Kevin O'Toole/Johannesburg
In the middle of August the African aviation community met in Johannesburg to discuss its future. There was nothing new about the issues. The industry, like much else within the African economy, is too small and fragmented for most of its players to do more than survive. Some have not even managed that.
The conclusion, too, was painfully familiar. African aviation desperately needs to disentangle itself from national politics and get down to some solid regional co-operation.
In all of this, the Johannesburg meeting - held under auspices of the International Air Transport Association (IATA) - contained little new.
As long ago as 1988 the region enshrined a commitment to co-operation in the now famous Yamoussoukro declaration, calling for airlines to create mergers, joint ventures and consortia. Seven years later, the deadline is looming and little has been achieved.
What is new, however, is the mood of optimism. There is now a real belief that the region may finally be on the verge of achieving some of its long-standing goals on the back of the political change beginning to sweep the continent.
The choice of Johannesburg to host the airline talks is itself important. Before last year's elections sealed its reinstatement to the world community, Africa's most successful economy was languishing in political and economic isolation. Now it is back and already showing signs of providing sub-Saharan Africa with a natural leader.
Mike Myburgh, chief executive at South African Airways (SAA), underlines the commitment of the carrier and the country to play a role as a good African citizen.
"SAA considers itself not only as a part of Africa, but as a significant player in the field of aviation on the African continent," he says.
The airline, which was once barred from overflying its neighbour states, has already stepped in to lead the launch of Alliance, the long-haul joint venture founded with Uganda and Tanzania. Myburgh also points to a wealth of technical resources that SAA is now able to share.
Political pragmatism
South Africa's re-emergence also appears to coincide with signs of a new political pragmatism appearing in many African states which may at last see governments loosen their grip on aviation.
Earlier this year, Kenya Airways began the search for a foreign partner as a first step towards privatisation. If it succeeds, the carrier will join only a handful of others that have strayed into the private sector.
Even the decision by the Zambian Government to let its national carrier collapse is being cited as an indication that airline ownership is no longer such a potent badge of national pride.
This optimism comes with a health warning. Progress is intimately bound up with the region's often unpredictable politics and poor economics, but the hope is that this, too, is beginning to mature.
"Never before has Africa been better ideologically poised for take-off...I'm convinced that the chemistry is right for a dramatic change in the economy of over the next decade," says Myburgh.
Much of the present fragmentation dates back to the politics which flowed from the early days of independence from colonial rule. The old colonial coalitions, such as East African Airways and Central African Airways, disintegrated into a mass of flag carriers as each independent state rushed to paint its flag on the side of an aircraft.
This fragmentation, says Capt Mohammed Ahmed, secretary general of the African Airlines Association (AFRAA), remains the single greatest restraint on growth.
The numbers speak for themselves. On a rough count there are at least 25 nominally international carriers in a continent which accounts for no more than 2% of world air traffic.
These carriers account for a total jet fleet of little more than 250 aircraft, smaller than almost any major US or European carrier. More than half of the aircraft are concentrated in the hands of SAA and the major North African carriers such as Egyptair, Air Algerie and Royal Air Maroc. The remainder are spread thinly across the vast African landmass.
Even taken collectively, with combined annual sales of around $3 billion, the continent's carriers would not sit among the world's top 20 airlines. SAA is alone among African airlines in making it into the top 50.
The fragmentation has also left the region with 63 international gateways, more than three times the number in the USA, and clearly unsustainable for one of the world's least developed air markets.
Such figures are not lost on the aviation community, now pressing with renewed vigour for change. At least some believe that the arguments for co-operation are slowly beginning to get through to governments.
PRIVATISATION
Brian Davies, who was brought in at the end of 1992 to help see through the turnaround at Kenya Airways, argues that there has been a tangible change in attitude. "There's a new sense of realism in so many of the airlines of Africa," he says. "There's a pragmatism that simply wasn't there even two years ago. Airlines are no longer being seen as just a badge of national pride."
From a self-confessed sceptic, arriving from a background in the UK airline industry, Davies has joined a growing band of optimists now scenting an imminent recovery in the continent's fortunes. "I believe there will be an explosion in traffic in Africa. We've seen it elsewhere in the world and it's a question of when, not if, it happens here. We must prepare ourselves for that," he says.
