The Algerian state airline carrier Air Algrie transferred a 49% stake of domestic carrier Tassili Airlines to the oil company Sonatrach. The transfer papers, which make Tassili a wholly owned business of Sonatrach, were signed by the two companies CEOs, Mohamed Meziane of Sonatrach and Tayeb Benouis, of Air Algrie.
Established in 1998, Tassili Airlines' core business was to provide transport and evacuation services to oil companies operating in the Algerian desert.
Although the reasons for Air Algerie's withdrawal have not been made public, they are likely related to the management style Air Algrie applied, which may have not pleased Sonatrach. It is also unclear on what Sonatrach will do with Tassili. However, the carrier will continue to serve the oil sector for the time being before transforming it into a regional carrier that will compete with Air Algrie. Some observers say Sonatrach is also envisaging the expansion of the small airline's fleet.
Air transport in Algeria remains an embryonic market. Previous attempts to jump-start the sector failed largely as a result of the financial scandals such as the collapse of the Khalifa Group which dampened private initiatives. As a result, state-owned Air Algrie maintains a monopoly over the domestic air transport market, with all the negative consequences resulting from a poorly managed state-owned firm.
As such, air transport is virtually out of reach for millions of travelers given the unavailability of service and exorbitant prices when service is available. With complete control over the domestic market, Air Algrie has recently imposed a third fare increase while it is barely able to maintain a 58% seat usage rate. As a result, passenger traffic continues to fall, and was down 2% year on year in January 2005. Only 330,318 passengers used Air Algrie in 2004 on domestic routes. This number is indicative of a highly under-developed market in need of a major legislative intervention to develop it. However, the government and lawmakers do not appear to be keen to do anything to help the airline sector at this stage, as they are still attempting to put the Khalifa Airways collapse behind them.
© The North Africa Journal 2005
