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DEVELOPMENT TRENDS IN AFRICAN AIRLINE INDUST
By
Raphael Kuuchi
AFRAA Commercial Director
EU-AFRICA AVIATION CONFE
Windhoek, Namibia, 2-3 April 20
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IntroductionIntroduction
In Africa air transport is vital for the socioIn Africa air transport is vital for the socio--economic develoeconomic developromotion of international trade, tourism and regional integpromotion of international trade, tourism and regional integ
Insufficient and/or poorly developed nature of other modesInsufficient and/or poorly developed nature of other modesmakes air transport the most ideal for linking the vast continmakes air transport the most ideal for linking the vast contin
Huge untapped marketHuge untapped marketonly 10% travel by aironly 10% travel by air
EUEU--Africa coAfrica co--operation is important becauseoperation is important because
Long historical and cultural tiesLong historical and cultural ties
Geographic proximityGeographic proximity
Trade and business relationshipTrade and business relationship
Major air traffic marketMajor air traffic market Significant changes in EU regulatory environment (singlSignificant changes in EU regulatory environment (singl
sky, etc)sky, etc)
A winA win--win partnership will benefit both sideswin partnership will benefit both sides
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Traffic Performance TrendTraffic Performance Trend
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Traffic Performance TrendTraffic Performance Trend
Over the past decade, traffic growth in African haOver the past decade, traffic growth in African haper annumper annum
Africa accounts for 3% of passenger and 1.8% of Africa accounts for 3% of passenger and 1.8% of
NonNon--African airlines carry over 75% of trafficAfrican airlines carry over 75% of traffic
The number of passengers carried by African airlinThe number of passengers carried by African airlinmillion last yearmillion last year
Freight carried exceeded 800,000 tons in 2008Freight carried exceeded 800,000 tons in 2008
This represented an increase of 5.9% over 2007 coThis represented an increase of 5.9% over 2007 coglobal growth rate of 4.6%global growth rate of 4.6%
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35,929 35,432 33,056 34,677
39,31541,712
45,205
-
10,000
20,000
30,000
40,000
50,000
60,000
N
o.ofPassen
gers
Passengers Carried by African Airlines (2000 -
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International Schedule Passenger Traffic by Region - Total
Kilometres Performed (PKP)
Africa
3%
Europe
40%
N/America
18%
L/America
4%
Middle East
7%
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Passenger Traffic Distribution - Africa to other R
Europe, 64%
N. America, 1%Middle East, 16%
Intra-A
Major growth markets in the future include NorMiddle East and Asia Pacific
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Passenger traffic Carried by Market - 2
Inter-continental
49%
D
Intra-Africa12%
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Traffic Performance Trend
Percentage of Freight Carried by Reg
AFRICA , 1.81%
ASIA/PAC
34.66%
EUROPE , 26.55%
LATIN
AMERICA/CARIBBE
AN, 2.94%
MIDDLE EAST,
6.45%
NORTH AMERICA ,
27.60%
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Market Outlook for 2009
In February 2009 alone, African carriers posted a passenger the largest drop among the worlds regions
Correspondingly, capacity of African operators was reduced
IATA projected a 2009 African airlines passenger traffic decover-year with cargo demand falling by 13%
A forecast loss of $600 million is projected for African airlin
but high yields will continue to increase competition and
airlines
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Low Cost AirlinesLow Cost Airlines
7 low cost airlines operate in Africa
A number of low fare operators also exist
Many more are expected as market opens up
In the near future, the nature of traffic in most African marksupport low cost operations which requires point to point d
http://www.attitudetravel.com/airlines/airarabia.htmlhttp://www.attitudetravel.com/airlines/mango.htmlhttp://www.attitudetravel.com/airlines/kulula.htmlhttp://www.attitudetravel.com/airlines/jet4you.htmlhttp://www.attitudetravel.com/airlines/fly540.htmlhttp://www.attitudetravel.com/airlines/atlasblue.htmlhttp://www.attitudetravel.com/airlines/1time.html7/30/2019 EU-Africa Aviation Conference
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WHAT ARE AFRICAN AIRLINES DOWHAT ARE AFRICAN AIRLINES DO
REMAIN COMPETITIVE?REMAIN COMPETITIVE?
