Despite the travails of the global aviation industry, there is a lot to be optimistic about in the African airline sector.
Passenger numbers continue to rise year on year; 2016 was the safest year for flights in a decade; and new airlines continue to be set up even while others disappear. Perhaps the most heartening sight is the continued success of Ethiopian Airlines, which demonstrates that it is possible for African airlines to compete with their international rivals.
According to figures from the International Air Transport Association (IATA), there were no passenger fatalities in sub-Saharan Africa last year and no jet hull losses, with an accident rate of 2.30 per 1m departures, in comparison with an average of 9.73 per 1m departures over the previous five years.
Safety concerns continue to be raised over specific airlines. Although all carriers from Benin and Mozambique have now been taken off the European Union blacklist of airlines that are banned from flying in EU airspace, two new African carriers joined the list when it was updated in May: Nigeria’s Med-View Airlines and Zimbabwe’s national carrier, Air Zimbabwe.
Nigeria continues to struggle to produce airlines on a scale comparable with the size of the Nigerian economy. However, in May, the government announced that it had appointed a group of six companies, including German airline Lufthansa, to advise it on setting up a new national carrier, as well as on more general aviation sector policy. Abuja has vacillated in its attitude between seeking to set up a new flag carrier and hoping that the private sector can fill the void.
Most recently, in February, the state-owned Asset Management Corporation of Nigeria was forced to take over the country’s biggest airline, Arik Air, to prevent its collapse. President Muhammadu Buhari has promised to create a national airline. The government has suggested that more than 10 existing but indebted airlines, including Arik Air, could be merged with the support of an international airline.
One airline that has been able to expand into Nigeria in the absence of a big domestic operator is Ethiopian. It has developed Addis Ababa as an important hub at the crossroads of Africa, Europe, the Middle East and the rest of Asia, and now flies to four Nigerian cities 20 times a week. It was scheduled to begin flying from Lagos to Singapore on 1st June.
Discussing the new Singapore service, the general manager of Ethiopian Airlines Nigeria, Solomon Begashaw, said: “We have a vision of being the leading African airline of the world. By 2025, we hope to have 180 destinations. We have been ordering aeroplanes and working on our human capital.” In addition, Ethiopian’s West African offshoot Asky, based in Togo, flies to 23 destinations, just seven years after it was set up.
RwandAir is another airline that is growing strongly, albeit from a low base. Its 11 aircraft include two Airbus A330s and three Boeing 737-800NGs, flying to 19 destinations in Africa and the Middle East at present. It plans to launch services to North America, Europe and India in the near future, starting with Mumbai, London-Gatwick and New York.
RwandAir CEO John Mirenge told The New Times of Rwanda: “The future is very bright, especially when you look at where the airline was five years ago. We were carrying a quarter of the passengers we are flying today.” The airline should be able to grow more quickly once the new airport in Kigali is built.
No progress towards single market
The sector’s big failing is the same as ever. In 1999, 44 African governments agreed to introduce an open skies policy under the Yamoussoukro Decision. The aim was to open up heavily protected domestic sectors in order to increase competition, reduce costs and boost the number of passengers travelling across African skies.
Yet most states have failed to actually implement the agreement and protectionism still reigns supreme. For some reason, national airlines continue to be seen as symbols of national pride in a way that few other services are.
Speaking at the Aviation Africa conference held in Kigali in February, Elijah Chingosho, the secretary general and CEO of the African Airlines Association described open skies as now just a “pipe dream” despite the “significant economic benefits” that would accrue. Only 15 countries are fully committed to implementing Yamoussoukro.
Given the geographical shape of the continent, the reluctance of more than 70% of countries to become involved makes it difficult to create the liberalised sector that was originally envisaged. As a result, African states are often better connected with other parts of the world than they are with each other.
IATA forecasts average growth in traffic of 5.4% in sub-Saharan Africa between 2016 and 2035, with the total number of international passenger journeys set to reach 300m by 2035. Yet there is no doubt that the sector is struggling financially. Again according to IATA, African airlines collectively lost $700m in 2015 and $800m last year, the two worst results on record.
Chingosho said: “To reverse this state of affairs, the quest for a single aviation market should not be allowed to fail. Failure would result in the African airline industry following the footsteps of the once-thriving African shipping industry, which has now virtually disappeared.”
from African Business Magazine http://ift.tt/2sinZ3w