Many still associate African aviation with unexplained accidents and airlines banned from entering European airspace. The continent’s airline industry has, however, turned a page with a number of world-class carriers emerging, eager to capitalise on Africa’s growing income levels.
On Monday, Cameroon’s rebranded and relaunched CamairCo began operations with an inaugural flight to Paris. Cameroon Airlines (now operating as CamairCo) was banned from European skies in 2005 due to maintenance and technical problems. Under the leadership of Alex van Elk, former managing director of Nigeria’s Arik Air, the company has again been declared fit to fly. Van Elk told Reuters that the airline is seriously contemplating flights to China and Dubai later in 2011. CamairCo would be hoping to join the new breed of African carriers such as Arik Air, Kenya Airways and Ethiopian Airlines that are challenging historical negative perceptions about the industry. Ethiopian Airlines will later this year join Egyptair and South African Airways to become the third Star Alliance member carrier on the African continent. Star Alliance is the world’s largest airline affiliation.
Many African airlines are targeting the continent’s traditionally underserved areas. Kenya Airways last year introduced flights from Nairobi to Juba in formerly war-torn southern Sudan, adding to other recently launched routes such as Kisangani (DRC), Bangui (Central African Republic) and Malabo (Equatorial Guinea). This year Nairobi-based low-cost carrier Fly540 also commenced operations in Angola. Initial destinations for Fly540 Angola will include the major centres of Cabinda, Luanda, Soyo, Benguela, Huambo, and Malanje. Operations are centred out of Cabinda, the hub of the Angolan oil industry, and Luanda. Fly540 is the first private sector International Civil Aviation Organisation (ICAO) registered airline to fly in Angola. “The Angolan regional and domestic market remains significantly underserved and the demand for Fly540 Angola to meet this latent demand is clear,” the airline’s parent company Lonrho said in its 2010 annual report.
South African carriers are also targeting the growing African market. Comair, operator of both British Airways in Southern Africa and low-cost brand Kulula.com recently announced new routes from Johannesburg to Maputo and Gaborone. The company is already flying to a number of destinations in the rest of the continent, including Harare, Livingstone, Lusaka, Ndola, Dar es Salaam and Mauritius. All Comair’s African routes are serviced through the British Airways brand. According to the company, it is currently experiencing a good mix between business and leisure travellers on these routes. South African expats doing contract work in other African countries also account for a sizeable number of passengers.
Kulala.com’s low-cost competitor in the South African market, 1Time, is also eyeing expansion opportunities in the rest of the continent. Bloomberg reports that after adding flights to Maputo a few months ago, 1Time is now also considering flying to Lusaka and Harare. Glen Orsmond, 1Time Holdings CEO, was quoted saying “in Harare there are landing slots available and we’re applying for the licence”.
Bilateral air service agreements
Stuart Cochrane, executive manager for network development and alliances at Comair, says that a lack of bilateral air service agreements between African governments have traditionally been the reason for the low number of flights between African countries. A bilateral air service agreement is in essence an agreement which two nations sign to allow civil aviation between their territories. For many countries one of the major motives for not signing these agreements has been to protect their own national flag carriers.
Cochrane says the industry is, however, seeing greater liberalisation although the continent is still far from an “open skies” system. “We are seeing liberalisation, and liberalisation provides us with the opportunity to add more capacity into certain markets, which will hopefully increase airlift between African countries,” he explains.
Opening new markets
Greater competition in the regional airline industry, resulting in cheaper flights, is likely to open up the continent for business people. For example, with more inexpensive flights, a South African investor with an interest in Tanzania, might be more likely to fly to Dar es Salaam to investigate a possible business opportunity.
Through introducing cheaper flights, Comair is looking to boost demand on its African routes, rather than just steal customers from its competitors. “We are able to create some competitive pricing that stimulates more demand, because we believe that the market should be growing. We are not looking at simply taking a percentage that flies on our competitor, we actually want to grow the market,” Cochrane notes.
More low-cost airlines?
The low-cost airline industry in Africa is not nearly as prominent as in many other regions across the globe. Kenya Airways chief executive Titus Naikuni recently told The Africa Report that low-cost rivals were “not a major issue at the moment” in East Africa.
Cochrane says that low internet penetration levels is one of the major challenges holding back growth of the low-cost airline industry. Without access to internet, prospective travellers find it more difficult to book seats on low-cost carriers, which predominantly sell their tickets through online platforms. “A low-cost model is driven to a large degree by being able to minimise and reduce your distribution costs. It has worked very well for us in South Africa as Kulula.com because we have very sound internet penetration in this market. When you start operating a route in [the rest of] Africa where there is minimal internet penetration your business model is flawed slightly,” he explains.
Comair has therefore decided to use its legacy carrier British Airways, as opposed to Kulula.com, as the main airline on its African routes. Cochrane says British Airways enables the company to interline with other airlines, to offer connecting flights and to sell seats through the worldwide systems that have become synonymous with legacy carriers. “The legacy model is certainly one that we will continue to focus on as we move forward into Africa.”
Will we see more low-cost players joining the industry? According to Cochrane there are certain markets with high volumes of passengers, such as Nigeria, where low-cost carriers might be feasible. “From my perspective I think the volumes in certain markets are there to see low-cost airlines grow within Africa.”