Consolidation is essential

Africa’s plethora of airlines has long been seen as stumbling block to the continent’s aviation development. Could consolidation and consortia hold the key to success?

The diversity of countries, a growing number of small and weak airlines with poor networks and a motley collection of ageing fleets are a major handicap to the development of air transport in Africa. While this may be obvious to industry observers on the continent and elsewhere, the reality of this disturbing situation was hammered home at the first African Airlines Forum organised by a prominent group of West African businesses and the African Airlines Association (AFRAA) in Mali’s capital Bamako in early April.

Christian Folly-Kossi, secretary general of AFRAA, was particularly forceful in reminding the audience that airlines are “too small to compete effectively and need to consolidate for the continent’s aviation sector to develop. Many are simply not big enough,” he stated.

The figures speak for themselves. A continent made up of 54 sovereign nations, with a combined population close on 850 million, accounts for just 4% of the world’s air transport market, according to IATA. Add into the mix more than 300 disparate airlines, with the top 10 generating some two-thirds of total estimated revenues of under $10 billion, about those of Continental Airlines, and the gulf that exists between Africa and the developed world is there for all to see. An examination of the air transport map of Africa highlights a large swathe of countries that have no long-haul operators, almost a similar size block whose airlines are fighting for survival, with carriers only in South Africa, North Africa and pockets in East and West Africa achieving profits.

How to reduce that gulf, Kossi said, is possible only through consolidation. He referred to the demise of Air Afrique, Ghana Airways and Nigeria Airways in recent years, which contributed to gaps in air services in the region. Several airlines have stepped in to snap up routes, such as partially privatised Air Senegal International, Virgin Nigeria and Ghana International Airlines, although the last-named is already suffering from government interference in its management, less than six months after starting operations out of Accra.

Many carriers in the region, Kossi reminded, connect only regional points, with just a few links to Paris, contrasting this with hub-and-spoke networks with a strong exposure to intercontinental markets of the few successful carriers in Africa. North African carriers were thinking of creating an Air Maghreb consortium, but nothing has been heard of this for some time, while hopes are being rekindled of a strong privately owned East African consortium along the lines of the former East African Airways Corporation, which served Kenya, Tanzania and Uganda until 1977.

The many shoestring operations also contribute greatly to the poor safety record – more than a third of fatal crashes occur in Africa – which drives travellers on to foreign carriers, adding further to the woes of local airlines. The publication in March by the European Union of its first-ever blacklist has only reinforced the perception of Africa’s dangerous skies and has not been helpful, Kossi said. “It sends a bad message and risks damaging the transport industry in Africa by projecting a negative image on all operators in the sector,” he remarked. The list bans 92 airlines from flying in EU skies, and puts restrictions on another three with ageing aircraft, but the significance of the list is that 85 of these airlines are based in Africa.

European blacklist

However, none of these fly into European airspace, prompting Kossi to remark that the list is inappropriate and was published to appease public opinion following a spate of accidents in Africa in 2005. A closer examination of the list reveals that 67 of the 85 airlines come from just three countries: Democratic Republic of Congo, Liberia and Sierra Leone, all of which have suffered fatal accidents last year. These three have a long history of devastating civil wars, during which the import of ageing, mostly surplus military aircraft, was commonplace. Kossi asserts that the list paints an unrepresentative picture of the continent.

While the delegates at Bamako were at one over what needs to be done to make Africa’s air transport industry safer and more efficient and competitive, the forum also highlighted the overwhelming amount of work that still lies ahead to achieve this objective.

The sad fact is that talk is cheap and many governments still only pay lip service to the necessary structural reforms of their airlines and safety oversight. Many more are faced with other more pressing needs and do not have the means to put such laudable aims into practice. ■

GUNTER ENDRES / LONDON

Source: Airline Business