African Aviation: Is the Industry Ready to Carry the World?
African Aviation: Is the Industry Ready to Carry the World?
The aviation industry in Africa is still in its infancy, despite almost every African nation developing their flag carriers as well as a number of regional airlines. Despite its youth, aviation across the continent has grown in leaps and bounds – although it has gone through some rocky patches in the last few years. In December 2012, The Event ran an article on the sheer number of government bailouts the industry had received. These included hundreds of millions of US dollars in bailout for South African Airways, Royal Air Maroc, RwandAir, Precision Air (Tanzania), Air Zimbabwe, Air Nambia and Air Arik (Nigeria). Some of these bailouts have helped the carriers, while some are beyond repair.
South African Airways (SAA), for example, recently announced that it was planning to enter the West African airline business though a stake acquisition in a Togo-based carrier and setting up its regional operation base in Ghana. South Africa also signed an agreement with Swaziland ained at building essential aviation infrastructure that will “unlock and stimulate regional economic activity”, according to African Aerospace Online News Service. Ethiopian Airlines – now the fastest growing and most profitable airline in Africa – recently also secured financing for four new Boeing 777-200LR freighter aircraft, to be delivered between 2014 and 2015, and have also signed a technical support agreement with RwandAir. Ethiopian also announced the start of four weekly flights to Vienna, Austria, starting in early June.
Kenya Airways also recently commenced service in a Nairobi-Paris route with its first B787 Dreamliner. “We are in the process of modernizing our fleet, which is already one of the most modern on the continent at the moment. It is one of the ways through which we aim at consistently providing a world-class experience to our customers across our network of destinations,” Titus Naikuni, Kenya Airways Group Managing Director and CEO, said.
On the other end of the spectrum, Zimbabwe’s Tourism and Hospitality Industry Minister Walter Mzembi called for the government to subsidise its troubled airline. “I have not experienced a national airline in Africa that is viable unless it is subsidised by government,” Mzembi said, mentioning that it was necessary for government to come up with a model that would support the airline’s viability. “At best we should say Air Zimbabwe shall operate at a break-even level,” he said. But analysts say Air Zimbabwe must be recapitalised first as a debt overhang of over US$110 million makes it unattractive for investors. Also in danger of liquidation is Libya’s Afriqiyah Airways, where a merger between Afriqiyah and Libyan Airlines has been suspended as the flag carrier’s home market struggles to contain a simmering civil war.
But how does the business events industry deal with this aviation rollercoaster? Can meetings, incentives, conferences and exhibitions withstand the pressure of so many ups and downs? Gary Corin, Managing Director at Specialised Exhibitions Montgomery, says they can and do – although it can seriously affect delegates. “One of the biggest challenges is if flights get cancelled,” he says, “Our exhibitions are on specific dates annually or even biennially so if a flight is cancelled or delayed it can have a very negative impact on the event.” He goes on to say that delegates prefer global carriers to regional low-cost carriers (LCCs): “Global carriers tend to be more reliable in particular on long-haul routes. Many of our international visitors are quite happy to use local low-cost carriers to venues like Cape Town and Durban, however.”
Ethiopian Airlines CEO, Tewolde Gebremariam, has warned that reliance on global carriers – Gulf carriers in particular – could mean the end of Africa’s aviation industry. Speaking at the Aviation Club in London, Gebremariam said, “We have tremendous competition coming from the Gulf carriers. Dubai is only three and half hours away from Addis, Abu Dhabi and Doha the same. They have been doing very well and now Africa is also in their centre of strategy.” He said that Europe’s failure to respond to the threat by Gulf carriers has made it very difficult for airlines to operate in Europe. “For passengers travelling from South and North America to Europe, Africa, the Middle East and Asia, the only way was through Europe. But now that hub and spoke is moving to the Middle East and unfortunately and inadvertently European governments and politicians are helping them move the centre of gravity to the hubs in the Middle East.
“We are growing very fast but we have a serious challenge when considering that 80% of traffic between Africa and the rest of the world is controlled by non-African carriers – All of us - Kenya Airways, Ethiopian, South African, Egyptair, Air Morocco, TAG Angola, CAM Air, Rwandair, Arik Air and so on –put together - we only have 20% of the market. This is a big, big challenge if we don’t do something to at least maintain 50% of the market. Otherwise we are going to be swallowed and they are going to have us for their lunch.”
Exorbitant tax rates and fuel prices are also holding African airlines back. In April, the International Air Transport Association (IATA) called on African governments to work with the aviation industry. “The African industry cannot fulfil its potential if it continues to be weighed down by high costs,” said Tony Tyler, IATA’s Director General and CEO. Buying aviation fuel in Africa is about 21% more expensive than the global average, while direct taxes on tickets also have an impact on airlines. “We see a combination of ‘solidarity’ taxes, tourism taxes, VAT, and infrastructure development fees, each of which reduces the ability of aviation to drive economic benefits and generate jobs. Governments must carefully weigh the income generated against lost economic opportunities. There should be a joined-up policy framework that is focused on the benefits of connectivity which would grow in a more favourable tax environment,” said Tyler. Improvements have, however, been realised in Angola, Uganda and Ghana. Tyler also challenged airlines on their safety procedures. “World-class safety is possible in Africa. The safety record of African carriers on the IOSA registry tells us that the key to this is integrating the best safety practices of the industry as captured in the IOSA standards. IATA is committed and actively engaged in helping to enhance African aviation’s safety performance to reach worldwide levels based on the African Strategic Improvement Action Plan,” he said.
Elijah Chingosho, the Secretary General of the African Airlines Association (AFRAA) recently said that Africa’s aviation industry was slowed by closed air policies. “The growth of the aviation industry in Africa has been hampered by closed air policies and visa requirements by countries on the continent,” he said. According to him, this is a major concern, as governments favour non-African airlines at the expense indigenous airlines.
Whether there will be such a thing as ‘African Aviation’ in the next decade remains to be seen. Ultimately, it is largely up to governments and airlines themselves rather than their business class passengers to band together and create a continental system that services both regional LCCs and international flights. Unity, a clear strategy and continental standardisation will be the only things that sustain African airlines and take them into the future.
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