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African Airlines must tap into Africa’s un-served market.

By Nunurai Ndawana

Recently during the International Civil Aviation Organisation Flag handover to Zimbabwe for the ICAO75 commemorations in Victoria Falls, I spoke to Dr. Elijah Chingosho the former Secretary-General of African Airlines Association (AFRAA) on his thoughts on the African Aviation.

Here is what Dr. Chingosho has to say;

On the low-cost model in Africa,

EC: “With the low-cost model it must offer frequent shuttle services between two highly populated cities. We have seen this model with relative success between Johannesburg – Cape Town and Nairobi- Mombasa. This allows the airline to have high load factors and offer low fares.

There are other considerations that go with the LCC model such as online payment methods and bookings these can only be done in a market with mobile penetrations rates. Currently, in Zimbabwe, the finance regime offers a bit of a challenge because you have to pay via credit cards or at an inter-bank rate that is usually high.

On my flight on fastjet from Harare to Victoria Falls, I noticed that the onboard service was similar to that of a regular airline. Refreshments were offered at no cost whereas the LCC standard is that you have to buy it from the onboard service. This poses a question, who is paying for it? Today I paid U$350.00 for a return flight which is just too expensive for an LCC airline for a 55-minute flight. Such high fares are attributed to various factors such as time of booking and landing charges that range U$50.00 per passenger and is often added on the overall ticket.

In my view, in the absence of a strong national airliner in Zimbabwe, fastjet is offering a critical service into Zimbabwe”.

On the increase of new aircraft deliveries in Africa in the last 12 months,

EC: “These deliveries are to a few airlines and unfortunately the growth is skewed to Ethiopian Airlines. ET receives one new aircraft every month and in the past year, we have seen Uganda Airlines, Egypt Airlines, and others receiving new aircrafts. We are also hearing of South African Airways getting two Airbus A350s, Air Botswana received some Embrears and Air Zimbabwe is set to get some Boeing 777-200s.

Unfortunately, I don’t see most of these airlines getting new aircraft to consolidate their operations and grow their business model further. If you look at Uganda Airlines for an example, you will conclude that the motivation of having a national airline was derived from the need gap identification on routes such as Kampala to Mogadishu and the need to better serve visitors to their country. The same goes for Air Tanzania.

However, even with these deliveries, Africa remains largely underserved, except for routes such as Harare-Lusaka where you have most airlines operating on 5th freedoms between the two cities. The same cannot be said for flights to cities like Blantyre, where you struggle to get flights.

Small is not beautiful for Africa’s airlines

On where he sees Uganda Airlines in five years time after their much-publicized launch;

EC: “Uganda Airlines has entered into a market that is adequately served. We have Ethiopian Airlines, Kenya Airways, and Rwandair. The presence of these airlines provides overcapacity in the region and for smaller players, this will lead to diluted yields. We have seen bigger players in the region like Kenya Airways experiencing losses and I don’t see them getting out of this situation that they are in.

Based on the current market structure and trends I don’t foresee both Uganda and Tanzania Airlines making money in the next 10 years. It’s not always about the airline’s profit or losses, you must have a broader view on the contribution of aviation to the economy. Look at RwandAir and Rwanda, the country has repositioned itself as a MICE destination in Africa and that has increased their yields and load factors”.

On point to point connections within Africa or going International,

“Africa is largely underserved. Within Africa, the potential is there and airlines must take advantage of these markets and provide a service through their hubs. Ethiopian Airlines has done this to perfection. They have connected Africa so well and operate with high yields on most of their intra-Africa destination. This, in turn, allows them to have an international service that also has a high yield.

As a parting shot, I would recommend African airlines consolidated intra-Africa routes and build traffic through their hubs. Going head-on with global airlines on a continental route will lead to losses in most cases”.

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