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Fleet Modernisation
58% of the aircraft in service in Africa is made up of ageingB727/B737/B757, DC9, MD80 and F28/100, etc
The average age of the African fleet is about 19 years
Boeing forecast Africa fleet requirement at 560 jets worth $6
2007 and 2027
156 aircraft are currently on order by African airlines
The biggest challenge is to obtain financing at reasonable coperception and the financial weakness of the African airlines
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Safety and SecuritySafety and Security
Safety remains a major priority and challenge in Africa
Amidst resource constraints, the industry in Africa is not relresponsibility in ensuring a safe and secure operating environ
AFRAA and its member airlines have endorsed IOSA, COS
ACIP programmes, Banjul Accord Initiatives, etc
AFRAA is working closely with sub-regional and regional orimprove safety
Almost all AFRAA airlines have undergone the IOSA auditsof them have passed and are registered
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Safety and SecuritySafety and Security
The EU blacklisting a major setback to the intercocarriers of Africa who meet international safety sta
The basis of the blacklisting is uncertain, lacks tranthere is no clear process of getting off the list
Several years after the initial blacklist was publisheof countries and airlines that were originally listed on the list
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MRO and TrainingMRO and TrainingCentresCentres
To meet aircraft maintenance, repair and overhaul requirements of
competitive costs, MRO Centres have been established by some mAfrica
Besides servicing the aircraft of their airlines, these Centres providesupport to other airlines within and outside the continent
Currently MRO Centres are located in Johannesburg, Cairo, Addis
Casablanca
There are simulator training facilities as well as Pilots and Entraining academies on the continent
Managerial and skills training and capacity building institutio
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Partnerships and Code share
29TOTAL
1Interair
1Tunis Air
1Libyan Airways1Air Namibia
1LAM Mozambique Airlines
1Air Burkina
2Rwandair Express
3Air Madagascar
2Precision Air
3Air Senegal International
1Ethiopian Airlines
2Kenya Airways
3EgyptAir
7South African Airways
No. of Partn
in Africa
Airline
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Global Alliance MembershipGlobal Alliance Membership
Three African airlines are members of global allian
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Environmental ConcernsEnvironmental Concerns
Environment issues have become topical and compelling
Operating older aircraft in Africa is negatively impacting the
Fleet renewal will reduce airlines environmental footprint
We applaud the EU for the leadership in establishing an envtrading scheme for Europe
However, AFRAA and African States believe that a global athe leadership of ICAO is the appropriate way forward in adenvironmental concerns relating to international air transpor
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LiberalisationLiberalisation
The internal African market is gradually being liberalised butpainfully slow
Many African carriers including Ethiopian, Kenya Airways, Airways, Royal Air Maroc, Afriqiyah and EgyptAir are benefliberal bilateral air services agreements
This has resulted in better intra-African connectivity today, urgent expansion is needed to shorten travel time and reducinter-city air travel
The need to create a conducive environment for all operatornow than ever before if African airlines are to survive and pthemselves for global liberalisation
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Diminishing Presence of African AirDiminishing Presence of African Air
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Diminishing Presence of African AirDiminishing Presence of African Air
African airlines support liberalisation but they need to be positionecompete and survive in a liberalised market
As a continent, we lack the necessary regulations, institutions and mmechanism to ensure fair play in a liberalised global environment
In the 1970s and 1980s Africa had about 26 inter-continental airlinAfrique which covered 11 States)
Today, this has been reduced to just 9
Some of the existing inter-continental carriers may further disappea
Efforts should be focused on safety, modernising economic regulatup the internal market
Lets look at air transport in the past and now
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The Airline Industry in the 1970s & 1980s
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Diminishing Presence of African AirDiminishing Presence of African Air
21
82
31
136
20
94
26
76
35
84
0
50
100
150
200
250
300
Francop hone t o
Paris
Francop hone to
Europe
Anglophone West
Africa to Europ e
East Africa to
Europe
Southern Africa to
Europe
Weekly Flight Frequencies between Africa and
African Airlines European Airlines
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Diminishing Presence of African AirDiminishing Presence of African Air
eekly Flight Frequencies -
Africa to Europe
European 72%
No
Southern A
East Africa 3%
Anglophone WestAfrica 2%
Francophone Africa, 4%
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Challenges of African AirlinesChallenges of African Airlines
Lack of capital and high cost of accessing finance due to riskairlines Small size, modernise fleet
Developing and retaining skilled human resources stemmi
Safety and security
Absence of conducive environment for airlines to position t
Lack of IT infrastructure and systems
Rapid regulatory changes particularly in the EU communit
blacklisting, ETS
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The Way ForwardThe Way Forward
Strengthen the capital base of African carriers through private stratpublic private partnerships
Recapitalisation will modernise fleet, address some safety concernsnetwork expansion and make airlines competitive
Develop and retain badly needed skills EC could provide assistanby encouraging its airlines to support human capital development i
Fully implement YD weve talked about it enough!
Create the right environment for competition regulations, institutmonitoring
There is an urgent need for a comprehensive air transport policy wa framework for Africas relationship with 3rd countries on issues retransport
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The Way ForwardThe Way Forward
We are encouraged that the EU is willing to support Africa under tstrategic partnership to assist in the crafting of an African air trans
Such a policy should encourage cross-border investments in aviatioinvestors should invest in our airlines
On safety;
AFRAA will continue to work with and support stakeholders on va
CAAs should be encouraged to share limited resources and experti
EU and Africa should work together to ensure that aircraft that areenvironmental reasons in Europe do not get into Africa through thmarkets
Unilateral regulation of the industry should give way to global reguThis will ensure the weak and vulnerable are not disadvantaged
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The Way ForwardThe Way Forward
AFRAA believe there could be better ways of addressing theof Africa without resorting to blacklisting
EU and Africa should continue to work together towards finappropriate solution in this regard
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