It remains to be seen just how far governments will be prepared to go in relaxing control of their flag-carriers, but a successful privatisation of Kenya Airways could help create momentum.
Already the airline has benefitted from its radical and occasionally painful restructuring, producing profits for the first time in its 18-year history. Ahmed points to other AFRAA carriers that have quietly been restructuring over the past three years, including Air Tanzania, Ghana Airways, Sudan Airways and Uganda Airlines. SAA also turned round losses last year to report a highly respectable 5% net profit margin.
A well-kept secret perhaps, but the AFRAA carriers actually turned in a collective profit for 1994. Admittedly the profit was slight, representing a margin of 0.2% on sales, but a welcome step in the right direction nonetheless.
Ahmed adds that it is a matter of hard economics that airlines will have to become more self-sufficient. If governments can no longer afford to subsidise loss-making flag carriers, they will have to fight for funds in the competitive and occasionally hostile world capital markets.
Airports, too, are beginning to assert their claim to independence. Michael Singyangwe, of the National Airports Corporation of Zambia, is one of a new breed: an able and persuasive champion of commercialisation. He argues that few governments have the resources to fund their airport infrastructure, and even those that do often lack the will.
"It's no longer appropriate to pretend that all governments can support airports, because the cannot. They can and should let the airports run on their own," he says.
Singyangwe also calls for a relaxation in bilateral agreements, allowing airports the scope to market themselves to foreign airlines. His own base at Lusaka, now without the traditional state-owned flag-carrier, is perhaps in a good position for such an experiment.
CO-OPERATION
While restructuring and a dose of free marketeering may be an encouraging platform on which to build, Africa's underlying need is for co-operation.
Ahmed argues that governments should "...make it a requirement that any restructuring programme also include viable co-operative arrangements among airlines".
Alliance, which began scheduled operations to London in July with one of SAA's two Boeing 747SPs, is one potential model. The venture aims to provide Uganda and Tanzania with a shared long-haul service which their individual carriers would have struggled to run. If it succeeds, other states are expected to join.
It should also eventually provide an interesting mix of state and private ownership. SAA holds a majority 40% stake, while the two other national airlines each have 10% and their government's a further 5%. The remaining 30% will be open to private investors.
Another potential model comes from Air Afrique, one of the few multi-state consortia to survive the fragmentation which followed in the wake of independence.
Sassy N'Diaye, IATA's regional director for Africa, admits that the structure has not been without its faults. "Its strengths are at times its weaknesses," he says, conceding that the early days of the airline were dominated by political in-fighting between the member states.
Nevertheless, Air Afrique is still together after 24 years and in better shape after its recent bout of restructuring. "Political interference is now minimal," says N'Diaye. He adds that new states have been ready to join the consortium, with Mali already in the fold and Guinea Bissau due to become the twelfth member.
Five North African countries have a long-standing project to create a similar co-operative venture under the banner of Air Magreb - but with Libya under sanctions and political upheaval in Algeria, the project may remain a distant hope.
Mergers and alliances apart, Ahmed suggests that a mix of market forces and competition is likely to create new centres of gravity within the continent as smaller regional carriers drift towards joint operations with larger, international carriers.
South Africa and Kenya are certainly among the candidates to lead the way in sub-Saharan Africa. Nigeria, too, has the economic potential, if it ever achieves political stability. Ahmed adds that the emergence of hubs could also help the development of a route network within Africa as traffic develops into the gateways. To date, only around a quarter of possible African city pairs are inter-linked, with the vast bulk of flights going out of the continent into Europe.
Ahmed concedes that this vision of a "natural" progression towards a handful of international gateways relies heavily on the consent of the participating states.
Again, some progress is being made. The well-intentioned but largely ineffectual Yamoussoukro declaration was a start. In September 1994 governments went further with the Common African Policy on Air Transport, aiming to open up traffic rights within the region while keeping external bilaterals firmly in place. The policy calls for a virtually free exchange of rights within the "sub-regions" of Africa, with a progressive relaxation of restrictions between the sub-regions.
How fast and far these policies progress remains to be seen. Optimism is based more on gut feeling than hard evidence, but the fact that optimism exists is, perhaps, cause for hope.
Source: Flight International
