EU-Africa Aviation Conference

7/30/2019 EU-Africa Aviation Conference

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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.html


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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
http://www.egyptair.com.eg/english/


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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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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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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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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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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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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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Documents

EU-Africa Aviation Conference