African airlines navigate turbulent skies

On board Ethiopian Airlines from Johannesburg to Addis Ababa.

On board Ethiopian Airlines from Johannesburg to Addis Ababa.

The African Airlines Association (AFRAA) in November announced its picks for the best airlines in Africa in 2019 – Kenya Airways for having the “best improved intra-Africa connectivity” in 2018 and Royal Air Maroc for its remarkable “financial performance and profitability”.

Kenya Airways introduced the highest number of new routes in 2018, including flights to Malindi, Mauritius and Mogadishu. The airline is also increasing capacity and frequency of flights to about a dozen other cities in Africa, including Cape Town, Zanzibar and Kigali.

The African Continental Free Trade Area came into effect in 2019, becoming the world’s largest free trade area by number of member states. By rewarding “intra-Africa connectivity”, AFRAA is encouraging its members to take advantage of it.

Kenya Airways’ award comes soon after the airline marked one year since it launched a non-stop flight from Nairobi to New York, cutting travel time between Africa and the US by at least seven hours. Now travellers no longer need to transit through European or Middle Eastern cities. The company announced that after just 12 months of operating the Nairobi–New York route, it has carried 100,000 travellers – a great success, it said.

Yet despite all these accolades, there is no denying that the airline, like many others in Africa, has gone through turbulent times. Surges in operating costs from ambitious expansion and rising fuel costs continue to eat into the airline’s profit. In the middle of this year, the airline posted a $740 million net loss after taxes in 2018, compared to a loss of $640 million for the period between April and December 2017. It has plans to re-nationalise and to explore public-private partnerships.

To some extent, the travails of the Kenyan carrier reflect the struggles faced in operating a profitable airline in Africa today.

High taxes, restricted market access, high operational costs – the cost of jet fuel runs 35% higher in Africa than in the rest of the world – are some of the challenges African airlines face, according to Abderahmane Berthe, Secretary General of AFRAA.

Africa represents 16% of the global population but accounts for only 3% of global air traffic, according to the International Air Transport Association (IATA). However, demand is slowly growing.

Over the last two years, it grew by an estimated 2%, a study by global air travel consultancy firm Sabre. Published in November 2019, the study also revealed that travellers are willing to spend up to 27% more on air travel if they can move around easily and freely.

So why are there still obstacles to tap into the growing number of passengers in Africa?

According to Christian Folly-Kossi, a Lomé-based aviation consultant and a former secretary general of AFRAA, the reason lies in national ambition. Every country wants to have a national carrier at all costs: “A flag, a national anthem and an airline are considered the basic attributes of sovereignty,” he says.

So as passenger numbers grow, countries are relaunching their national carriers. Uganda is the latest to start operating a national company. Ghana and Zambia are making plans to relaunch theirs, while Senegal is trying for the third time in two decades to put its own in the air.

“Let me give you an example to buttress my point,” Folly-Kossi said. “Professional boxers have known this for a long time: you can’t have a heavyweight compete against a featherweight. One of them will not make it out of the ring.” Smaller African airlines may be run out of business in their own countries by the bigger international carriers. This is why African air regulators are reluctant to liberalise their air spaces. Recent data on airline routes’ profitability in Africa appears to confirm Folly-Kossi’s misgivings.

According to OAG (originally the Official Aviation Guide), a UK-based air traffic analysis company, the most profitable air routes in Africa are operated by Emirates, which connect South Africa to Asia and Europe through Dubai.

South African Airways and TAAG Angola Airlines were the only African airlines operating any of the 10 most profitable African routes between April 2018 and May 2019. The most profitable intra-African route, between Johannesburg and Cape Town, is operated by South African Airways.

Yet South African Airways, just like Kenya Airways and Air Côte d’Ivoire, is struggling to stay afloat. Over the last two decades, the South African carrier has had to rely on massive bailouts by the government, estimated by local media to be to the tune of $1.96 billion.

Still, while IATA says that the continent can expect millions of passengers by 2036 and to grow the numbers by 5% annually over the next 20 years, more airlines in every African nation competing for the same routes would not solve the industry’s issues, aviation experts say.

Folly-Kossi advocates for airlines operating between regional hubs that smaller airlines would then feed. “In Europe, smaller countries such as Belgium, Switzerland and the Scandinavian nations understood as early as the 1980s and 1990s that their airlines would only survive if they operate around the concept of hub-and-spoke,” he said. This is a system of air transportation in which local airports offer air transportation to a central airport where long-distance flights are available.

For instance, Ethiopian Airlines partners with ASKY, a West and Central African regional carrier, to operate a West African hub out of Lomé, Togo, for its transatlantic flights to Brazil and New York and soon to Houston, Texas in the US. Similarly, Kenya Airways also plans to make Nairobi a major hub in East Africa around its regional expanded network.

If there could be five additional hubs, Folly-Kossi believes, it would unlock the African market for both short- and long-haul flights.

This article was first published by Africa Renewal.