Tanzania last week unveiled an ambitious programme to conclude the privatisation of Air Tanzania Corporation by the end of next month.

Parastatal Sector Reform Commission (PSRC) spokesman Joseph Mwapunda told The EastAfrican that eight interested bidders had been invited to submit offers for up to 75 per cent of Air Tanzania's equity.

"The whole process should be over by the end of July this year," Mr Mwapunda said of what is being seen as a two-horse race between South African Airways (SAA) and Kenya Airways (KQ).

SAA's East African regional manager, Mr Maurice Phohleli, said that SAA's interest in ATC was in line with its strategy for Africa. "We have a three-hub plan; with Johannesburg in the South, we are looking for a hub in East Africa and another hub in West Africa," he said.

That puts SAA in direct competition with KQ, which has developed a strong regional hub in Nairobi from which it services the East, Central and Southern Africa regions.

Kenya Airways managing director Brian Presbury said recently that the airline was interested in acquiring a strategic stake in Air Tanzania. "Having two strong and profitable airlines will be a good thing for the East African Community," he said, without indicating what stake Kenya Airways would bid for.

Besides SAA and KQ, ComAir, Nationwide, Gulf Air Falcon of the United Arab Emirates, Aero Asia International of Pakistan, Air Consult International of Ireland, and Precision Air of Tanzania are interested in Air Tanzania. ComAir and Nationwide are the second and third biggest airlines in South Africa after SAA.

PSRC chairman John Rubambe said last month that a new company would be formed to take over the commercial operations of ATC prior to concluding the transaction. Bidders have been invited to conduct due diligence on the parastatal's financial position.

Kenya Airways officials started their review in Dar es Salaam last week, a week after SAA. It was not clear when the other bidders would conduct theirs. ATC owns two Boeing 737-200s and has leased one B737-300 from Ansett Aviation Worldwide, and two Don Air Turbo Props from a South African company.

However, only three of the aircraft are operational because one 737-200 and the leased B737-300 have been withdrawn for servicing, forcing suspension of services the to Comoros and to Entebbe through Mwanza, ATC spokesman Innocent Mungy said.

Analysts say the Kenya Airways-ATC code share arrangement on the Nairobi-Dar es Salaam route, their former association with ATC staff in the defunct East African Airways, and the fact that several former ATC pilots now work for KQ, could give it a headstart over other bidders. 

Last week, KQ – already quoted on the Nairobi and Kampala stock exchanges – confirmed that it was actively considering undertaking the listing of its shares on the Dar es Salaam exchange later in the year or during the first quarter of 2003.

However, SAA, Africa's biggest airline, has strategically located its regional headquarters in Dar es Salaam, an hour's flight from Nairobi, and has been conducting a powerful public relations campaign in Tanzania.

Kenya Airways' key concern is that the development of an alternative hub so close to its own could translate into business losses. "They fear the development of a competitive hub in Dar es Salaam," Mr Phohleli said.

However, SAA and KQ will have to contend with Precision Air, which boasts a strong network on the Tanzania mainland and regular flights to Zanzibar and Mombasa along the Kenya coast. Precision Air, whose officials declined to comment, is associated with a former ATC director.