Wednesday, 26 February 2014

The problems with African Aviation - AFM (Airline Fleet Management)

Africa’s aviation industry creates 6.7 million jobs and $6.8bn for the continent’s GDP. However, various factors are undermining its development. AFM’s Africa correspondent, Kaleyesus Bekele, reports from Mombasa, Kenya.
Africa has seen many airlines come and go. They each rise with a wave of optimism, but crash with crippling debt and defeat. Air Afrique, Nigeria Airways, Ghana Airways, East African Airlines and Uganda Airlines are just some to have fallen into liquidation. Indeed, a number of African countries have lost their national carriers, forcing customers to depend on neighbouring airlines in order to fly to the rest of the world. Yet despite all this defeat, Africa’s aviation industry continues to battle on. It is, after all, a significant growth market and worth the fight. So, as old airlines disappear, new start-up carriers arrive. Some are more successful than others. Air Malawi, 1Time, Cameroon Airlines and Air Nigeria have recently gone bust. However, Air of Nigeria, ASKY, Pan African Airlines and Air Rwanda are thriving.
So what is behind all these casualties, and how can the existing carriers protect themselves from failing like their counterparts?
Meeting of Minds: 
In late November 2013, African airline CEOs and civil aviation authorities gathered in Mombasa, Kenya, for the African Airlines Association (AFRAA) annual general assembly (AGA) to discuss the challenges Africa’s aviation industry faces. The three-day conference was held under the theme of ‘Challenging times – Africa’s strategic alignment’. It brought together over 360 high-profile delegates from 55 countries across the world. Among the issues, speakers highlighted poor airport infrastructure; high airport fees; market restrictions; exorbitant taxes; aviation fuel; and competition.
In his opening remarks, the secretary general of AFRAA, Elijah Chingosho, singled out excessive airport taxes, poor infrastructure and fuel prices that are above industry average as major challenges confronting airlines. “The generally high cost of operations is making African airlines less competitive,” he argues. South African Airway’s CEO, Monwabisi Kalawe, stresses the need for African airlines to co-operate. He believes the region’s most significant challenge is the cost of doing business in Africa. As an example, he notes that aviation fuel prices are much higher than the world average. “In some countries, airport fees are exorbitant and these have to be reviewed,” he says.
Adding to this, Tony Tyler, director general of IATA and guest speaker at the AGA, was critical of African governments. Tyler argues that African governments levy cumbersome airport fees and taxes on jet fuel and airfares. In particular, he cites the Kenyan and Ethiopian governments, and adds that the nation’s conflicting rules hinder the airline industry growth. 
The problems with government run deep and downward to airline chief executives. Africa’s aviation industry is renowned for being laced with corruption, nepotism and bureaucracy. And it’s these things that link the government to some of the continent’s less scrupulous business leaders. For example, Khaya Ngqula, former South African Airlines CEO, has been accused of fraud totaling almost $3m (R30.8m), although it is something he contests. Still, this reputation impedes business and has resulted in many chief executives losing or changing roles.
According to Inati Ntshanga, CEO of SA Express, this instability is a major problem for African airlines. “Airline management is changed now and then. CEOs are removed more often. In some countries the management of the airline is changed when there is a change in the government,” Ntshanga explains. “There should be continuity in leadership. Look at Dr Titus [Naikuni], he led KQ for 12 years. Look at Tewolde [GebreMariam, CEO], he served Ethiopian since 1985. When a person stays with an airline, he will have the time required to implement his vision.”
Safety at stake:
Another contentious issue for Africa is safety, for which it also holds a poor reputation. Indeed, African carriers dominate the European Union’s (EU) blacklist, which bans certain airlines from flying into EU airspace. Among those banned are all 50 from the Democratic Republic of Congo; all four from Equatorial Guinea; all 17 from Mozambique; all 10 from São Tomé and Príncipe; all seven from Sierra Leone and all 18 airlines from the Republic of Sudan. Added to these are every airline from the Republics of Benin, Congo and Gabon, which each have eight airlines. Clearly more needs to be done in terms of safety, as well as the legislation, documentation and enforcement that surrounds it. 
Speaking at the conference, Chingosho called on African states to take safety seriously and, together with the African Union, engage with the EU on what he considers is the unfair banning of African airlines. Naikuni, who is now president of the AFRAA and CEO of Kenya Airways, splits the problems into two categories: internal and external. “Safety is a major concern. If we have an unsafe airline, nobody is going to fly [with] us. We have to admit that. This is an internal problem. Of course, inappropriate government policies affect airline operations. Change in governments also impact airline management. We have four or five elections in Africa every year and these could have their own effects on the countries’ stability, and that translates to the airlines’ performance.” 
