator is good but it’s not yet time — and trying it at a improper moment would be a false signal in light of the goodwill enjoys now. Gill

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RwandAir: Why it's too early to consider privatisation