Displayed with permission from allAfrica.com
AIR Namibia has cancelled a N$20 million a year tender that was previously awarded to businessmen Desmond Amunyela and Lazarus Jacobs to sell their products on the plane.
The airline’s decision to withdraw the contract came after claims emerged three weeks ago that the airline wanted to award this deal to a South African firm because the Namibians who held the contract were « already empowered ».
Paragon Investments, which is owned by Amunyela and Jacobs, won Air Namibia’s in-flight duty-free services contract from 2013 to 2016, and sold products on routes such as Angola, Zambia, and Germany.
The duo sold products such as fragrances and other small goods on the planes flying from one destination to another.
Paragon’s contract ended in May this year, but the airline refused to renew it, even though the company had asked to continue selling until a replacement was found.
Air Namibia spokesperson Paul Nakawa said the duty-free tender was suspended due to the recent economic downturn on the Namibia-Angola route which was caused by the low oil price and a shortage of cash in the Angolan economy.
« We are in fact withdrawing this tender, and when the economic situation in Angola improves, we may reintroduce the duty- free services on our flights, » he stated.
Air Namibia called for tenders to sell products on its flights in February this year, with a deadline set as March 2016. Paragon and other companies tendered for this contract.
Amunyela declined to comment, but sources said of the N$20 million annual revenue they received from this contract, they paid Air Namibia around N$7 million per year.
Sources close to the airline said the decision to withdraw the contract is suspect as it comes at a time when some executives at the airline are being accused of pushing Tourvest Inflight Retail Services – a South African company – to take over the services from Paragon.
Air Namibia sources claimed that Paragon was recommended by an Air Namibia manager. Nakawa declined to provide the name of the recommended company.
« The process of going out on tender was necessary as the then existing duty-free contract had expired. This is good governance. There were no formal letters of dissatisfaction issued to the company performing the service in the past, » he noted.
He said an evaluation of all tender documents received was done several months ago, but the tender committee put the tender on hold. No final decision was made.
The spokesperson said once the in-flight services are restored, companies which tendered will be requested to present their proposals.
Sources at Air Namibia said senior managers worked together to overrule a recommendation of the duty-free tender in order to award that contract to a foreign company instead of a Namibian company.
Nakawa denied this too, saying the tender committee is made up of several members of the executive committee.
Aviation deals to foreign firms are not new to Namibian parastatals. The Namibia Airports Company awarded a N$30 million contract to Menzies Aviation, a United Kingdom-based company, to manage a business lounge at the biggest airport in Namibia.
The wrestling of these aviation contracts from Namibian-owned companies has angered business people who claim that it defeats the empowerment drive as foreign firms are getting work which can be done by locals.
This tender has a controversial past, too. The Namibian reported last year that former managing director Theo Namases had renewed Paragon’s three-year contract for duty-free services without user department and board approval, a move which contravened the Anti-Corruption Act.
According to an investigation, an interview with Air Namibia’s management revealed that the airline had been unhappy with Paragon’s services as it had allegedly failed to meet some of the main tasks, an allegation Amunyela denied.
« I hope that the progressive colleagues at Air Namibia will be vigilant enough to guard against tender conditions that will be designed in favour of foreign-based in-flight duty-free operators in order to muscle Paragon out, » he said last year.