Global Standards:
Tyler argues that aviation’s economic and social benefits can be undermined by the unintended consequences of government action, which are not aligned with the established framework of global standards. “Global standards are the foundation upon which a safe, secure and integrated global air transport system is built. The system is so reliable that we don’t often think about the enormous co-ordination that makes it possible. That is why we need to remind governments of the value of global standards that support aviation and the vibrancy of their economies,” Tyler says. 
Safety is the prime example of what can be achieved with a consistent, global approach. The IATA Operational Safety Audit (IOSA) is the global standard for airline operational safety management. Over the decade since it was established, there has been a clear trend showing that the aggregate safety performance of airlines on the registry is superior to those airlines that are not on the registry. African airlines on the IOSA registry are performing in line with global averages. And in 2012 there was not a single Western-built jet hull loss by any of IATA’s 25 African member airlines.
“Improving safety is the biggest issue on Africa’s agenda, and global standards play a crucial role in this area. Last year, nearly half of the fatalities on Western-built jets occurred in Africa. African governments recognise the need to improve safety in the Abuja Declaration’s goal of reaching world-class safety levels by 2015. IATA is actively contributing its expertise and resources to all the Abuja Declaration’s commitments,” says Tyler. Of course, once this new level of safety is reached, Africa can look forward to market liberalisation. Naikuni notes that the slow pace of air transport liberalisation is hurting the growth and development of Africa. 
The AFRAA AGA called upon governments to demonstrate commitment towards liberalising the air transport industry and creating an environment conducive to airline operations. This will increase regional and domestic traffic and create a bigger base market. Naikuni urges governments to remove barriers to co-operation and replace them with policies and regulatory framework. But once one hurdle is overcome, another is soon met. Although some airlines may not be prepared for competition in a liberalised environment, Naikuni argues that protecting such airlines puts back the whole industry. 
Non-African carriers have dominated African skies and hold 80 per cent of the passenger traffic on intra-Africa routes. How can African airlines regain control of Africa’s air industry? Unfortunately, this is a question the airline CEOs could only ask, and not answer. According to GebreMariam, African carriers were operating under an unfriendly regulatory framework. He adds that markets are protected by bilateral air service agreements. “Unfortunately, there are African countries that prohibit African airlines from flying into their countries. There are countries that deny African airline traffic rights and grant rights to non-African airlines,” GebreMariam laments. According to him, African nations should open their skies for African airlines. “We need to whole heartedly implement the Yamoussoukro Declaration [a 1988 agreement by African countries to open their skies for African airlines].”
Some speakers raised concerns about the increasing dominance of Gulf carriers in Africa. Mega-carriers such as Emirates, Gulf Air and Etihad are dominating African skies. How can African airlines compete with giant carriers that are backed by their governments and that have access to cheaper fuel? Naikuni does not believe in banning. “We need to have a sound business development strategy that would enable us to compete with any airline,” he told participants. His vision is founded on a clear and justified confidence. The future of aviation in Africa has the potential to be very bright. Africa’s population of one billion people is spread across a vast continent with a wealth of untapped resources. The African economy is rapidly developing, its people are growing wealthier and governance is more stable. 
“Africa is the continent of opportunity for aviation. The future is still being created. By keeping global standards at the heart of our efforts, I am convinced that the future will be bright,” Tyler surmises. 

1 comment:

  1. oooooo shame shame shame...Now here the worlds begging bowl cry once more. What the matter Africa?Cant compete with the giants of the giants? Africa saddles itself with all the ills of this world that you can imagine, so its not surprising Africans are capable or able to compete on any level at anything. So whats the easiest thing to do? Whine and complain! Look at those faeces zimboz call air zimbo! With that type of "management" why would anyone be surprised of this(article) whining and crying foul by Africans? LOOK at moza new updates at all about that crash, not even any new developments..its just "crashed by accident" that was the end of the whole thing. You just gotta question that continents sanity sometimes! I say let all these African "airlines" just liquidate and disappear and give unlimited access to western and gulf states airlines since these are run exactly as they should be, as SAFE, COMFORTABLE, EFFICIENT, QUALITY AND PROFITABLE AIRLINES!! TO AFRICANS: IF YOU CANT HANDLE THE HEAT, THEN GET THE FK OUT OF THE KITCHEN!!